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Preparing for FY24: Tips and tools for EOFY challenges

Australian businesses are bracing for a tough year ahead in FY24, according to CreditorWatch’s “End of Financial Year Survival Guide 2023.” 

The guide, filled with expert insights, offers crucial advice and resources to help businesses navigate the coming months. 

Key areas covered include optimising cash flow, identifying early warning signs of insolvency, and preparing for upcoming changes in Australia’s contract terms, set to take effect in November 2023. With leading economic indicators pointing towards challenges, this comprehensive guide aims to empower businesses to overcome obstacles and thrive in the face of adversity.

CreditorWatch Chief Economist Anneke Thompson warns that the discretionary goods and services sector will encounter significant difficulties in the upcoming financial year. With approximately 40% of Australian households experiencing the impact of the Reserve Bank of Australia’s 11 cash rate increases by September 2023, retail trade volumes are already declining, affecting consumer confidence. The uncertainty surrounding the peak of the monetary policy tightening cycle is expected to persist until potential cash rate cuts by the RBA occur several months later.

Labour force dynamics will also undergo noticeable changes in the coming year. Despite some confidence in job security and wage increases, the unemployment rate is predicted to continue rising due to the decrease in job vacancies and an increase in labour supply through overseas migration. This trend will likely cause workers unease and further impact consumer spending.

While trading conditions remain strong, the food and beverage industry, in particular, faces significant risks. Rising and unpredictable supply costs and softer demand pose challenges for restaurants and cafes.

Additionally, the anticipated sharp increase in energy costs, particularly gas, in September will have far-reaching implications for energy-intensive sectors. Despite inflation showing signs of improvement, rising energy prices, high-interest rates, and rents will continue to limit consumer spending, making trading conditions increasingly difficult for Australian businesses.

Strategies for businesses to get ahead

To stay ahead in FY24, businesses need to be aware of the challenging economic landscape and adapt their strategies accordingly. The report offers insights from various experts. Glenda Lewis, President and CEO at Step Out. 

Transform emphasises the importance of optimising cash flow through activities such as filing tax returns quickly, invoicing promptly, offering early payment incentives, accepting multiple payment methods, and assessing the cash conversion cycle. Prue Greenfield, Principal Lawyer – Litigation and Dispute Resolution, and Eliza Sinclair, Lawyer – Trade and Commercial at Macpherson Kelly, provide a detailed analysis of recent changes to unfair contract terms, outlining their implications for consumer and small business contracts. 

Rachel Burdett, Senior Partner at Cor Cordis, offers 11 key warning signs to identify business stress heading towards insolvency, guiding businesses on risk evaluation and governance requirements.

Despite the adversity faced by many businesses, Patrick Coghlan, CEO at CreditorWatch, remains hopeful and optimistic. He notes that the businesses that have weathered the storm of the pandemic have emerged as leaner and more efficient entities fuelled by digital transformation.

By proactively preparing for challenging conditions and striving to achieve a healthier financial position, businesses will gain a significant advantage over competitors when conditions eventually improve.

The End of Financial Year Survival Guide is available for download here.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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