Despite all the doom and gloom predictions, COVID was really not that bad for many Australian small businesses. Whilst some industries like travel, entertainment and hospitality were decimated, on the whole, Australian SMEs rode the COVID wave and came out the other side. Employees quickly adapted to work from home and propped up by Job Keeper, government grants and with tax collections put on hold the extra stimulus packages propped up zombie businesses that would have otherwise closed. But the tide is now turning.
Inflation is rising, staff costs are higher with an increase to the minimum wage and a severe skill shortage, the SME Recovery Loan scheme has ended and the ATO is back collecting tax liability including the debt accrued over the last two years. COVID is rearing its head again and business insolvencies are starting to rise.
The tide is turning.
The Government has spent so much money keeping business afloat during COVID that it’s now come to a screaming halt as we enter a recession. With national debt sitting at more than $800 billion they have no more money left to throw. There’s nothing left in the piggy bank.
In the past six months, here at OptiPay, we’ve noticed it’s taking businesses longer to pay their bills – the average days outstanding has increased by a week. It’s one of the first signs that businesses are under mounting financial strain – to maintain cashflow they’re having to be selective about the timing of when they pay debts.
