CreditorWatch Business Insights

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Managing Director of Open Analytics, James O'Donnell, joins CreditorWatch's Head of Content, Michael Pollack, to unpack the latest data on business credit risk.

The numbers show a deterioration in business conditions and home owners coming under increased mortgage stress.

Subscribe to the CreditorWatch Business Risk Index for free and receive the results in your inbox every month.

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Join CreditorWatch's Dominic D'Andrea, Key Account Consultant and Paul Mead, PPSR Specialist, as they take you through the ins and outs of portfolio health checks, how to identify risky customers and how to protect your business.

Customer details change. They move address, their business name changes, their credit rating drops or increases, and sometimes even close shop.

Changes to a customer’s details may change their level of risk, so you need to act accordingly to minimise your exposure.

How are you keeping up to date with all the changes across your customer base? See how you can quickly keep up to date with changes across your entire customer database with CreditorWatch.

You can also subscribe for free to the CreditorWatch Business Risk Index to get the results in your inbox every month. No spam!

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Several leading indicators in the May 2023 CreditorWatch Business Risk Index (BRI) show Australian businesses are coming under increasing pressure.

External administrations, B2B trade payment defaults, court actions and credit enquiries are all trending sharply upward as Australian businesses grapple with rising interest rates, high inflation, decreasing demand and declining forward orders.

CreditorWatch Chief Economist, Anneke Thompson’s view is that the RBA is unlikely to consider lowering interest rates until at least mid-2024, given core inflation remains stubbornly high.

The index results are consistent with other economic indicators such as the NAB Business Confidence Index, which is showing an accelerating decline in trading conditions.

On a regional level, the Business Risk Index data for the past 12 months has revealed that three of the five biggest movers down the index are all adjoining – Wyong, Gosford and Lower Hunter.

Key Business Risk Index insights for May: * External administrations dipped from March to April due to seasonality but are now up 35% YoY. * Court actions also dropped in March due to seasonality are now up a 50% YoY. * Credit enquiries are up a massive 85% year-on-year as businesses become more nervous about the health of their trading partners and tighten credit policies. * B2B trade payment defaults up 31% YoY, with Food and Beverage Services the number one ranked industry for probability of default by a considerable margin. * Merrylands-Guildford and Canterbury, in Western Sydney, remain the worst performing regions in Australia for default rates. * Casey-South in Victoria has entered the top 10 worst performing regions for the first time with a projected default rate of 7.00% over the next 12 months. * Unley in South Australia is the region with the lowest insolvency risk (across regions with more than 5,000 businesses), followed by Norwood-Payneham-St Peters, also in SA. * The rate of external administrations in the construction industry continue to trend upward – sitting at their highest point since June 2020. * The rate of external administrations in the Healthcare and Social Assistance sector, while still low, has more than doubled over the past 12 months.

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CreditorWatch Chief Economist, Anneke Thompson, and Director of Open Analytics, James O'Donnell, discuss the latest CreditorWatch data insights on Australian businesses and the outlook for the remainder of 2023. Hosted by Michael Pollack, Head of Content at CreditorWatch.

Data released over May 2023 continues to point to slowing in retail spending by Australian consumers as well as continued pessimism on future spending intentions. Business confidence has also registered a below average result with business conditions deteriorating, although still well above long term averages. There are also early signs that the jobs market is about to get more difficult for employees, as the seasonally adjusted unemployment rate rose from 3.5% to 3.7%.

TRANSCRIPT

Hello and welcome to CreditorWatch Business Insights. I’m Michael Pollack, Head of Content at CreditorWatch and today I'm joined by Anneke Thompson, CreditorWatch’s Chief Economist and James O'Donnell, Director of Open Analytics. Welcome James, welcome Anneke.

James

Thanks Michael great to be here.

Anneke

Thanks Michael.

Michael

So, we're looking at our monthly Business Risk Index insights as well as what's going on in the broader economy. James, could you take us through what you're seeing out there in terms of business conditions and what the business risk index data has been saying?

James

Sure thing, Michael. In general, we're seeing that insolvencies, court actions and B2B trade defaults are continuing to pick up. Particularly insolvencies, we've seen particularly in some industries quite a bit of acceleration in the number of external administrations. At the same time, we're seeing an increase in B2B trade activities. That’s measured by the trade receivable data that we see a CreditorWatch. Although, I put the caveat there that potentially some of that is not driven by actual increases in trade activity. It's more about the costs of things going up, so inflation is no doubt contributing to those figures.

