Coronavirus is affecting Australia’s industries differently — but all business owners are bracing for long-term uncertainty

tech ASX

Timelio co-founder Charlotte Petris.

The economic impacts of COVID-19 are already beginning to hit businesses across Australia.

With financial markets, crude oil, and Bitcoin all plummeting, some relief is being made available with government efforts hoping to bring business spending forward, by investing in productive assets, with the recently announced stimulus package.

The question, however, is whether it’s enough. 

The chaotic effects of the virus aren’t limited to financial markets and commodities. The virus is also affecting business operations across every sector. 

Global reaction 

Bain & Company’s Situational Threat Report Index is continuing to evaluate the effects of coronavirus on global business, grading it from 0 (a negligible threat) to 10 (severe global recessionary conditions).

As of March 12, the index stood at 6, with markets and the public in multiple major nations reacting strongly. 

Evaluating the effect of coronavirus on global business.

At that level of threat, we should be focused on activating first-level contingency procedures which include mitigating immediate threats to employees by restricting travel, reviewing and even deferring non-strategic investments (against the government’s hopes of us pumping money into the economy) and planning for a three-month recession. 

Australian action 

What are Australian businesses doing to brace themselves for longer-term uncertainty as they grapple with short-term disruption?

At Timelio, we have seen a 50% increase in enquiries for funding in recent days. Business owners are looking to secure cashflow, while some are also looking to take advantage of sudden opportunities. 

FMCG is one industry that is being hugely impacted by unpredictable consumer behaviour.

With many of our customers experiencing a more than 25% increase in sales over recent weeks, they are conversely impacted by shipment delays due to additional quarantine requirements and additional costs of importing due to the weakening Australian dollar.

Some have been able to make up the delays by air freight, while others are desperately trying to avoid being out of stock with retailers by performing extensive reviews of their supply chain and future deliveries to ensure sufficient production time to meet demand. 

Some manufacturers have had to delay new product lines as they cannot get stock manufactured in time. This is prompting businesses to diversify operations by looking at new geographical regions for manufacturing partners. 

Other businesses that sell through multiple channels are experiencing a reduction in store sales, but an increase in online demand. Many of our consulting and labour-based businesses have secured government contracts which are less likely to be impacted in the short term, and with a workforce of contractors, they can easily scale up or down as demand requires. 

In the construction and infrastructure industry, our customers have been winning new contracts over recent weeks with strong order books. While we are currently seeing a limited impact on supply chains, we expect to see a more delayed impact than in the consumer goods industry.

As consumer confidence weakens and coronavirus hits builders’ supply chains, projects will be delayed which will make it harder to secure funding from banks. 

Agriculture is another industry not yet experiencing a significant impact from the virus. Many of our growers are seeing an increase in sales, however, there is expected to be some disruption to those importing and exporting.

Our farming customers are most concerned right now about commodity prices for grain, meat and dairy as many in the agriculture industry are still recovering from the impacts of bushfires. 

Stronger together 

By far, the biggest challenge we are seeing at Timelio is the effect of stock delays, extending the working capital cycle and funds required beyond ‘normal’ and acceptable levels. 

As the pandemic deepens, dealing with such a fast-changing and volatile situation will be challenging.

Starting now, it is incredibly important that fintechs work together with customers to do significant contingency planning, and most importantly, get prepared

NOW READ: Coronavirus and commercial contracts: What happens if you can’t meet your obligations?

NOW READ: Hairdressers and beauty salons at risk from coronavirus, and local councils must help, says industry chief

Trending