Money – Speak up on finance blues

Financial pressure is building in the region with the unrelenting drought and Covid-19 threatening the liquidity of farmers, tourism, hospitality businesses and the forestry sector.

So if you think your financial situation is about to suffer, now is the time to start talking with suppliers and creditors to make a plan that works for everyone. With open communication, you may discover that they can extend credit for you or introduce a payment plan that you can manage, and they are happy with. Alternatively, your business may be doing okay and paying your accounts sooner will improve the cash flow of a supplier who is feeling the pinch.

The banks are calling on the Reserve Bank to reduce the official cash rate, which would reduce interest rates for businesses who may want to increase their borrowing. This is great if you are a booming entrepreneur with a decent chunk of capital, but if you are borrowing to maintain cash flow or pay wages it may not be a good idea to increase debt.

A better option could be reviewing where you can make cutbacks to get through the short-term economic blip, such as delaying buying new equipment or being realistic about reducing expenses. Again, talk to your bank business manager and maybe a business adviser, if they can think outside of the square.

The rural community is supported by the Ministry of Primary Industries and there are social welfare funds available for those in extreme hardship, and there is increased flexibility with Inland Revenue. If you are an employee and you lose your job, register with Work and Income straight away, because there may be a stand-down period before you can receive any benefits.

Just like business owners, individuals with unexpected cash flow problems that make it difficult to meet obligations – such as rent and payments due to lenders – need to talk to the people they owe money. It may be possible to arrange a payment holiday or to reduce the amount of payments until you find another job. Don’t be shy to ask.

For businesses and individuals, it is important to face up to your financial reality because missed payments can result in penalties, thus increasing your total debt. It seems likely everyone will feel the financial impact of a double whammy to our local economy. Now is the time for the community to rally together. People are helping one another by sharing water, and we should consider how we can support businesses who are bearing the brunt of reduced tourist numbers and an export downturn.

Many hospitality businesses and tour operators offer innovative added value for locals during the quieter winter months, and they may need to launch good deals right now to improve cash flow. More than anything, talk to someone if you have concerns about debt, budgeting and cash flow. They may not have the solution, but they may know where to find it.

Christine Liggins, Debtfix
www.debtfix.co.nz