Michael

Okay. Anneke, do you have anything you want to add there?

Anneke

I'd say it's probably not surprising that we're starting to see an increase in business insolvencies, given we had much lower than normal insolvencies throughout the COVID period. So, there's sort of a natural catchup. But as James mentioned, there's certainly some industries that are being hit harder and are seeing quite accelerated levels of insolvencies. They're mainly construction, followed by the food and beverage sector as well.

Michael Sure. So, James touched on the fact that we're seeing a rise in trade receivables, the average cost of invoices coming through is increasing. But on the other side of the coin, we're seeing consumer demand and business confidence declining. So, what can we attribute this scenario to Anneke?

Anneke

Well certainly consumer confidence is lower than it's ever been. Probably the only time where it's been at similar levels was the GFC. But even then, it picked up much quicker than it's picking up now. So, it's been low for since about September last year and it's stayed low. What I would say about the increase in trade receivables is, while we think inflation peaked in December, that was mainly attributable to goods inflation and fuel. But services inflation is actually increasing and if you think about the invoices that our customers send each other, there often in the services sector. So, prices in that category are still lowing up and it's a bit of a cause for concern from the RBA, and certainly one of the reasons why they lifted the cash rate after the May meeting.

Michael

Sure. So, if inflation has peaked then what's your view on the timing for the RBA getting things back to their inflation target of two to three per cent?

Anneke

I think it's still going to take a fair amount of time. I wouldn't expect it to be in the 2 to 3% range even next year, we may not be getting there until about 2025. We've still got supply side pressures. Rent is one of the inputs into the inflation basket and that obviously is increasing at a really alarming rate, and with the amount of houses that we're forecast to build going forward, there doesn't seem to be any let up there. Another worry is energy pricings, we're going to see a pickup in energy pricing in September quarter. In some ways Australia is really behind the curve here, Europe and the US saw increases in their energy prices over the last couple of years - we're sort of playing catch-up.

There's a couple of factors there that’s still pushing inflation along, even though we're seeing inflation of price rises ease in household goods, clothing and footwear; sort of normal goods that consumers are spending less money on now.

Michael

Those power prices are definitely having a massive impact aren't they. We saw unemployment lift slightly by two points this month, to 3.7%. What can we read into that number Anneke?

Anneke

I’d definitely say that we've seen past the trough of unemployment, I highly doubt from here on in that we’ll get back down to three and a half percent. Two reasons, obviously net migration has been very strong, so we're filling a lot of the jobs that are available, particularly in the hospitality sector. Secondly, particularly once we enter the new financial year, we’ll see a lot less hiring activity and I think there's a lot of businesses out there who'll start to circle the wagons, shore up their finances, and probably take a much more conservative outlook to headcount growth. I don't think we're going to see mass layoffs just yet. We're not at that part of the economic cycle, but the hiring frenzy that we've been on in the last two years is very much over.

Michael

Okay, interesting. So, let's take a look at industry data from the Business Risk Index. A lot of the data obviously is showing an increase in insolvencies, back to pre-COVID levels in some cases, like construction that's actually exceeded pre-COVID levels. What’s your outlook there James, in terms of industries?

James

Michael, the industries that we sort of have a watch on if you like, and monitoring closely are really anything related to hospitality. I think more generally, discretionary spending driven industries like hospitality, arts, and recreation accommodation. The gap between them and other industries in terms of default and insolvency rates has increased. Of course, construction, which has had a lot of commentary by ourselves and the media, there’s still big challenges there. I'd say they are the key areas to keep an eye on.

Michael Sure. Anneke, what would you like to add?

Anneke

I agree with James. I will add, the food and beverage sector has actually been one of the sectors in terms of retail trade that that has been going along quite nicely. April was the first month we saw a decline in the food and beverage sector, which was the first time since we've been released from lockdown. So, it's sort of the early signs that, although conditions in that sector have been pretty good up till now, I think Australians are now starting to pull back their spend in that area. And I agree with James, once they see lower demand and coupled with high energy pricing, higher wages, costs and other key inputs in the restaurant sector, they're certainly going to be feeling the pain over the next year.

Michael People are definitely tightening their belts aren't they? James, obviously through your work at Open Analytics, you work with a lot of banking clients. What are you seeing from them in terms of the outlook for trading conditions.

