As millions Australians arm up for their COVID-19 vaccination in anticipation of and with the promise of greater freedoms for the double-vaxxed, businesses forced to close during lockdown may be reviewing their situation as they prepare for re-opening and the next phase of living with COVID. For those considering investment in new or upgraded equipment, the finance situation is looking good with low interest rates in place and investment incentives still on offer through Government initiatives.
In this issue, we cover off on a range of current topics relevant to business finance across multiple sectors.
RBA September Decision
At the 7 September Board meeting, the RBA decided to keep the official cash rate on hold at the 0.1% level but to extend the timeframe for the bond buy program at a rate of $4 billion per week from mid-November to at least the middle of February 2022. This change in the timeframe reflects the effects on the economy of the Delta variant outbreak across multiple states over the past few months.
In the statement accompanying the decision, the RBA Governor Philip Lowe notes that the economy had considerable momentum prior to the current Delta outbreak and the unemployment figure had dropped to below 5%. But as a result of the outbreak and resultant lockdowns, it was expected that September quarter would record a fall in GDP and a rise in unemployment. But it is expected this decline would be temporary. A delay not a derailment of the economic recovery.
However, uncertainty exists around the timeframe and the pace for the expected bounce back. The RBA expects the bounce back from the current outbreak to be slower than that recorded earlier in 2021. To read the full statement www.rba.gov.au
National Accounts: June Quarter
The June Quarter National Accounts were released in late August and showed a 0.7% growth in the economy for the period. Treasure Josh Frydenberg said this result was above the expectations of the market and was ahead of what was forecast in the budget.
While the Treasurer stated that the results showed the resilience of the Australian economy in bouncing back from COVID, the comments were made against the backdrop of the two largest state economies facing extended lockdowns as a result of the Delta outbreaks.
While only 29 days of the June quarter figures were during lockdown, the full impact of the outbreak would be seen in the September quarter figures but no doubt being felt by businesses at the time. September quarter figures will not actually be released until early December but a 4% drop in GDP is anticipated and the Treasurer admits the figures will be challenging.
While the focus for many is on local issues and impacts, businesses in many sectors are also feeling significant effects from global events. Supply chains continue to be disrupted due to COVID and the microprocessor chip shortage which is hitting manufacturing facilities around the world.
Order books for many goods including motor vehicles, trucks and equipment are filling for local dealers but buyers face delays in delivery. Local manufacturers also face delays being unable to receive key components necessary for their production lines.
For many there is no quick fix for this situation so finding ways through via cash flow finance or embracing new processes and procedures to generate sales and income are options. If you require cash flow support finance, speak with Jade Finance about the solutions we can offer to support your business.
Temporary full expensing is available through to June 2023 for eligible businesses making acquisitions of eligible business equipment. This is an accelerated asset depreciation initiative and requires the equipment to be acquired via an appropriate finance product. Chattel Mortgage is a finance facility which allows the asset to be depreciated and is available for the purchase of motor vehicles, trucks and a wide range of plant, machinery and equipment.
Chattel Mortgage attracts the lowest interest rate of the portfolio of business finance products and we can source and structure highly cost-effective deals for all sizes and types of businesses.
Embracing and Employing Innovation
Challenging times such has been experienced through most of 2020 and 2021 require a rethink in order to keep on track and actually ahead of the game. Businesses are encouraged to embrace innovative ways of production and carrying out their activities. In particular in regard to digital technologies. The current situation has placed additional emphasis on online purchasing and click ‘n collect and businesses need robust systems in order to effectively provide these services to customers.
If your tech systems are not up to scratch to compete in your sector, speak with us about finance to acquire the latest IT and digital systems to gain that much-needed competitive advantage.
Bumper Harvest Time Forecast
Many growers and producers around the country are facing a much-appreciated bumper harvest season but may also face labour shortages which can impact output and prices. Investing in machinery to increase productivity may present an attractive prospect to optimise the harvesting period.
Manufacturers such as John Deere have recently launched several new and impressive models to assist growers to maximise their harvest. Speak with is about cost-effective finance deals on agricultural machinery and equipment.
With the prospect of better times ahead as the country approaches those key vaccination targets, be assured that Jade Finance is in a position to continue to support businesses with cost-effective finance to capture new opportunities and to adapt to a changing operating environment.
Contact Jade Finance 1300 000 008 to discuss your business finance requirements.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.