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More businesses sending their revenue back into the black

Adrian Flores
Adrian Flores
22 October 2020 1 minute readShare
More businesses sending their revenue back into the black

Fewer businesses are reporting a fall in their monthly revenue, according to new data, leading one chief economist to call for businesses to be eased of government support.

The latest data from the Australian Bureau of Statistics found that the proportion of businesses reporting a fall in their monthly revenue decreased from 47 per cent in July to 31 per cent in October.

The latest Business Impacts of COVID-19 Survey also showed that almost three-quarters (73 per cent) of businesses had not sought additional funds over the previous six months.

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Almost two in five of all businesses (38 per cent) reported that available cash on hand could sustain their business operations for six months or more, while 29 per cent reported that cash on hand could sustain operations for less than three months.

“More than four in five (83 per cent) businesses that did not seek additional funds said it was because the funds they had were sufficient and around half (49 per cent) did not want to increase debt,” said ABS head of industry statistics John Shepherd.

 

“For the 21 per cent of businesses that sought additional funds, the most common purpose was to cover operating costs (72 per cent).”

Responding to the ABS figures, CreditorWatch chief economist Harley Dale said it’s positive to see that business revenues are stabilising.

“Cash flow is ultimately what is going to decide whether companies survive or fold over the coming few months,” Mr Dale said.

“However, the fact that such a large majority of firms aren’t seeking new funds is indicative of the one-size-fits-all approach that the government stimulus measures have taken.

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“The likelihood is that taxpayer money is being put into companies that will fold without it and these firms are taking on business that could otherwise be absorbed by healthier companies.”

This survey is part of a series of additional ABS data to measure the economic impact of COVID-19. The data was collected between 9 October and 15 October.

More businesses sending their revenue back into the black
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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