James

Sure. I can separate that down into the major banks and the non-bank lending world. At the big banks, I'd say the general consensus is that there's still concern around interest rates. We’re starting to see on business lending portfolios and mortgages, that default rates are starting to tick up; they were very low in COVID but they're definitely climbing. The consensus is the effect of the rapid rate rises basically haven't come through yet. There’s generally a bit of a lag between rate rises and the effect on things like mortgage defaults. Big banks are bracing themselves for more defaults in that space.

In the non-bank lending world, there's some interesting trends there, including challenges with start-ups and newer clients obtaining funding. So, there's generally a sort of caution. Again, likely linked to inflation and interest rate rises. A lot of non-bank lenders are struggling to get funding in a lot of sensors, so it's quite challenging for startup lenders in Australia at the moment.

Michael Thank you both for your time today, that was really interesting and thank you everybody for listening. We will be discussing the economic outlook again with James and Anneke next month. Thank you both for your time.

Anneke

Pleasure. Thanks for having me, Michael.

James

Thanks, Michael.

Michael If you would like more business insights from CreditorWatch, check out our business risk index page at creditorwatch.com.au/businessriskindex.

Thank you once again for listening and we'll see you next month.

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How would you like a free resource that tells you how risky your customers are compared to the industry average? Well here it is.

In this episode we hear from James O'Donnell, Founder of Open Analytics and creator of the CreditorWatch Portfolio Risk Benchmarking Report. This free report from CreditorWatch allows you to compare the riskiness of your customer base against four key measures:

Credit Ratings (CreditorWatch RiskScore) – creditworthiness of entities in your portfolio.
Geographic Risk – risk related to the location of your customers.
Business Maturity – how long your customers have been registered businesses.
Business Type – based on criteria such as private/public/sole trader/GST registration status.

If you are a commercial lender or have a business with a turnover of at least $250 million, you can request a copy of the report here.

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CreditorWatch Chief Economist Anneke Thompson takes us through the November 2022 results for the Business Risk Index.

The highlights for November include:

B2B trade receivables are down 16% quarter-on-quarter.
Credit enquiries are up 87% YoY and are up 61% since last month.
External administrations increased 26% since last month and are up 24% year-on-year.
Month on month B2B payment defaults continue to show a high degree of volatility decreasing by 25% from last month, whilst following a generally increasing trend.
Court actions are down 6% year on year.
Yarra Ranges in Victoria is the region with the lowest insolvency risk (across regions with more than 5,000 businesses), followed by Cottesloe-Claremont in Western Australia.
The Western Sydney regions of Merrylands–Guildford and Canterbury are the regions at highest risk of default across Australia (for regions with more than 5,000 businesses).

CreditorWatch CEO Patrick Coghlan says businesses are right to take a cautious approach ahead of the Christmas/New Year period.

“Flat year-on-year trade growth in the month of November points to subdued trade activity in December, however, it appears that the RBA’s rate rises this year are beginning to bite and having the desired impact on inflation. There are still a lot of challenges out there for businesses but bringing inflation down would bode well for 2023.”

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CreditorWatch was recently certified as a Great Place to Work and also made the AFR BOSS Best Places to Work list for 2022.

So how did we get there and, more importantly, how to we stay there?

CreditorWatch CEO Patrick Coghlan and General Manager of People and Culture, Fiona Crawford, share their insights into what makes a great place to work and the importance of authentic and transparent leadership, employee empowerment, inclusion and non-work related personal growth initiatives.

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Like the rest of the Australian economy, the construction industry was getting back on its feet after the worst of the pandemic. But the sector has now been hit by a perfect storm of supply chain disruptions, cost blowouts and staff shortages as inflation and interest rates rise.

Many of these forces, particularly cost increases, are beyond the control of construction companies. But construction also has major industry-specific challenges. Construction has the worst late payment record of any industry. About 12 per cent of construction businesses are more than 60 days in arrears on their payment to suppliers. Fixed-term contracts are also placing cost pressure on contractors.

The risk is that construction collapses cascade down, creating a chain reaction of failed businesses. That could have a serious impact on Australia’s economic recovery.

In this episode of Business Insights, Patrick Coghlan, CreditorWatch CEO; Anneke Thompson, CreditorWatch Chief Economist; James O'Donnell, CreditorWatch Data Analyst and Ginette Muller Director of GM Advisory discuss the findings from our 'Cracks in the Foundation' construction white paper and the outlook for the industry for the remainder of 2022.

