As the economic ripple effects of the coronavirus hit Australian businesses, MyCRA Lawyers has issued a warning to small to medium businesses to contact their creditors if they are struggling to pay their bills and apply for hardship before it is too late.
With the Queensland government announcing relief measures for small to medium business in the form of a six-month deferral of payroll tax obligations, MyCRA LAwyers CEO Graham Doessel said: “It’s important to remember that while it’s extra time to pay, it doesn’t take the debt away.
“While to begin with it was just tourism operators and seafood exporters, the risk of an extended and prolonged economic downturn is real and affecting the entire economy.”
He cautioned that even though the tourists and customers may have stopped, the bills won’t stop and that can mean defaults on people’s credit files.
“That may not sound serious, but as soon as you are 14 days or more late in making a loan repayment, it will go on your comprehensive credit file for two years,” he said.
“This will impact your ability to access credit. Get a default or a court judgment on your file and you will be feeling the financial symptoms of the coronavirus for five years.”
He advised SMEs who find themselves financially affected by the virus to consider making a list of their bills and contact each credit provider (in writing, if possible) to let them know the circumstances and to check no bills have gone unpaid.
“If you have seen your cash flow decimated due to the coronavirus, reach out to your creditors and ask for some breathing room. Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations,” Mr Doessel said.
“Lenders and companies like Telstra, Optus, AGL, Origin Energy and the like all have hardship policies for people who are genuine victims of circumstances beyond their control.”
‘Australia to be hit hardest’
Australia will be one of the countries most affected by the economic fallout of the coronavirus, the OECD has said in its special research paper on Monday, in which it characterised the virus as the greatest danger to the global economy since the 2008 financial crisis.
“The adverse impact on confidence, financial markets, the travel sector and disruption to supply chains contributes to the downward revisions in all G20 economies in 2020, particularly ones strongly interconnected to China, such as Japan, Korea and Australia,” the OECD said.
It explained that Australia should look at stimulus measures, including additional precautionary reductions in policy interest rates, to restore confidence and reduce debt-servicing costs.