Nature flexes her muscles in 2011
 

Natural disasters have given 2011 an austere start for many businesses (and individuals) down under; floods and a cyclone in Queensland, floods in Victoria and South Australia, bushfires in Western Australia and an earthquake in New Zealand.

Thankfully the government, relief agencies, banks and other lenders are offering financial assistance to those affected in both Australia and New Zealand.

Relief packages have been put together by the banks for businesses and individuals in both countries but it may not be enough as late payments may affect already businesses in other areas of the countries.

Australian businesses were supported throughout the GFC, but in 2010, business failures jumped 23% and companies defaulting on payments have increased by 89% in the past three years.

A situation not helped by consumers who are taking advantage of the strong Australian dollar by purchasing goods via overseas websites. These goods are not only cheaper because of the strong dollar, but they are often not subject to import tax; the first major casualty of the canny shopper is book retail giants Borders and Angus and Robertson which took with it Whitcoulls chain of newsagencies in New Zealand.

Not good news for a country of just 4.4 million suffering the economic aftermath of nature’s might. Like Queensland, tourist operators in New Zealand are asking visitors to still keep coming as there’re plenty of areas unaffected by these disasters. (International tourists account for 18.2% of all New Zealand’s export earnings.)

Having recently returned from visiting North Island, I can assure you this stunning country is still open for business.

And at time of writing, following the Japanese earthquake, as well as having concerns over the unstable nuclear plants, experts are also warning Australians to brace themselves for further insurance premium rises and short-term price rises for cars and household appliances.
 

Out and about

Risk Magazine presented Australia with the honour of the best manager of sovereign debt, winning the title of 'Sovereign Risk Manager of the Year' for 2010, so it seemed pertinent the first seminar run by AICM – SA division was on Debt Recovery.

Josh Richards, of Donaldson Walsh Lawyers took us through the intricacies of this subject and, being a good lawyer, after giving us a disclaimer at the start of the seminar, highlighted some of the differences in legislation between states and gave some tips to credit managers who may have to file claims.

“Although the law seems black and white, there’s always an exception to the rule,” Richards advised.

In February, Darryl Gobbett, Chief Economist, Prescott Securities gave AICM – SA division members an animated talk on ‘How the economic crunch affected businesses’. Australia did get off lightly in comparison to other countries in the GFC and Gobbett forecast it will play a major part in supplying emerging economies the following areas:

► Fuel: Coal, Uranium and Gas
► Food: Cereals, Meat and Fish
► Fibre: Cotton, Wool, Wood pulp (Paper) and the return of Rayon
     (Price gains 2010: Cotton 100%, Fine Wool 30%, Rayon 75%)
► Mineral Resources: Just about anything!
► Services

     - Education
     - Finance
     - Tourism

More recently, Trevor Goodwin, President AICM – SA division presented ‘Legal entities and credit assessment: The Process’ where he reminded members of the 5 C’s of credit: Character, Capacity, Capital, Collateral and Conditions. “It’s challenging times as bankruptcy no longer has the stigma attached to it,” he said. "Although year on year figures figures of new bankruptcies are decreasing, almost 6000 new individuals* registered as bankrupt in the last quarter of 2010.

“Around 700,000 taxpayers are on special tax payment arrangements, and as a business, we don’t know if an individual/business is on a repayment plan or whether it is defaulting on this plan,” he added. The Australian Tax office expects 260,000 small business owners to default on their repayment deals.

Finally, in case anyone knows of a budding a young credit professional down under, entries are now open to find the Australian Young Credit Professional of the Year. Entries close 31st May 2011.

* Figures taken from by Insolvency and Trustee Service Australia
 

Anna Waddington-Feather is International Correspondent for Credit Control Journal