Over the last few months the business community has been presented with an extraordinary set of events to digest, interpret and consider the impact of on our and our client's businesses.
These include:
- The events that led up to the General Election and the subsequent fallout in a number of political parties. Regardless of your political persuasion it has probably been the most interesting election that I have seen. One thing is for certain: social media will continue to play an increasingly larger part in our lives.
- The Reserve Bank taking the rare position of not just talking our dollar down but selling NZD. Whilst half of your clients will be saying "YES about time the dollar fell!" the other half will be saying "NO!" Just at a time when my wife has suggested a family trip to the US next year -"Ouch".
- The OCR rises have at least steadied. However the impact of the 1% increase in the OCR over the past 12 months will start having an impact on how bankers look at their clients servicing calculations. The EBIT position may need to be that much higher now the funding rates have increased. We will watch closely to see how the banks manage this.
- Dun and Bradstreet have recently reported "With the economy growing at a higher than expected 0.7% in the June quarter, businesses have demonstrated a greater capacity to manage their finances and pay their expenses on time. According to Dun and Bradstreets Trade Payments Analysis 66% of commercial invoices were paid promptly (between 1-30 days) during Q2 2014, an increase from 59% the year before." I must admit most of our clients and businesses that we are currently talking to are not experiencing this.
As you can see there has been plenty happening in the market. However whilst governing parties may change, the dollar and OCR may go up or down, debtor days may increase or decrease ultimately the one thing that keeps business ticking along is cashflow.
That is what we do.
Craig Brown
General Manager Lending