Shut borders put Queensland firms at risk

A new barometer of business risk has found firms in regional Queensland face the highest risk of default due to state and international border closures.

Digital credit reporting agency CreditorWatch launched its new business risk index for September on Wednesday, which will complement its existing business risk review.

CreditorWatch chief executive Patrick Coghlan believes it will be an invaluable tool in choppy economic conditions as major states reopen from COVID-19 lockdowns.

“Overall the economy is in a state of flux,” Mr Coghlan says.

“While this week’s reopening of the NSW economy is a positive step forward, it will only be when Victoria exits lockdowns and state and international borders reopen that any sustained recovery can be begin.”

The business risk index tracks businesses across 300 regions and numerous industries.

“It will serve as a guide for businesses when making future growth plans, as well as informing public policy decisions,” Mr Coghlan said.

In its first report it found the probability of default highest among regional businesses in Queensland.

“This is due to trading difficulties in regions such as Coolangatta and the Gold Coast, which rely on borders being open and a regular and ongoing influx of domestic an incoming tourists,” Mr Coghlan said.

In contrast, he said it was telling that two of the five regions where the probability of default are lowest are in South Australia, one of the states that has been the least impacted by border closures and shutdowns.

The probability of default by industry was unsurprisingly among food and beverage services, a sector that has been forced to close due to lockdowns.

At the other end of the scale, the mining industry has the lowest probability of default.

“While commodity prices such as iron ore are starting to drop, overall high commodity prices have supported this sector,” Mr Coghlan said.

When it comes to payment arrears, construction heads the list having been hit hardest by shutdowns in NSW and Victoria, while health care and social assistance industries have the quickest payment turnaround.

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