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Liquidation of Kiwi companies is up 36% on last year, according to new data from Centrix.
Centrix’s report said it’s clear that business owners in construction, retail trade, hospitality, property/rental are all feeling the pinch.
“Year-on-year, defaults were up in the property/rental sector (+35%), retail trade (+20%), hospitality (+16%), construction (+16%) and transport (+10). Credit demand was also up across all sectors, with the exception of property/rental.”
“This has the flow on effect impacting employees and their finances, contributing to an overall challenging financial situation for Kiwi households across the country.”
Speaking to Breakfast this morning, Auckland restaurant owner Chand Sahrawat said the industry is unpredictable at the moment.
She said their customers are struggling, and activities like eating out were the first to go when people were struggling financially.
The cost of food had risen, which meant going out for dinner had become more expensive, Sahrawat said.
She added that things should start to improve with summer approaching, but businesses would still feel the pressure.
“Hopefully Christmas will help us all recover a little bit but cashflow is tight out there, we’ve had increasing wage costs like never before.”
Also speaking to Breakfast this morning, chartered accountant Luke Kemeys said it’s “really tough” for Kiwis at the moment.
“Interest costs rising, cost of living as such, so the pressures on business owners is really tricky.
“If you couple that with the economy contracting, meaning that there’s less money to collect is when businesses really run into trouble and we start to see some of those liquidations.”
Kemeys said he thinks a lot of business owners are in the mindset they can go to a financial adviser and it be “a silver bullet”.
“But really, you need to be planning, you need to know your numbers, especially in an economic environment like this.”
He said his recent advice to clients has been to expect to be “in a slow grind”.
“It’s about getting through that week-to-week, month-to-month and understanding your numbers and if you don’t, reach out for help so that you can avoid that ambulance at the bottom of the cliff.”
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