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Economy at turning point as positive trends continue;

Grim outlook for flood-affected regions

In our latest episode, we present the January Business Risk Index results and analysis. CreditorWatch CEO Patrick Coghlan and Chief Economist Anneke Thompson discuss the key insights.

Key Business Risk Index insights for April:

Trade receivables and credit enquiries continue to trend upwards, indicating the broader economy many have reached an inflection point.
Average trade receivables for April were at their highest level since July last year.
Credit enquiries decreased from March to April but are still up 30 per cent quarter-on-quarter.
Multiple adverse impacts will likely temper this positive data over the coming months.
The Business Risk Index national default rate remained flat at 5.8 per cent in April, however CreditorWatch forecasts a continued rise across 2022.
There was stabilisation across industry default rates in April.
Court actions decreased from March to April but are still up 12 per cent year-on-year.
Victorian Grampians is the lowest insolvency risk region with greater than 1,000 businesses.
Western Australian wheat belt is the new lowest insolvency risk region in the country overall.
The Western Sydney regions of Bringelly - Green Valley and Merrylands – Guildford are the highest risk regions in the country.
Insolvency rates in areas heavily affected by the recent floods are forecast to rise significantly over the next 12 months – 36 per cent in the Lismore area (Richmond Valley – Hinterland) and 14.5 per cent for Brisbane’s Rocklea – Acacia Ridge area.

Register to be the first to receive monthly insights from the Business Risk index at creditorwatch.biz/businessriskindex.

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Our latest episode of Business Insights is the third in a three-part series on how SMEs can best prepare themselves for uncertainty using the 3 Ps of preparation: processes, policies and procedures, and protection.

Our guest for the series is an expert in helping businesses with best-practice preparation: Natalie Ledlin, Solicitor Director at Ledlin Lawyers.

In our third episode on protections, Natalie takes us through how to protect your business if something goes wrong with your customer, and how to take security over the assets that your customer has or that the directors might have.

Contact information: nledlin@ledlinlawyers.com.au

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Our latest episode of Business Insights is the second in a three-part series on how SMEs can best prepare themselves for uncertainty using the 3 Ps of preparation: processes, policies and procedures, and protection.

Our guest for the series is an expert in helping businesses with best-practice preparation: Natalie Ledlin, Solicitor Director at Ledlin Lawyers.

In our second episode on policies and procedures, Natalie takes us through setting up payment terms, credit policies and limits, and collection procedures, as well as prioritising payments and ensuring privacy of data.

Contact information: nledlin@ledlinlawyers.com.au

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In this challenging economic climate, it is more crucial than ever that businesses are well prepared for whatever impacts come their way.

Our latest episode of Business Insights is the first in a three-part series on how SMEs can best prepare themselves for uncertainty using the 3 Ps of preparation: processes, policies and procedures, and protection.

Our guest for the series is an expert in this area: Natalie Ledlin, Solicitor Director at Ledlin Lawyers.

In our first episode on processes, Natalie takes us through the key legal considerations around customer onboarding, credit policies, prioritising payments and privacy of data.

Contact information: nledlin@ledlinlawyers.com.au

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In our latest episode, we present the January Business Risk Index results and analysis. CreditorWatch CEO Patrick Coghlan and index creator James O'Donnell from Open Analytics discuss the key insights.

Key Business Risk Index insights for March:

Trade receivables and credit enquiries up, indicating the economy many have reached a turning point for trade activity.
Multiple adverse impacts will likely temper this positive data over the coming months.
The Business Risk Index national default rate was up marginally to 5.8 percent, from 5.7 per cent in February, however CreditorWatch forecasts a continued rise across 2022.
Credit enquiries were at 219,428 for March – the highest monthly number since July 2021 and second highest since March last year.
Court actions were at their highest point since March 2021 indicating that enforcements and collection activities are returning to normal levels.
Trade payment defaults are at their equal highest point since October 2020, another leading indicator of rising insolvencies.
The probability of default for the hospitality industry jumped from 6.7 per cent to 7.2 per cent from February to March. Arts and Recreation and Transport have also deteriorated.
Trade payment default rates in the Lismore region have increased from February to March but remain well below the national average.
The net result of the CreditorWatch Business Risk Index and our broader credit indicators is that the economic outlook is bumpy, with multiple negative impacts conspiring to drag on growth.

Register to be the first to receive monthly insights from the Business Risk index at creditorwatch.biz/businessriskindex.

