Three tips to protect your business in a downturn
Economic conditions have started to tighten and rising inflation, rising interest rates and a full labor market are having a major impact on Kiwi businesses. After years of government financial support and debt deferral, reality is starting to hit New Zealand’s economy.
As Kiwis begin to feel the pinch, businesses of all sizes are already feeling the full impact. Supply chain issues and labor difficulties have hit the industry hard, adding to the challenge of maintaining contractor relationships, invoices and company cash flow.
Shaun Irvin, New Zealand sales manager at debt settlement firm EC Credit Control, says many businesses are “feeling the pressure” and struggling to get their cash flow under control.
“It’s often the small businesses,” adds Irvin. “They agreed to the terms and conditions of the exchange with a handshake. These business owners are great at their jobs, but not when it comes to having the right skills and documentation in place to be paid.”
Matthew Gannaway, Managing Director of EC Credit Control, says business owners need to consider three key questions to protect themselves in the event of a downturn in the months ahead:
According to Gannaway, companies “must act now” to follow up on unpaid invoices and late payments.
“There’s nothing to be gained by procrastinating over your unpaid bills,” he says.
#Tip 1 – Act now on your unpaid invoices
EC Credit Control has removed barriers to escalating invoices for resolution by integrating with Xero and MYOB APIs. Each allowing customers to load slow payers in seconds with just a few clicks.
Gannaway says many companies underestimate the “true cost of not getting paid on time.”
“It’s not just the costs of the goods or services you’ve provided. It’s the value of the subsequent work you need to do to get back to a balanced position, based on your profit margin,” he adds. -he.
The EC Credit Control website offers a handy business tool to help businesses determine the true cost of not getting paid for their work.
While it’s important for businesses to get paid, it’s also vital to maintain relationships with customers who pay late, adds Gannaway.
“Companies need to keep those relationships intact,” says Gannaway.
Documentation on the general conditions of sale
SMEs often enter into transactional agreements with customers without defining their terms and conditions of sale. This can expose business owners if things go wrong.
#Tip 2 – Don’t rely solely on a handshake when accepting contracts
“Companies should use terms and conditions documentation when onboarding a customer,” Irvin says. “The companies that do it well are the ones that get paid on time, every time.”
Agreeing to terms and conditions at the start of a business relationship can help both parties clearly define payment terms, provisions for cost and material increases, disputes and time extensions.
“Terms and Conditions documents empower a business and also help customers understand their responsibilities,” Irvin adds.
Use of the Personal Property Security Registry
Businesses can also use the PPS registry to their advantage.
#Tip 3- Protect your property and assets on the PPS Registry
The government-backed National Registry allows individuals and businesses to register a legal claim and security interest in personal property, such as equipment, or intangible assets, such as intellectual property.
Registering an asset on the PPSR allows a business to become a secured creditor and recover costs owed to it in the event of non-payment, non-return or misuse of valuable asset by a customer.
“If a company’s customer goes into liquidation, they will be in a stronger position if they have registered. It’s quite economical and a sensible decision to make,” adds Gannaway.
CE credit control
EC Credit Control can guide businesses on cash flow management, terms and conditions, and navigating the PPSR.
Kiwi businesses can use the group’s debt resolution service to find a customer-friendly solution to unpaid invoices, protect customer relationships and recover costs.
The EC Credit Control team is working “with both parties on a solution,” says Gannaway.
“When you focus on resolution, it becomes a win-win for both parties.”
EC Credit Control also assists businesses in various industries with drafting terms and conditions documents.
“We can help companies implement terms and conditions in their business and set up a rigid credit management process,” adds Gannaway.
In addition, EC Credit Control guides companies in the use of PPSR. Businesses can outsource their PPSR processes, ensuring registration is done correctly and personal assets are protected.
“A business can contact our customer service team to file warranty on their behalf, and they will get the security they need,” adds Irvin.
Gannaway says New Zealand companies need to consider debt control, terms and conditions of the swap and PPSR as economic conditions continue to tighten.
“EC Credit Control’s aim is to improve the well-being of our customers’ businesses and to establish efficient credit processes. Every New Zealand business needs to think about these three factors. What is who protects your business?”
EC Credit Control has your business covered. Visit them here: eccreditcontrol.co.nz/you-work-hard-for-your-money.
Their friendly customer service team is on hand to discuss your needs. Call them on 0800 324 768.
EC Credit Control Area Managers are based nationwide to visit you in person, in their virtual meeting room, or with a quick phone call.