While there was expected to be a so-called fiscal cliff following the end of JobKeeper support, we can clearly see that all key economic indicators are strongly positive, albeit with the overhang of labour shortages.
In New South Wales, we’re seeing a booming economy, and across my network, I’m hearing that those skilled in facilitation, strategy and execution are at full capacity. Many are requiring their clients to list projects in order of priority and often reluctantly turning away assignments.
Corporate projects scheduled for last year are simultaneously being run with those originally slated for this year, and skilled labour shortages are exacerbating the situation. Continued uncertainty around COVID-19 lockdowns and state border closures is a constraint on moving workers to job locations.
So, while we’re all buoyed by the somewhat unexpected strength in the recovery of the Australian economy, hospitality, tourism, education colleges and all sectors requiring both skilled and unskilled labour are constrained. Retail and hospitality businesses are now required to pay full rent, but for many, their pre-pandemic revenues haven’t returned.
ATO remains on pre-COVID footing
The Australian Taxation Office has not yet initiated the debt recovery it undertook pre-COVID. Many SMEs are in some sort of debt to the ATO, more so in some industries than others.
Before the economic pressures of the pandemic, the ATO regularly pursued debt recovery and issued wind-up notices, statutory demands, garnishee notices and structuring repayment arrangements. It isn’t yet known when the ATO will recommence this – and to what extent – following the COVID-19 moratorium.
When it does begin, we’re likely to see many SMEs encountering distress and many seeking professional advice from insolvency experts to legally reduce prospects of personal liability.
And while often we as expert advisors can initiate strategies in order to avoid these outcomes, it’s important that we’re brought in at the earliest juncture. Directors who fail to seek advice may place their personal assets in jeopardy.
I look forward to meeting with the ATO in the coming weeks to gain further information about how this process may play out and when activity may recommence.
Refinancing with lender referrals
Meanwhile, we here at Levi Consulting continue to have business cases referred from peer-to-peer lenders that are business problems rather than pure insolvency issues. In that way the market has shifted.
And while these matters remain mostly undisclosed due to their sensitive nature, we’ve been consultants to provide effective solutions to more than 20 peer-to-peer referred matters to work with their delinquent or potentially delinquent borrowers to refinance, or together find formal or informal solutions.
Working capital can be easily accessed and there are more opportunities for both short- and long-term funding. SME’s that wish to remain well-managed and profitable must use forecasts and financial projection tools and utilise knowledge of actual and budgeted performance of the business to build a strong knowledge base.