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In this episode of Business Insights, we take you through how to improve the strength of your ledger, with CreditorWatch's Trade Consultant for DebtorLogic, Lucinda Judd. In these times of uncertainty for businesses, ensuring that your customers are reliable and able to pay on time is critically important for your cash flow.

CreditorWatch's DebtorLogic tool can help in two ways: by helping to identify those customers that are most likely to pay late or not at all and also allowing you to target those businesses in your industry that show the best payment behaviour.

To find our how DebtorLogic can help your business improve the quality of its ledger, get in touch with Lucinda at lucinda.judd@creditorwatch.com.au.

INTERVIEW TRANSCRIPT

Hello and welcome to the latest episode of Business Insights. I’m Michael Pollack, Head of content at CreditorWatch and I'm joined today by Lucinda Judd, Trade Consultant for DebtorLogic at CreditorWatch. Thank you for joining us, Lucinda.

Lucinda

Hi everyone.

Michael

Now, we are obviously here today to talk about all things DebtorLogic, but let’s just start with the lay of the land. We're seeing that a lot of businesses are currently in a very different state to what they were pre-COVID which has created quite an uncertain trading environment.

CreditorWatch’s Business Risk Index is showing that trade receivables continue to decline and court actions are picking up which is an indicator that the banks and the ATO are resuming their regular cycle of collections and CreditorWatch expects insolvencies to continue to increase across 2022.

As the RBA has also noted, the recovery is going to be long and protracted, so as Omicron or Deltacron as we're now talking about, and the devastating floods on the East Coast have shown, these externalities can be really swift and severe and can impact the entire economy.

So, I think it's fair to say the businesses that come out of this in the best shape will be those that act now to get a jump on their competitors. Would you go along with that Lucinda?

Lucinda

Oh, definitely I think being proactive is key at the moment due to all of the uncertainties that we are seeing in the market at the moment.

Michael

Sure. So, could you just tell us how businesses can best utilise data to strengthen their balance sheets and improve the quality of their ledgers?

Lucinda

Yeah, look I think you kind of hit the nail on the head there with the business conditions at the moment. [They’re] really really uncertain and I think we're in a time where creditors can probably no longer really rely solely on those traditional risk indicators to identify distressed business.

Trade payment data I think can really help by providing creditors a bit more visibility on payment behaviour across the market. You can see a customer's propensity to pay an outstanding amount and also any delinquency within your ledger as well, which is great that you've got that additional visibility there. Generally speaking, deteriorating payment behaviour is a lead indicator that an entity is experiencing financial difficulty so by being on top of these early warning signs of risk and trade activity. Our customer base can really take a more proactive approach to their debt management.

Michael

That's really the key isn't it - detecting those early warning signs. So how can CreditorWatch’s DebtorLogic tool help in this regard Lucinda?

Lucinda

DebtorLogic is my bread and butter. It provides a data driven analysis of your ATB or your aged trial balance to highlight your risky debtors, late paying behaviour and also put some accounts to prioritise for collections.

It's going to break down your information into some really easy to read graphs and charts so that your collections team can quickly establish risky debtors in conjunction with an outstanding balance as well. So, you can very quickly and easily segment your ledger into a risk category so you can see who's got a cancelled ABN, whose got court actions or payment defaults and just focus specifically on that.

We also offer really customisable reporting functionality within that field so that you can download reports from the system on your chosen filter. So, whether it be a risk category, which accounts are falling into a specific aging bucket state or industry, risk scores so you can take a really targeted approach and create some more prioritised call lists for your collections team based on that that data that we're seeing.

Michael

Sure, so DebtorLogic obviously not only allows you to identify delinquent payers or customers that are paying late for example, but it can be used proactively as a sales tool. Tell us a bit about how that works.

Lucinda

Yeah, definitely. So DebtorLogic is going to also profile your customers essentially based on high risk and low risk. So, if you see that a customer is falling into a low-risk score category of an A to a C, then your sales team could potentially choose to focus on that list of debtors for further credit extensions, some bonuses or incentives for continuing on with that low risk behaviour.

But also having the industry and state breakdowns allows them to target maybe an industry that's been doing quite well throughout this COVID period, through the floods, through everything that we're seeing in the market at the moment, you can target those strengths within your ledger whether it be for sales or marketing, for prospects, or even you know potential credit extensions as well.

Michael

Great. Now what are some of the other ways that DebtorLogic can help with credit management? How can it help improve collection rates for example?

