Many Aussie retailers are feeling the financial strain and expect to explore restructuring or insolvency options in the next six months, new research from national business recovery and insolvency firm Jirsch Sutherland has revealed.
The independent survey of over 1,000 SME directors, almost one-fifth of whom are in the retail sector, identified the key sources of current stress. Cash-flow and turnover were the main stresses for over one-third of respondents with just 10% of respondents citing JobKeeper ending as their primary concern.
“More businesses fail due to lack of cash-flow than due to lack of profit,” Jirsch Sutherland partner and retail sector specialist Andrew Spring said.
“In retail, it’s even more important to be conscious of a positive cash-flow cycle, as it can be hard to manage. In these unprecedented times, it is vital to take into consideration the conditions when the government’s ‘life raft’ is no longer there.”
According to the survey, one-third of retail businesses polled have taken advantage of JobKeeper and other government stimulus measures but say they will probably have to explore restructure/insolvency solutions once they end. A further 25% that haven’t claimed the support payments also expect to consider restructuring or winding up their businesses.
“These are telling statistics and really reinforce the need for retailers to seek professional guidance early,” Spring said.
“While the government measures have helped many retailers stay afloat during these COVID times, there are others that haven’t taken advantage of or been eligible for JobKeeper and other benefits and are still facing hard decisions. Delaying those decisions is likely to only dig those businesses into an even deeper financial hole. And delays also contribute to the ever-increasing stress level of the people involved with those businesses, whether they be owners, employees or creditors.”