Rateseeker Round-Up: April Business and Finance News

Rateseeker Round-Up: April Business and Finance News

There has been some big news to come out of the business and finance sector in the past month, including improved corporate profitability and banks offering government-backed loans.

We’ve rounded up the main updates you should be aware of below.

Business report improved profitability

According to the Reserve Bank of Australia, business profitability has improved as the economy bounces back after a tumultuous year. Despite aggregate business revenue remaining weaker than a year ago, operating expenses have also decreased. Coupled with improved trading conditions and policy support, businesses have managed to maintain the large cash buffers they accumulated in 2020.

By late 2020, companies’ holdings of cash and deposits covered more than five months worth of expenses on average. Meanwhile, unincorporated businesses had more than two months worth of buffers. These savings are expected to support businesses through the recovery in 2021 and beyond.

If your business is experiencing cash flow difficulties, the Rateseeker team is here to help. Contact us today for a complimentary, obligation-free consultation.

Business confidence hits a seven-year high

The latest Roy Morgan Business Confidence Index found that business confidence in March increased to a reading of 124.0 — the highest reading in seven years. This rating is:

• The highest reading since January 2014 (131.5)
• Significantly higher than March 2020 (95.1)
• Significantly higher than the long-term average (113.6)

Note: a number above 100 signifies positive confidence, while a number below signifies negative confidence.

On top of this, Roy Morgan also reported that:

• 61.2% of businesses expect good times for the economy over the next 12 months
• 59.4% feel the next 12 months is a good time to invest in growing the business
• 52.6% expect the business will be better off financially in 12 months

Banks offer loans under the SME Recovery Loan Scheme

The Big Four banks have started offering loans as part of the Federal Government’s SME Recovery Loan Scheme. Under this scheme, the government will guarantee 80% of the loan amount, which makes it easier for businesses to quality for finance. The scheme will run until 30 June 2021.

Other conditions for the loan include:

• Businesses can borrow up to $5 million over a term of up to 10 years
• Loans can be either unsecured or secured (excluding residential property)
• Loans can be used for a broad range of business purposes, including investment and refinancing
• Interest rates are capped at about 7.5%
• Lenders can offer repayment holidays of up to 24 months
• Businesses that want to participate in the scheme must have a turnover no greater than $250 million.
• In addition, businesses must either have received the JobKeeper payment between 4 January 2021 and 28 March 2021, or be located or operating in eligible local government areas impacted by the floods in March 2021

Looking to take advantage of this scheme? Reach out to us to learn how we can help you secure additional financing for your business.

Businesses hit hard by payment redirection scams

According to the ACCC, Australian businesses reported over $14 million in losses last year due to payment redirection scams. What’s more, the average losses from these scams so far in 2021 are over five times higher than this period last year.

Payment redirection scams involve a scammer impersonating a business or its employees via email and request money owed to be sent to a fraudulent account. This can involve:

• Scammers hacking into a legitimate email account, intercepting legitimate invoices, then amending the bank details before ‘releasing’ the email to its recipients.
• Scammers impersonating senior executives and requesting that staff transfer funds to them, or that they make a payment to a third party.

The ACCC advises that all organisations ensure staff are well trained in the company’s payment processes and remain aware of payment redirection scams.