Business-to-business turnover hits lowest point on record

At a time when businesses expected a boom in sales, Christmas last year saw the lowest business-to-business turnover since CreditorWatch began its business analysis in 2015.

The data is derived from looking at the invoice payments and trade receivables from thousands of businesses Australia-wide. 

CreditorWatch data analyst James O'Donnell said businesses usually experienced a significant spike at the end of the year as households shopped for Christmas but this year that spike was still in single figures at 5 per cent.

“When COVID-19 hit, business-to-business trade really fell off a cliff,” Mr O'Donnell said. “The figures we’re reporting for the December month are the worst we’ve got on record.

“What we normally see in December is a [large] spike. It was a 5 per cent spike this year. It really is quite bad.”

The results are in line with the latest ANZ consumer spending data released last week, which showed the lowest level of spending since the delta wave.

The latest CreditorWatch results were compiled before the latest “shadow lockdown” caused by the omicron surge and Mr O'Donnell said the effect of this will not be known until the January data is released.

Despite the low levels of spending and consumer confidence, Mr O'Donnell said there were some bright spots in the report including the high level of savings on business and household balance sheets due to record government stimulus during the pandemic. Added to this is the shielding of companies from debt collection activity, with some loan holidays still in place, though Mr O'Donnell said this will come to an end in 2022.

“All the new signs are pointing to the default rates rising pretty steadily over the next 12 months. We are definitely not predicting carnage though,” he said.