Well, we have reached the end of what has been one of the most difficult financial years for Australian businesses in recent memory. The impacts of Covid have been felt by all businesses for the entire 12 months.

Amongst the many challenges businesses have had to navigate:

- The "on-again, off-again" lockdowns across the country.

- The continued uncertainty surrounding vaccination rollouts.

- The changing messages around the enforcement of ATO debt.

- Disruption to supply chains.

- Changes in demand across various sectors of the property and construction market.

Just recently Kathmandu issued a profit warning that they had a drop in earnings of over $12 million in the last 12 months. Just how well do you think your customers are fairing?

There is more uncertainty than ever around whether or not you will be paid by your customers. The good news has been that until April, the Government stimulus and support measures have kept business insolvencies and bad debts to record lows.

The May and June numbers paint a more concerning picture about what the next 12 months may hold:

- There has been a 24% increase in external administrations over the last 3 months. Monthly numbers are now greater than pre-Covid levels.

- Leading credit bureaus are reporting an increase of 9% in payment defaults recorded over the last 3 months.

There is expected to be more pain in the coming quarter as businesses are met with more challenges coupled with decreasing Government support. Only time will tell what the total cost is going to be and just how bad the fall out of Covid will be.

There is one thing for certain though, you should be very mindful of the risk of bad debts and how the failure of one of your larger customers could affect your cash flow.

Debtor Insurance is a specialist product that helps you and your customers manage debtors and protect your cash flow from the impacts of bad debt. I am more than happy to work with you so that you are able to understand how you can best mitigate the risks of potential bad debt. I strongly urge you if you have never considered debtor insurance before now, to consider it now!

If you would like to speak more about this please get in touch with me on 0417097642 or contact me via my Contact Me page.