Conquering the fiscal finish line
CreditorWatch unveils End of Financial Year Survival Guide with tips and tools to help businesses tackle the challenging economic climate
Leading economic indicators point to a challenging FY24 for Australian businesses, with many having to navigate a game of survival. That’s the assessment CreditorWatch, a commercial credit reporting bureau with over 50,000 customers across Australia, as published today in its new ‘End of Financial Year Survival Guide 2023.’
Rich with insights from a panel of expert contributors, the report offers tips and tools to help businesses prepare for the next 12 months. It includes an economist’s perspective of the outlook for FY24, as well as industry-leading guidance on optimising cash flow and recognising the early indicators of insolvency, to empower businesses for growth in the new financial year. It also outlines major changes to Australia’s historically unfair contract terms, which come into effect in November 2023 and may impact businesses in both the time it takes to review and amend contracts in line with the requirements, as well as the consequences for not doing so.
Economic outlook for FY24
The upcoming 2024 financial year presents significant challenges for businesses, especially in the discretionary goods and services sector, according to CreditorWatch Chief Economist Anneke Thompson. “The impact of the Reserve Bank of Australia's 11 cash rate increases will have been felt by approximately 40% of Australian households with home loans by September 2023,” says Anneke. “Retail trade volumes are already declining despite nominal retail turnover increasing due to inflation. Australians are spending more on fewer items, depleting their savings and causing consumer confidence to reach record lows. Consumer sentiment is unlikely to improve until there is certainty that the monetary policy tightening cycle has peaked, which is still several months away from any potential cash rate cuts by the RBA.”
In the coming year, there will be noticeable changes in labor force dynamics. Although employees have had some confidence in job security and wage increases, shielding the wider economy from high inflation and interest rates, the unemployment rate is expected to continue rising. The drop in job vacancies following the surge of available jobs after the lockdown, combined with an increase in labor supply through overseas migration, indicates an inevitable increase in the unemployment rate. This trend will create unease among workers and further impact consumer spending.
Despite strong trading conditions, the food and beverage industry in particular faces significant risks in the coming year. Rising and unpredictable supply costs, coupled with softer demand, pose challenges for restaurants and cafes. Although labor supply may be more accessible, the anticipated sharp increase in energy costs, particularly gas, in September will have far-reaching implications for energy-intensive sectors. While the worst of inflation may be behind us, rising energy prices, high interest rates, and rents will continue to restrict consumer spending, leading to increasingly difficult trading conditions for Australian businesses.
Strategies for businesses to get ahead
As we move forward in FY24, it is essential for businesses to be aware of the challenging economic landscape and adapt their strategies accordingly.
Within the report, Glenda Lewis, President and CEO at Step Out. Transform discusses the importance of businesses optimising their cashflow through activities like filing tax returns quickly; invoicing promptly, offering early payment incentives, accepting multiple payment methods and assessing their cash conversion cycle.
Prue Greenfield, Principal Lawyer – Litigation and Dispute Resolution and Eliza Sinclair, Lawyer – Trade and Commercial at Macpherson Kelly dissect recent changes to unfair contract terms, offering counsel on what the changes mean for consumer and small business contracts. They outline how the laws, which come into effect in November, will apply to more businesses and transactions, include greater consequences for those that breach the contracts, and increased powers for the courts assessing them.
Rachel Burdett, Senior Partner at national business advisory firm, Cor Cordis offers 11 key warning signs to use when assessing if what feels like business stress is actually heading for insolvency. She guides on navigating risk and governance requirements and the importance of evaluating your own and your partners’ business practices.
“Despite the adversity facing many businesses across Australia, there’s plenty to be hopeful and excited about,” says Patrick Coghlan, CEO at CreditorWatch. “The businesses that have weathered the storm of the pandemic have now emerged as leaner, more efficient entities, fuelled in-part by the power of digital transformation. Those that now take proactive measures to prepare for the challenging conditions ahead and push to achive their healthiest financial position possible, will gain a significant advantage over their competitors when conditions improve.
The End of Financial Year Survival Guide is available for download here.
About CreditorWatch
CreditorWatch is a leading Australian data and technology company that provides businesses with access to unique data and innovative products. By using CreditorWatch, businesses can confidently manage their commercial relationships, improve productivity and reduce financial risk.
As a leading commercial credit reporting bureau, CreditorWatch offers a complete suite of products and data insights covering the full customer lifecycle from customer onboarding and decision automation to credit risk management and automated collection software.
Since day one we have done things differently, launching products and pricing models outside of industry norms. We continue to challenge ourselves with this approach today, innovating and evolving our offering in line with customer needs and wants. Find out more at www.creditorwatch.com.au.
