Trade credit numbers bounce around through economic recovery
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Under embargo until 00:01am Wednesday 14th July 2021
Trade credit numbers bounce around
through economic recovery
SYDNEY, 14 July 2021 - The June 2021 CreditorWatch Business Risk Review is a reflection
of the ups and downs playing out in the economy through the COVID period. While a number
of indicators have deteriorated in June, the credit landscape is in an infinitely better position
than the outlook this time last year.
On an annual basis, it’s good news for credit inquiries. These have risen 32 per cent in June
2021 versus June 2020 - when the pandemic was still relatively dormant in Australia. This is
the ninth consecutive month credit inquiries have been up compared to the same time last
year.
“This is the part in the economic cycle when you would expect trade credit numbers to rise and
fall before they are likely to normalise in the third quarter of the year” says Patrick Coghlan,
CEO, CreditorWatch.
Total Monthly Credit Enquiries
350
300
250
200
Thousands
150
100
50
0
Source: CreditorWatch“If we look at the bigger picture, the extended lockdowns in Sydney are a stark reminder of the
economic vulnerability of some industries. We’ll need to keep a close eye on these as the first
half of Australia’s financial year progresses” Coghlan adds.
Total Monthly Credit Enquiries
350
300
250
200
Thousands
150
100
50
0
Source: CreditorWatch
External administration numbers turn around
External administration figures are up in the short term, rising 23 per cent in the June quarter.
But on an annual basis, external administrations are 21 per cent lower in June 2021 than they
were in June 2020.
“CreditorWatch’s external administration’s data reveals many Australian businesses weren’t in
a great shape even before COVID-19. This is backed up by a range of economic indicators
which emerged over 2018/19,” says Harley Dale, Chief Economist, CreditorWatch.
“It’s not surprising to see such a benign environment for external administrations at the
moment. But, looking at the first six months of 2021, these are down by twenty-five per cent if
you match them against the first half of last year which is good news for the continued
economic recovery, at least if only temporarily” Dale adds.
creditorwatch.com.auExternal Administrations
1200
1000
800
600
400
200
0
2018-08
2019-12
2021-01
2018-06
2018-07
2018-09
2018-10
2018-11
2018-12
2019-01
2019-02
2019-03
2019-04
2019-05
2019-06
2019-07
2019-08
2019-09
2019-10
2019-11
2020-01
2020-02
2020-03
2020-04
2020-05
2020-06
2020-07
2020-08
2020-09
2020-10
2020-11
2020-12
2021-02
2021-03
2021-04
2021-05
2021-06
Source: CreditorWatch
Best performing industries
Industry % of payment defaults in June
Health Care and Social Assistance 2.1%
Arts and Recreation Services 2.7%
Agriculture, Forestry and Fishing 3.1%
Worst performing industries
Industry % of payment defaults in June
Accommodation and Food Services 5.9%
Transport, Postal and Warehousing 5.1%
Public Administration and Safety 4.8%
creditorwatch.com.auDefaults show a similar trend
The number of defaults fell by three per cent in the June 2021 quarter and are down by 38 per cent
compared to the same time last year. This is good news for the economic recovery, indicating
businesses are becoming more capable of paying their bills.
Monthly Defaults
1800
1600
1400
1200
1000
800
600
400
200
0
2018-12
2020-01
2021-02
2018-07
2018-08
2018-09
2018-10
2018-11
2019-01
2019-02
2019-03
2019-04
2019-05
2019-06
2019-07
2019-08
2019-09
2019-10
2019-11
2019-12
2020-02
2020-03
2020-04
2020-05
2020-06
2020-07
2020-08
2020-09
2020-10
2020-11
2020-12
2021-01
2021-03
2021-04
2021-05
2021-06
Source: CreditorWatch
Court cases falling
The number of court cases fell modestly in June from 1,071 to 973, with these figures rising and falling
over the first half of 2021. The number of monthly court cases in June was the second lowest in over
six years.
Overall, the number of cases for June 2021 are 36 per cent lower than the same time last year. These
increased by 10 per cent in the June 2021 quarter versus the previous quarter but fell by 31 per cent
when compared to the June 2020 quarter.
Outlook
It’s likely trade credit figures will continue to be volatile for the remainder of this quarter, if not the rest of
the year. The uncertainty created by recent lockdowns and Australia’s low vaccination rate are two key
creditorwatch.com.auuncertainties confronting all businesses. Nevertheless, trade credit figures should display an overall
improving trend. If so, that will represent good news for Australia’s economic recovery.
“While this month’s Business Risk Review shows a short-term deterioration in some figures, it’s
important to be cognisant of the situation and the fact that many industries are still facing considerable
economic challenges. Applying a positive lens, businesses didn’t fall off a cliff as many feared at the
start of the year” Dale concludes.
Data accurate as of July 1 2021. ASIC data subject to change.
-ENDS-
Media Contacts:
Hayley Schubert
Sling and Stone
hayleyschubert@slingstone.com
0431 651 418
Mitchy Koper
GM Communications and Marketing, CreditorWatch
mitchy.koper@creditorwatch.com.au
0417 771 778
About CreditorWatch
CreditorWatch is a digital credit reporting agency, headquartered in Sydney. From sole traders through
to ASX listed companies, more than 50,000 Australian businesses now use CreditorWatch to make
affordable, informed credit decisions, avoid high-risk customers and ensure they get paid on time.
CreditorWatch customers can easily search for and monitor the credit history, court actions, payment
defaults and insolvency notices associated with any business entity in Australia (including sole traders,
trusts and partnerships) giving them an incredibly accurate picture of the risk posed to their business.
The company was founded in 2011 and has offices in Sydney, Melbourne and Brisbane. Find out more
at www.creditorwatch.com.au
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