The issues the construction, retail and transport sectors are having to deal with in the face of the COVID-19 pandemic are being compounded by cashflow problems caused by late payments.
According to the latest Australian Late Payments report for the June 2021 quarter by analytics provider illion, businesses across the country recorded a deterioration of 0.4 per cent in late payment days from the March 2021 quarter, with construction, retail and transportation businesses experienced a continual increase in payment times over the past year.
“Despite some level of recovery following the worst of the pandemic, businesses are still struggling to improve their payment times,” illion CEO, Simon Bligh, said. “While the situation is not critical, we may see a long period of deterioration leading to a slump in business confidence over 2021 or beyond. The next six months will be the critical period, as businesses come off government lifelines and consumers start closely examining their finances.”
During the June quarter, the construction sector posted a 5.2 per cent year-on-year deterioration in late payment times to 10.8 days, which illion noted is a fiigure not seen in over three years.
“Construction companies are having difficulty coping with the current economic environment, with payment times worsening month after month since the pandemic began,” Bligh said. “However, upcoming infrastructure projects – such as Victoria’s Big Build and the federal government’s $1.5 billion infrastructure stimulus package – could potentially offer a lifeline over the next few years.”
Retailers posted a 0.1 per cent quarterly deterioration in late payment days during June 2021, and a 3.3 per cent worsening on thge same time a year ago. illion’s research reveals that payment times in retail have deteriorated by nearly 11 per cent since pre-pandemic times.
“While government stimulus and cashed-up consumers have largely prevented any large-scale disasters, the industry still faces numerous challenges over the remainder of the year, including patron restrictions, the threat of future lockdowns, and uncertain financial support programs,” Bligh cautioned.
While the transportation sector experienced only a mild deterioration in payment times over the last quarter and past year, since the March 2020 quarter, the sector recorded a 22.5 per cent deterioration, making it one of the worst-performing sectors during the pandemic according to the report.
“With commuters staying at home across major cities and a widespread decrease in mobility experienced by the broader populace, transport businesses could struggle to recover over the remainder of 2021,” Bligh pointed out. “The sector was also very much weakened by the shutdown of international flights, a situation which could have a domino effect across many other industries.”
