As was widely expected, the RBA decided to keep the official cash rate on hold at 0.25 of a percentage point.
CreditorWatch chief executive Patrick Coghlan said the expected hold on interest rates is another sensible measure to ensure that cash stays in the economy as much as possible.
“This follows last month’s extension of the JobKeeper and JobSeeker schemes that demonstrate the extent to which the government is having to step in and support the economy,” he said.
However, Mr Coghlan was concerned that government support, in whatever form, will have to come to an end eventually, and when it does, there will be a seismic shock as companies have to fend for themselves or admit defeat.
However, he noted CreditorWatch’s recent data showing that there was a 15 per cent increase in credit enquiries in the first few weeks of August compared with the July average.
He believed this is an important indicator that businesses are starting to onboard new customers.
“While we can’t count on green shoots just yet, it’s my view that government stimulus packages should be eased off, where possible, to avoid just kicking the can down the road,” Mr Coghlan said.
With 10 per cent of all businesses in Australia in danger of failing because of lack of cash, Mr Coghlan said we could potentially end up seeing 10 years’ worth of administration in the next six months.
“Therefore, I urge business owners to seriously ask themselves if their companies are going to be viable, and if they’re unsure, they should seek advice sooner rather than later,” he said.
“Finance experts, restructuring specialists or bankers — they’re here to help.”