SMES Urged to Get Risk-Savvy

Published: Mon 16 Aug 2010 04:53 PM
SMES Urged to Get Risk-Savvy as They Face the Toughest Year Yet
Auckland 16 August 2010. The country’s small-to-medium size enterprises are urged to step up their risk assessment processes as they work hard to stay in business during the toughest year they have faced in decades.
Figures held by the country’s largest credit bureau show that just five percent of these small and medium sized businesses actually conduct proper risk assessment which includes an assessment of creditors’ ability to pay.
Veda Advantage Managing Director John Roberts says that without sound risk assessment in place these businesses will find it increasingly difficult to obtain credit from mainstream lenders.
“The days of relying on personal connections when it comes to advancing credit for products or services are well over - to stay in business companies need to know just how credit worthy their clients are and whether they can actually pay their bills,” Mr Roberts says.
Mr Roberts’ advice follows research released by Massey University’s Small to Medium Enterprise Research Centre which found that a spike in business failures and staff cutbacks may occur this year.
The Managing Under Recession report, which surveyed 1539 small-to-medium enterprises (SMEs) in 2009, found many owners had relied on personal savings to back up their balance sheets since the recession began.
Centre Director Professor David Deakins says the survey found SMEs were self-financing but he warned that when businesses exhausted their internal sources of finance they would then find it difficult to source external funding, such as bank loans.
Mr Roberts says “thanks to the recession banks have limited lines of credit so they want to know when they lend to a SME that the company has robust business practices in place – and that starts with risk assessment.”
Veda Advantage data shows a 29.72 percent increase in the number of defaults in July 2010 compared with the same month last year.
SMEs account for about 96 per cent of all enterprises in New Zealand.
About Veda Advantage –
Veda Advantage facilitates credit reference checks for New Zealand’s major banks and lenders, and underpins the ability of consumers to exercise choice in relation to consumer credit products. Veda Advantage holds files on around 97.5% of the individual credit-active population and 100% of the commercial credit-active population in New Zealand.
You can apply for a copy of your credit file at or by calling 0800 692 733. A $23 express delivery service fee is payable if the file is needed urgently, or otherwise the file will be available within 10 working days.

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