Future-proofing & reducing risk vital for vulnerable companies.
Business owners are at the coalface of the economic pressure the country is now experiencing. The boom times have slowed and the real impact of Covid increasingly evident. Many businesses are feeling the pinch, especially those who were reliant on government subsidies and, as these subside, a cold reality is becoming evident – potentially over-extended cash flow.
Recent figures* reveal that liquidations were up for the first quarter of the year, higher than the previous two first quarters. There is an economic flow-on effect; if a company goes under owing money, others suffer.
Mel Curwood, Business Support Specialist for EC Credit Control Waikato, is well aware of the issues businesses are facing. As the daughter of business owners, and a business owner herself, she feels their pain.
Curwood is the daughter of parents who owned a business – and, as she grew up, saw her parents were skilled, but still lacked systems and processes ensuring they reaped the best possible rewards from their hard work: “They taught me that it’s great to have a business, create your own destiny and be your own boss. However, if you don’t have the right systems in place, you can end up being a slave to your business.”
Right now, she says, businesses are feeling particularly vulnerable: “They are coming across road blocks, be it staff shortages, financial road blocks, cash flow worries. We want them to know they are not alone.”
Curwood works with business owners feeling the pressure, helping to develop plans and processes to relieve matters. She helps businesses analyse pain points, address any historical issues, and put in place the right processes to ensure future resilience.
Some of the vulnerability businesses are currently experiencing comes from non-payments. Curwood has recently worked with a large construction firm who had been subcontracted by another contractor, who ended up not being able to pay them.
“The subcontractor I worked with was owed around $500,000,” she says. “The lead contractor had told them that they needed to be paid by another client before they could pay them, which was a big warning sign. I asked my client if he would be able to survive if the contractor went into liquidation, and he really didn’t know.”
As it transpired, the head contractor went into receivership, leaving the subcontractor struggling to pick up the pieces. “For the first time in the business owner’s life, he was unable to pay his bills. He was in tears – it was the hardest time of his professional life.”
Curwood encouraged him to contact those he owed money to and explain the situation. It transpired that the client of the non-paying contractor was extremely happy with the work the subcontractors had done. “The subcontractor took a hit, but they formed a new relationship with the client – and they were able to continue working for them.”
She says it’s important for business owners to be able to identify the warning signs, particularly when it comes to cash flow: “I encourage clients to look for any change in behaviour in companies that owe you money. Have they stopped answering your calls? Are payments being delayed? If so, turn to someone external for support.”
Businesses in the Waikato region, where Curwood is based, are experiencing a range of difficulties right now. Those in agribusiness (and anyone who works outside) have been hard hit by Cyclone Gabrielle, ongoing bad weather and the uncertainties inherent in any election year.
There’s also pressure on small operators who went it alone during Covid. While there was demand, they were thriving, but now the pressure is on the economy, they may be struggling to make ends meet.
“Often these new operators are experts in one field, which was fine when there was demand for their services,” she says. “But now the economy is slowing down, they may be realising they didn’t have the proper structure in place to keep their business going through the hard times.”
Curwood’s job in partnership with EC Credit Control is to help struggling businesses with the support they need. She assesses processes, understands how they get clients on board, and the ins and outs of their project tendering process. She can then point them in the right direction and help future-proof their business against risk.
If businesses are concerned about cash flow or have other issues of concern, Curwood, along with EC Credit Control can work alongside them to formulate solutions – and she is passionate about supporting businesses and helping them realise their value.
“The work they do and the responsibilities they carry on their shoulders for themselves, their staff, their clients and their families can be a lot sometimes. It’s so important for business owners to have the right foundations in place to support and protect the lifeblood of a business: cash flow.”
For more information: eccreditcontrol.co.nz
*Recent Figures: Company liquidations are climbing as Covid support wears off