Lucinda

Yeah, really great question. So, one of the real strengths within DebtorLogic is our customer insights graph so we actually combine small business and corporate trade data to help you understand really what sort of risk a customer represents to your business by looking at how they pay their bills across the market.

So that's what customer insights is focusing on is really comparing how you're paid against the market. So, this allows your collections team to target you know, maybe the accounts that are paying you 90 plus days where they're paying the rest of the market one to 30 days that is straight away seen as some low- hanging fruit and those accounts falling into that category can be identified as low-hanging fruit and the accounts to target for collections.

You know this is going to help to improve your collection rates within your portfolio but also your DSO as well. So really great visibility using the customer insights graph.

Michael

Great. Now CreditorWatch also offers a free ATB analysis to help businesses improve the quality of their ledgers. Could you just tell everyone what this involves?

Lucinda

Yeah, exactly so the free ATB analysis is a great way for our customers to see DebtorLogic in action and to get some rich data insights on their data specifically so rather than us just going through some dummy data, we actually book in a time, upload one of your ATB reports and go through all of those findings together.

So, we'll schedule in a 20-to-30-minute session and discuss all of those findings together and I would definitely recommend going through that exercise, especially now just to get a really good health check on your ledger at the very least.

Michael

Thanks, Lucinda, for that great overview of DebtorLogic. Now if you'd like to take up her offer of a free ATB analysis. You can get in touch with Lucinda at lucinda.judd@creditorcatch.com.au. You can also ask any questions you might have about DebtorLogic and that email address you'll find in the podcast description as well. Well thank you Lucinda.

Lucinda

No, it's lovely catching up Michael thanks a lot.

Michael

No problem at all. It was a pleasure. Thanks for listening everybody. Some really valuable information there I'm sure you'll agree on how to protect your business in this uncertain trading climate. All business insights will be back next Wednesday with more tips on how to protect and grow your business. So please join us then. Bye for now.

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The Personal Property Securities Register (PPSR) is an essential facility for all businesses leasing or selling goods or services on credit. But it is also widely misunderstood by small business owners. In this episode of Business Insights, Paul Mead, PPSR Sales Specialist (NSW) and Jason Sutherlin, PPSR Sales Specialist (Victoria) discuss the essential elements to consider when registering assets on the PPSR.

Key points:

The purpose of the PPSR
Why searching on the PPSR is important for businesses
Types of property not covered
Key considerations for businesses when registering personal property on the register
Why it is important to register within set time frames the different types of property

Read more on how to protect your assets using the PPSR here.

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In the latest episode of Business Insights we speak to CreditorWatch's Victorian Sales Manager Hilbert Klaster about supplier hopping - the practice of moving from one supplier to another, leaving a trail of unpaid debts - why it is on the rise and how businesses can avoid being caught up in it.

Key points:

What is supplier hopping?
Why it is on the rise.
How can you identify a supplier hopper?
What can creditors do to protect themselves from the effects of supplier hopping?
What should creditors do if they suspect a debtor/customer is supplier hopping?

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The Australian economy is rife with uncertainty due largely to the ongoing impacts of the COVID-19 pandemic and its multiple variants, such as supply chain disruptions and labour shortages, but also the war in Ukraine, floods on the east coast, rising inflation and the impending Federal Election.

In our latest Business Insights episode, CreditorWatch CEO Patrick Coghlan and Shift CEO Jamie Osborn unpack what all this means for business operators and how they can best prepare themselves. They also discuss the main takeaways from CreditorWatch's Outlook 2022 - Australia's 'phantom' lockdown threatens sustained economic recovery whitepaper.

Key points:

Managing uncertainty and driving success as a business operator
Whether we will see a K-shaped recovery, with big winners and big losers
The prospects for SMEs for the remainder of the year
The biggest challenges currently confronting the business community

Download our Outlook 2022 whitepaper to read the business forecasts from a host of Australian business leaders including Ray White Chief Economist Nerida Conisbee and Managing Director of Open Analytics, James O'Donnell as well as Patrick and Jamie.

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- There was a small increase in trade activity for February - an encouraging sign but it is too early to tell if it is the beginning of a sustainable pick up in trade activity. The impact of the east coast floods is yet to be seen in CreditorWatch’s data, but it will undoubtedly drag down trade activity.
- Credit enquiries were at 211,357 for February – the highest monthly number since November 2021 and second highest since July.
- Court actions have seen a significant increase in the last quarter when compared to the corresponding period last year. We are seeing early signs of enforcements and collections activities returning to normal.
- External administrations increased 29 per cent from January to February.
- Trade payment defaults jumped 35 per cent from January to February.
- The net result of the CreditorWatch Business Risk Index and our broader credit indicators is that trade activity remains subdued with the impending economic impacts of the east-coast floods expected to exacerbate this.

