Business Telegraph

Startup News

Navigating Covid-19: 5 tips SMEs need to know

  • Written by Patrick Coghlan, CEO of Creditorwatch


As a result of the Covid-19 and as a way of bolstering the business sector, the Federal Government recently introduced changes to Australia’s insolvency laws. As we enter our third month of this global pandemic, it’s important SME business owners understand exactly how these changes will affect them and the steps they should be taking to make sure they’re safeguarding their future.

The saying goes “we’re all in this together” and it’s clear that businesses across all economic sectors and of all sizes are facing similar hurdles and opportunities when it comes to staying afloat. Below are five actions that SMEs can take now, to ensure they enter the new financial year on the front foot and in a sturdy position.

Understand the changes being made

The truth is that 50 percent of companies that incur a CreditorWatch payment default end up in administration within 18 months. During such unprecedented times, these statistics are likely to only heighten and are ones we should be paying strong attention to.

The removal of illegal insolvent trading (at least until September anyway), has created a sense of mistrust between creditors and their debtors, but, it’s important to note, SMEs can still take legal action where necessary with some courts still continuing to run via the telephone or online.

Don’t feel you have to wait six months before registering payments defaults or obtaining a stat demand.

Reassess your entire ledger

Your first point of order should be an assessment of your ledger. You may already have a firm idea of which customers are ‘failing’ or ‘hibernating’ at this point, however, for customers that do fall into the hibernating category, it’s important to identify if they represent a high risk.

The economic conditions have created an air of uncertainty for customers, so it’s crucial to ensure they’re meeting their payment times. Follow them up but keep empathy at the forefront of your mind when doing so. Conversely, for customers that are trading in the black, now is a good time to target them for credit limit increases. Showing them a little extra attention whilst times are tough could pay dividends in the future.

Keep an eye out for illegal phoenixing behaviour

In the wake of the 2008 global financial crisis, there was an increase in the number of businesses conducting illegal phoenix activity and there’s a significant possibility that history will repeat itself over the next 6-12 months.

To curb your risk of this fraudulent activity, it is important to ensure you have a deep level understanding of the customers you are involved with.

Take a look beyond a business level and comb out any knots at a director level too. A director with a payment default is five times more likely to experience another payment default, a director with a court action is twice as likely to have another court action and a director with a failed business is two times more likely to fail again.

Perform director due diligence - have these individuals had companies before? Under what names? How are (or did) these companies perform?

Assess credit limits currently on offer

Protecting your business is key, and to do so, it’s important to reassess your credit limit. Halve all credit limits where possible or opt for cash-on-delivery.

Doing so – or even just having the conversations – will give you a clearer picture of who you are dealing with and just how sturdy their business is. With the school holidays and public holidays having just passed, it may be that many businesses decide to close their doors and hibernate from this point forward. Try to be a bit lenient where you can.

Pick up the phone, you’re already looking at it anyways

The key to assessing how your customers businesses are performing is through face-to-face conversation where possible, otherwise by talking it through on the phone. In 2020, we’ve become incredibly reliant on technology and the ability to send an email or text, but, you’ll get significantly more out of a phone conversation. It’s not only another point of contact (communicating is particularly important during self-isolation) but shows customers you have an interest in their success.

Maintaining trade relationships will strengthen trust and you’ll also be able to get a real sense of what people are prepared to and can actually pay.

Entrepreneurs & Leaders

4 Indoor Things To Do In Sydney On A Rainy Day

Sydney is one of the few cities in the world that is known to have a perfect climate throughout the year. However, t...

Jackpotcity Casino Slots for iPhone

Slot machines are one of the popular types of entertainment in most online casinos. There are so many varieties that i...

Which is Better: In House Payroll or Outsourcing Payroll

Choosing whether to have an in-house payroll or an outsourced payroll is complex. A single lousy decision might cost...

Places to see in Western Australia

Australia is one of the exotic countries in the world where people go for luxury vacations. If you are going to visi...

7 Greatest Road Trips of Australia

Australia is a country that is filled with natural wonders. From the tropical rain forests of the north to the red d...

Tips for Improving Your Wine Tasting Skills

If you aspire to become more knowledgeable about wine, then working on your tasting skills is a great place to start...

Interview Questions to Ask Every Candidate Teacher

Those working in school administration are always worried about the ongoing problems of recruitment and retention of...

The Top 3 Highlights of a Trip to Melbourne

Melbourne is Australia’s ultimate destination for anyone willing to experience everything Australia has to offer. Fr...

7 Things to Do When It Rains in Australia

A rainy day usually ruins the whole itinerary you’ve made for the trip. The outdoor activities that you want to try ...

7 Surefire Ways to Get a Personal Loan with Bad Credit in Australia

Australians are still struggling to get a personal loan with bad credit, but there's a better way: apply online. Thi...

Preventing Insurance Fraud: How to Protect Yourself in 2022

Insurance fraud is a big crime with many victims in it that demand and deserve justice. Insurance fraud can victimiz...

Why it is worth betting on cryptocurrency?

Earning money from bets today looks like an obvious solution for a huge audience of users. You can bet on a team to wi...

What Repairs Does A Level 2 Electrician Specialise In?

Some electrical installations and repairs require the expertise of someone who’s spent additional training on dealin...

4 key benefits of cloud computing

Cloud computing is still a relatively new technology. Despite being around for approximately two decades, a huge num...

8 Ways to Keep Yourself Occupied During a Rainy Day

Rainy days have their own special way of bringing our moods down. Kids cannot play outside, while adults must stay i...

How to Scale Your Business IT

It's the vision of every business owner to grow its company, but most don't know how to. While the secret lies in te...

Is The Online Gambling Industry Growing?

Earlier on, brick-and mortar casinos used to be the only places where people would go and gamble. However, with the ...

Learn How Software and Hardware Work Together Using Microbit

In the world of electronics, the software can be a bit of a black box. It’s hard to get your hands on it even if you...

How An Accountant Will Boost Your Small Business

Running a small business is not an easy task at all. Even more, if you try to do everything by yourself and not ask ...

Beneath The Beard: Acne Treatment and Care

Acne is an incredibly common skin condition. It affects up to 85% of the world’s adolescents and young adults. But i...

Horse racing in Australia and peculiarities of betting on this sport

It has long been established that gambling, particularly sports and racing is part of Australian culture and a defin...

Best Ways to seek out the Digital Marketing Companies to Expand a Business in Local Areas

The onset of the 21st century brought with itself an excellent upsurge within the sector. Gone are the times when pe...

Real Judgments About Winnings at Bitcoin Casinos

Winning at bitcoin casinos is not a new concept. In fact, there are many stories of players who have been able to fi...

Will My Car Be Removed On The Same Day Of Receiving The Cash Quote?

Car Removalists like https://a1expresscarremoval.com.au/ which are places for selling your car for cash have made di...

Writers Wanted


NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion