Early in 2021, the business media was rife with reports of an impending “fiscal cliff” due to the end of Covid stimulus packages associated with the $100bn JobKeeper scheme, which was a payment to businesses for the purpose of maintaining employees in their roles despite the downturn in economic conditions.
However, after a preceding year of extraordinary stimulus spending, government data shows that when the JobKeeper payments finished at the end of March this year, the government spending was back in line with spending prior to the JobKeeper payments commencing in March of 2020. Further, in the first month alone after the JobKeeper payments concluded, more than 90,000 people moved off welfare schemes, mainly JobSeeker (payments for which increased but have since returned to pre-Covid rates), and this is a monthly trend that has continued. The prediction is that unemployment could fall below 5 per cent next year as the government attempts to continue the momentum on the “post-Covid” recovery with their big spending budget.
The rapid growth experienced in the economy is undoubtedly a positive situation. But this rapid economic growth is also creating significant challenges for businesses of all sizes. Along with the conclusion of stimulus packages, tax concessions are largely also finished, with the ATO seeking payments that were deferred during the previous year, and bank repayment holidays are also concluding. These factors, coupled with the need for businesses to recruit more people to keep up with growth, is providing a significant cash flow problem for businesses.
At APositive, we have just come off the back of our biggest month ever with aggregate client sales doubling from the Covid lowest point. As a finance solutions service provider, this is reflective of the boom in the recruitment industry specifically; according to SEEK Australia’s May job ad figures, Human resources and Recruitment was the top industry contributing to month-on-month job ad growth, with a jump of 2.4 per cent (and noting that when recruiters are recruiting, it is a sign of increased need for resources across the economy).
APositive’s uplift is due specifically to recruitment businesses seeking finance solutions to manage this period of growth at a time when business is feeling the pinch of returning financial commitments with the end of the government and banking concessions. At APositive, we live by the mantra “cash is king” and our products including invoice finance, payroll funding, and the deferred payment plans for recruitment fees, are all contributing to the positive cash flow of our customers. Access to funding enables our clients to go after opportunities without being constrained by cash flow limitations. Our products also enable our clients to protect themselves against bad debt, further suring up cash flow reserves.
The economic data in recent months has been pointing to the likelihood of this boom, and as the stimulus packages effects potentially dwindle, it’s important for longer-term success for businesses to maintain growth momentum. If your business is in the recruitment industry and you’re feeling unsure about your cash flow, know that there are finance solutions to support your immediate and long term growth. Here at APositive, we specialise in flexible, customised solutions backed by exceptional customer service and we’d love to talk with you about how we can help.