Register to be the first to receive monthly insights from the Business Risk index at creditorwatch.biz/businessriskindex.

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In our latest episode, we present the January Business Risk Index results and analysis. CreditorWatch Head of Content Michael Pollack and index creator James O'Donnell from Open Analytics discuss the key insights.

Trade receivables continued to decline – now down around 50 per cent on pre-COVID levels. The number didn’t ‘pop’ in December last year as was widely anticipated. Then the number fell dramatically in January 2022, delivering a 45 per cent contraction for the January 2021 ‘quarter’ compared to a year earlier.
Court actions were up a massive 58 per cent over the last quarter compared to the corresponding period last year
The boost in trading activity anticipated for the holiday season was dimmed by the arrival of the Omicron variant in the first week of December.
The number of credit enquiries has been trending down since July 2021. Following a lift in November, enquiries have fallen away heavily, precisely the opposite of what was expected.
This finding is consistent with messaging from the RBA that it has no short-term plans to hike rates although pressure is mounting, with the futures market having priced in a rise in May.
Western Australia is the best performing state in terms of probability of default with Victoria and New South Wales still feeling the effects of extended lockdowns in 2021.
The net result of the CreditorWatch Business Risk Index and our broader credit indicators is that the Australian economy has some way to go before we can talk about a sustainably strong recovery.

Register to be the first to receive monthly insights from the Business Risk index at creditorwatch.biz/businessriskindex.

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In our latest episode, we present the December Business Risk Index results and analysis. CreditorWatch Head of Content Michael Pollack and index creator James O'Donnell from Open Analytics discuss the key insights.

December trading activity was the lowest since the pandemic began due to the impacts of Omicron. Down 45 per cent on December 2020.
We expect trade activity to continue to slide over H1 2022.
WA continues to be the best performing state as a function of its economy continuing to operate throughout 2021 while many other states were in lockdown.
Queensland and Victoria are struggling to recover from a decline in the tourism trade and extended lockdowns respectively.
Newcastle was the biggest improver among metropolitan areas as its two largest industries, manufacturing and construction, continued to operate unaffected by Omicron in December.
Meanwhile Melbourne continues to decline on the Business Risk Index as the hangover from extended lockdowns remains.
Defaults, external administrations, payment arrears and court actions have dropped. This is typically the case in December so we will be keenly watching the January data for the size of the bounce.

Register to be the first to receive monthly insights from the Business Risk index at creditorwatch.biz/businessriskindex.

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In our latest episode, we present the November Business Risk Index results and analysis. CreditorWatch CEO Patrick Coghlan and index creator James O'Donnell from Open Analytics discuss the key insights.

Economy fails to bounce back as strongly as expected post-lockdowns.
Trade activity continues to fall.
Defaults, external administrations, payment arrears and court actions have jumped.
Credit enquiries jumped 16.6%, indicating that business confidence is returning.
States that shut their borders but kept their internal economies going, such as WA and QLD are seeing their metro areas bounce back fastest.
Melbourne and Sydney CBDs remain the worst performing capital city centres with probability of default at historic high-levels due to depressed trade activity continuing post-lockdown.
Credit behaviour and performance scores are improving among the hardest-hit Western Sydney suburbs including Bankstown, Burwood, Ashfield and Strathfield.

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In our latest episode, we present the October Business Risk Index results and analysis. CreditorWatch CEO Patrick Coghlan and index creator James O'Donnell discuss the insights.

Our comprehensive October Business Risk Index report contains a number of key insights including:

Three of the top five regions in Australia with the lowest risk of default are in regional Victoria – surprising given the heavy and enduring lockdowns the state has been under
Expect insolvencies and credit defaults to rise across the country in the short term
Trade turnover was weak in October, however, we still expect to see significant growth over the coming quarter
The Gold Coast and Western Sydney remain the highest risk regions in the country
Regional areas are outperforming urban and city centres. We suspect this is due to industry related factors including strong performance in sectors of the economy that are concentrated in high-performing regional areas such as agribusiness, mining, manufacturing and renewable energy.

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