The last few weeks of the year present a perfect opportunity to reflect on the past few months, while looking forward to what the future might have in store. Confidence indices give a valuable insight, as they show how businesses are responding to current conditions, as well as how their cash flow might fare in 2016.
The overriding feeling is that businesses are generally sensitive to conditions in the economy and the political landscape. As a result, sentiment may be strong at the moment, but there's no guarantee this will be the case further down the line.
CFOs' confidence starts to plateau
Deloitte recently questioned a number of chief financial officers (CFOs) throughout Australia to find out how their confidence fared during the third quarter of the year.
The report's authors noted a shift in sentiment over recent months, which is mainly a result of the concerns surrounding China. However, renewed optimism in relation to low interest rates and a better exchange rate helped to quell some of these worries.
CFOs may recommend that their businesses go in search of debtor finance or other vehicles to drive cash flow. This might especially be the case for companies that have strong international trade links, such as China.
Business confidence is improving
Results of the October Roy Morgan Business Confidence Index suggest sentiment as a whole is starting to improve. The index registered a reading of 119.3 during the course of the month, making it the highest level recorded since November 2014.
Analysing the reasons for this trend, the group indicated that the change in prime minister may have played a crucial role.
"Contributing to this improvement was the fact that there was a lack of major bad economic news during the month - in fact the ASX increased by 4.3 per cent," acknowledged Industry Communications Director Norman Morris.
Conditions are on an even keel
There has also been research into business conditions released over recent days. The NAB Monthly Business Survey for October showed conditions have started to level out, recording a similar result to the previous month.
The bank pointed to cautious optimism in relation to non-mining sectors, as there are high hopes other industries will pick up pace. More favourable financial conditions have been accommodated by the all-time low cash rate, which has helped firms make further investments in their operations.
Not only this, employment remains relatively low, bringing further advantages for business conditions throughout the nation.
If your business needs any help with working capital management via a business line of credit, debtor financing or equipment financing, contact Earlypay’s helpful team today on 1300 760 205 or visit our sign-up form.
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