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It’s the perfect time for small-business leaders to analyse their business, identify opportunities or improvements, and make a strong plan for the year ahead, according to a chief executive.
CreditorWatch CEO Patrick Coghlan has acknowledged that Australian business owners “have been fielding curveballs consistently over the last 24 months”.
“Inflationary pressures, rising interest rates, extensive flooding, labour shortages and supply chain disruptions are just a number of extenuating factors that have contributed to a highly unusual and irregular trading environment for many businesses in FY 21/22,” CreditorWatch has highlighted.
Because of that, Mr Coghlan believes “the end of the financial year is the perfect time to pause and take stock”.
“It’s vital that small business owners use this time to analyse their business, identify opportunities or improvements, and make a strong plan for the year ahead,” he said.
CreditorWatch is urging owners and executives to be using the end of financial year – which falls on 30 June 2022 – as “an opportunity to look under the hood” and assess the financial health of their businesses.
It comes off the back of data that shows insolvencies are predicted to rise over the coming year, due to the winding down of government stimuli, mortgage holidays and temporary moratoriums on insolvent trading over the past 12 months.
James Flaherty is a convenor at Insolve and has seconded Mr Coghlan’s comments about financial health.
He has urged businesses to “act now” to ensure they are adequately protecting themselves from suppliers or partners who may be at risk of collapse.
This is especially important in areas such as construction, with Mr Flaherty flagging the “period of extreme volatility” facing the industry.
“It’s crucial that businesses understand exactly who they’re trading with and the stability of those partners,” he warned.
Such signals have led CreditorWatch to develop an EOFY Survival Guide – to ensure businesses aren’t “missing key pitfalls and loose ends that could lead to major problems down the track”.
As part of that guide, some of the questions the commercial credit reporting agency recommends businesses be able to answer include:
- Are supplier contracts up to date?
- Is the supplier database up to date?
- Are you keeping an eye on customer payment times compared to the market average?
- Are you paying customers on time?
- Have you taken out PPSR?
- Are your customers paying you later than other suppliers?
- What is the average repayment time in your industry?
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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