Number Of Liquidated Companies Soars

Published: Tue 25 Nov 2008 02:43 PM
Tuesday, 24th November
Number Of Liquidated Companies Soars As New Zealand Business Owners Face Cash Flow Issues Too Late
Too many New Zealand businesses are going bust because they put off asking for help until it is too late, according to the Interface Financial Group, the country’s largest alternative funding source for small businesses.
Chris Reid, NZ director of The Interface Financial Group, which provides invoice financing (often called invoice discounting) to small and medium size companies, believes many companies are failing unnecessarily because the owners are leaving it too late before asking for help: ‘Business owners need to be looking for solutions much earlier,’ says Chris. ‘Interface has had to turn around 20 applicants away over the last three months, due to bad credit. They have been too far gone for us to help them. In 2007, we turned less than 20 away in the whole year.
‘Many people also still think that, when push comes to shove, their bank will lend them a helping hand. This might have been the case in the past but now the banks have really tightened their criteria. They just don’t want to take the additional risk in the current economic climate.’
According to the New Zealand Credit and Finance Institute, 242 New Zealand businesses were liquidated during October 2008. This is a significant 30%+ jump up from the 185 companies that failed in February 2008.
Analysts don’t expect the economic crisis to end anytime soon. Research by credit information provider, Veda Advantage, reveals that 73% of SMEs have concerns about New Zealand’s economic future. 41% of businesses state that their debtors are taking longer to settle accounts compared with a year ago. On top of this, 26% of businesses are finding their own debt levels harder to service than a year ago, with 8% admitting to having ‘real difficulty managing business debts’.
Chris suggests that the best way to prepare for tough times is for business owners to plan well ahead and start thinking about their options now:
‘There is a head in the sand mentality out there at the moment,’ explains Chris. ‘Business owners think that they will just muddle through somehow. They don’t think about what they will do if they can’t pay their creditors. Preparing for the worst and having solid solutions and plans in place will ensure that less New Zealand companies join the ever growing list of failed enterprises.’
Cash Flow Tips:
- Get invoices in on time. Large companies have rigid cut-off times- being disorganised with paperwork and invoicing late will have an extremely negative impact on cash flow.
- Make sure you have adequate systems in place. A high tech cash flow management programme can be a lifesaver
- If you are experiencing problems, speak to your bank and your accountant
- If they can’t help you, speak to someone else. Seek alternative solutions

Next in Business, Science, and Tech

Temporary Traffic Management Can’t Be The Scapegoat For Ineffective Systems And Planning
‘Dark Oxygen’ Discovery Underlines Need To Stop Deep Sea Mining
By: Greenpeace
What Happens When The Global Banking System ‘Goes Down’?
By: Launch PR
First-of-its-kind HIV Cure Case Among Scientific Highlights At AIDS 2024
By: International AIDS Society
Further Sesame Seed Recalls Due To Salmonella Fears
By: New Zealand Food Safety
What is CrowdStrike Falcon and what does it do? Is my computer safe?
By: The Conversation
View as: DESKTOP | MOBILE © Scoop Media