Its been well documented that August was the worst month for the Australian Stock market since October 2008, finishing down 8.6% for the month. And whilst the stock market will always ebb and flow, it is the effect on consumer confidence that has the biggest impact on the Australian economy.
Perhaps more worrying is that according to the ABS, Australian company profits are continuing to trend downwards, declining for the fifth quarter in a row in the June quarter this year. Some commentators have even suggested that Australia could be headed for a recession.
Business owners and directors therefore need to be alert for the early signs of stress in a business. This can encompass cancelled orders, late payments, margin pressures, and difficulty meeting financial covenants. The banks are very much watching for early warning signs. The number one early warning sign is a business not providing its obligatory financials on time so make sure you provide these, even if you are not particularly proud of the story they tell.
Difficult trading conditions require sound governance, a rigorous approach to cash management, an optimal capital structure, and, critically, strong relationships with financiers.
Please contact Pearl Debt Advisory to discuss any of the above.