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ABS business count data doesn’t paint full picture, says CreditorWatch

Adrian Flores
Adrian Flores
17 February 2021 1 minute readShare
business count data

Recent figures revealing the number of actively trading businesses during the 2019–20 financial year don’t paint an accurate picture of the real situation, according to credit reporting agency CreditorWatch.

The latest data from the Australian Bureau of Statistics reveals that at 30 June 2020, there were 2,422,404 actively trading businesses in the Australian economy.

It also revealed that in 2019–20, there was a 2.0 per cent, or 46,651, increase in the number of businesses, with a 14.5 per cent entry rate, or 344,472 entries, and a 12.5 per cent exit rate, or 297,821 exits.

Further, through 2019–20, three industries accounted for more than half of the net annual increase in businesses, which were:

  • Transport, postal and warehousing
  • Professional, scientific and technical services
  • Healthcare and social assistance

But according to CreditorWatch chief economist Harley Dale, while it’s encouraging to see the number of Australian businesses growing during the period, he also noted concerns that the data doesn’t paint an accurate picture.

“Through no fault of their own, many of the new entrants will have since discovered that they’ve entered the market at the wrong time, with some forced to close their doors already,” Mr Dale said.

“All three top-performing industries mentioned in todays ABS data are identified by the CreditorWatch monthly Business Risk Report as having an increasing number of overdue payment times throughout 2020.”

Mr Dale said rising payment times are always a concern as it highlights a business may be in financial difficulty, potentially causing a multiplier effect across the economy.

“The withdrawal of government stimulus in March is likely to amplify this trend,” he said.

“Itll be interesting to see what the next iteration of the report shows in December when the full effects of the pandemic on businesses’ entries and exits will be revealed.”

ABS business count data doesn’t paint full picture, says CreditorWatch
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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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