Lowest risk for Ballarat businesses

BALLARAT has been named the region with the lowest risk of business failure in Australia by the November CreditorWatch Business Index report.

The index is made up of areas with more than 5000 people, and Unley and Norwood-Payneham-St Peters in South Australia took out second and third place respectively.

Regional areas with lower commercial rents and an older or wealthier overall population were more likely to rank higher.

Ewen Fletcher, member of the Commerce Ballarat board, said one of the reasons Ballarat may have performed best is due to a large number of established businesses.

“The figures would be skewed heavily by the fact Ballarat has a lot of longstanding businesses,” he said.

“A lot of the other parts of the report which show financial pressure in the economy we are seeing with a lot of our members.

“While Ballarat has the lowest default rate predicated over the next 12 months, that’s not to say that there’s not a lot of pain out there.”

The businesses expected to have the largest rate of failure over the next year are those in the food and beverage services industry.

Mr Fletcher said the new State Government mandated food safety standards that came into effect earlier this month will only worsen prospects.

“They are at a significant cost for venues, especially smaller venues where the actual owner will have to take time away from the venue to get that certification,” he said.

“That will have a huge impact.”

The index also revealed that external administrations are on the rise in Australia, increasing by 26 per cent.

“The fact that almost every sector has seen double-digit increases in the rates of business failures across 2023 is truly shocking,” said CreditorWatch CEO Patrick Coghlan.

“When this is viewed in the context of our other key business risk indicators, such as the steep decline in the average value of invoices and the rise in B2B payment defaults, it is shaping up to be a very challenging 2024 for Australian businesses.”

The average value of business invoices in Australia over the last twelve months have dropped by 34 per cent and CreditorWatch chief economist, Anneke Thompson, said rising interest rates and low consumer confidence have led to the downturn in invoice value.

“The velocity of the drop is very large, and indicates that business activity is seriously slowing down, particularly among small businesses,” she said.

“Very large migration numbers have potentially masked some of the slowdown in spending by consumers, as migrants have added to the overall pool of consumers.”