How to avoid ‘risky business’, CreditorWatch paper explains

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The digital credit bureau has released a new paper on how businesses can reduce risk amid economic turmoil.

an article titled Risky Business and How to Avoid It: Bare Finances, which draws attention to the various risks to which companies are exposed in the current economic environment. The top three challenges are inflation, interest rates and lack of skills.

Other issues touched on were productivity, climate change, the accommodation crisis, supply chain disruptions and geopolitical uncertainty.

This whitepaper provides insight into what businesses can do when customers feel financial pressure and may be struggling to meet their ongoing financial commitments.

This insight was compiled from various industry experts, including John Field, Chief Executive Officer of Reworq Consulting. Roberto Bastos, Head of Credit Ratings at ANZ. And he’s Nick Pilavidis, the CEO of AICM.

CreditorWatch CEO Patrick Coghlan shares what the current economic outlook means for businesses, finding new ways to optimize working capital, and how credit managers view the commercial outlook. stressed the importance of companies getting as much information as possible at this time about key factors. .

“It is important to be prudent when extending credit.said Coghlan.

As COVID-19 stimulus payments were lifted, some companies were artificially aided during that period but failed to address operational issues. These are among the companies that are currently bankrupt. “

The Business Risk Index reveals the companies most at risk of default

According to CreditorWatch Business Risk Index (BRI) October 2022, The industries most likely to default in the next year include food and beverage services (7.25%). Arts and Entertainment Services (4.62%); Transportation, Postal and Warehousing (4.57%).

In addition, the BRI found that all regions across Australia, with the exception of the Lower Hunter and Wyong regions of New South Wales, had increased default risk in the coming year.

Anneke Thompson, Chief Economist at CreditorWatch, said the October BRI “broadly reflects the economy as a whole” and said trade activity was strong but medium- to long-term risks were heightened.

The data also revealed changes in the company’s balance of cash holdings and debt levels from June 2021 to June 2022.

When COVID-19 first emerged, businesses reduced their debt by about 25% from pre-pandemic levels and increased their cash holdings by 30%.

However, according to the BRI, this has “reversed significantly” since June 2021, with most companies seeing lower cash holdings and higher debt levels.

[RELATED: CreditorWatch streamlines business payments following recent acquisition]




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