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Business Risk Index results for November ’22 with Anneke Thompson

Chief Economist

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.”

Listen to Anneke’s summary of the November results below.

TRANSCRIPT

Hi everyone, this is Annika Thompson, Chief Economist at CreditorWatch.

Today we have released our Business Risk Index for November 2022, and I want her to take you through a few key insights from this data. First of all we are seeing the volume of trade receivables stagnate, which is quite an unusual dynamic for this time of year as volumes tend to increase prior to Christmas. However, this is broadly reflective of what is happening with retail trade, which declined month-on-month in October for the first time in a long while.

The second key trend we’re seeing, and this is really something we have seen over the year, is an increase in business-to-business trade defaults. And while this data does jump around a bit month-on-month, the trend line shows a clear increase since February this year.

So, what this means is that more companies are lodging a payment default against another company, which does suggest that cashflow is starting to become an issue for some businesses.

And once again, our bottom ranked locations for default rate probability are clustered around the Gold Coast and Western Sydney. The top locations and that is the locations where businesses are least likely to default, are more spread out across the country, but overall tend to be more regional or outer suburban areas, with the exception of Cottesloe-Claremont in WA and Adelaide City.

For a more detailed look at our data, please visit creditwatch.com.au/businessriskindex.

Chief Economist economicupdate economy news
Anneke Thompson
Chief Economist, CreditorWatch
Anneke joined CreditorWatch as Chief Economist in April 2022. She is a specialist researcher and commentator on issues impacting the credit industry, SMEs and the broader economy, conducting regular presentations to corporate groups. She is also a media spokesperson for CreditorWatch, regularly appearing on national television and in syndicated media. Anneke is also the Managing Director of Clio Research and formerly the National Director and National Head of Research at Colliers International Australia. She has also worked at NAB and Jones Lang LaSalle.
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