What's New At Credit Matters?

This month has involved a number of projects which have not yet been completed. It is one of those things however when the best laid plans do not always eventuate.

The one area of business community which is booming at the moment is work for tradies. Tradies are in demand everywhere. Unfortunately, tradies are also taken advantage of all too easily because their focus is on doing the work, not on managing the risk to their business or assets. If you know any tradies who might benefit from our free feature A Guide to Help Business Tradies Get Paid. The guide can be downloaded from www.creditmatters.com.au and can easily be installed on their phone or tablet for easy reference.

If you or someone you know need help with outstanding and past due invoices, help is available. Just refer to the brochures of the two qualified and experience credit and accounts professionals also mentioned in our Special Topics segment in this newsletter.

I you wish to promote your business services at an affordable rate, contact Kim at kim@creditmatters.com.au. You will be surprised at the value we have to offer.

Quote Of The Month

“You don't find light by avoiding the darkness.”

S. Kelley Harrell

Monthly Business Observation

If you don’t look for problems, and there are always problems in business, then you cannot expect to survive unscathed from the effects of any problems when they occur. In business therefore, seeking to confront potential problems, means in some respect, looking for them. Too many businesspeople do otherwise and try to close the stable door after the horse has bolted by suddenly being proactive and end up throwing good money after bad.

There are many examples such as failing to acknowledge that borrowing is not always beneficial, even if it classed as “good credit.” This has been acknowledged time and time again during this pandemic. Businesses are still closing down because of debt owed, and many more will close down in the months and years ahead.

Being aware that a recession was pending, and doing something proactive about it, was another failure, after all, there was plenty of warning from a number of perspectives. Yet, there are still businesspeople today, who act as though they are immune from the effects of a recession because they think all is well.

A failure to collect debt owed is another problem with management still believing there is no urgency in getting paid for outstanding invoices. In Australia, preferential payments and repaying insolvency administrators is going to be a real problem in future for these businesses.

The new insolvency provisions rushed through by the government are going to give directors and many bad business owners yet another option to avoid their debts. Creditors as a result, are going to find that as many of their customers close down they will be powerless to collect their unpaid invoices.

No one really knows the number of zombie businesses in the business community who thought government handouts would allow them to keep their employees in a job without further costs to their own business. Again, many of these businesses are going to find their employee obligations have increased through the benefit period. This cost, and the calling for payment from their creditors’ unsympathetic insolvency administrators, are going to cause real problems.

Even if businesses are taking proactive actions on perceived risks in the future, there is no guarantee the business will not bear additional costs. What can be said, is these businesses and their owners attempt to find potential problems, they can create a plan to minimise any damage. This means they have a far better chance of survival, or of keeping their capital and reputations relatively in intact, than those that do nothing.

This Month's Business Inconvenient Truth

As I study the world around us at the moment, I see so many different aspects of business that seem almost alien to what was considered normal in years gone by. One aspect in particular is becoming evident. It is, how easily it is for debtors to avoid paying their debts.

Consumer finance in particular these days is an obvious sector where businesses are being ripped off because debtors are favoured and are not penalised for untruths and fraud. Meanwhile all costs and responsibilities to prove the debtor is at fault, are stacked against the creditors.

It is also becoming evident in the B2B credit environment, there are similar conditions working for debtors and against creditors.

Notwithstanding such disadvantages for creditors, the creditors must also share some of the blame for a lack of action in protecting their rights. Unfortunately, many creditors appear unwilling to learn from the causes of bad debt write-offs and fraud, or initiate actions, and to protect their rights.

Furthermore, debtors will continue to be ripped off as this recession deepens if they do not start standing up for their rights and learn from their losses.