Media Release
New Zealand Credit and Finance Institute
Sunday September 9th, 2007
Credit Perception Impacts on Lending Realities
A professional organisation representing 500 of the country’s credit managers is warning businesses to batten down the
hatches following the recent spate of financial insolvencies
New Zealand Credit and Finance Institute (NZCFI) president David Young says the recent collapse of nine finance
companies in five months will severely dent consumer confidence resulting in less funds available for lending and,
longer repayment periods in some instances.
“Credit is based around a belief that money will be repaid. Once that faith has left the market, it’s difficult to
rebuild confidence.”
Fundamentally, the economy was still in relatively good shape but perception had a huge impact on credit, he said.
“Rising fuel prices and mortgage interest rates mean many people have less disposable income. This factor combined with
a tightening of funds available for consumer purchases means we can expect a slow down in consumer activity,” Mr Young
said.
For trade creditors, the most likely result was longer repayment periods.
“The prudent thing for businesses is to ensure they have a well resourced credit department with professional staff who
understand the current credit climate and can a maximum return for their employers.”
PricewaterhouseCoopers head of advisory partner John Waller is one of 14 industry experts scheduled to speak at the
NZCFI’s annual conference in Wellington next month. Mr Waller’s presentation on finance company insolvencies will
provide an insight into the reasons behind the current spate of insolvencies as well as explain the challenges facing
finance companies.
The conference will be held in Wellington on October 25 and 26.
ends