NZ’s Budget: what’s the big picture for small business?

Linden Toll
Founder & CEO

Prime Minister Jacinda Ardern’s government delivered a Budget two weeks ago that focuses on improving public services and infrastructure; promoting economic development; and tackling child poverty and homelessness.

While these are all noble, social pursuits, the small business sector—which plays a major part in NZ’s economy—might be feeling a little bit left out.

For instance, in the 2018 Budget at a Glance summary document put out by Finance Minister Grant Robertson, the words ‘small business’ and ‘SME’ are not mentioned.

But there are opportunities and bright spots buried within for small businesses. For example, the government has promised to provide 6,000 new homes for public housing over the next four years. BusinessNZ has said that big ticket Budget items, such as investing NZ$28 billion over 10 years in Auckland transport, would help drive business growth.

Additionally, the Budget is underpinned by an economy expected to grow strongly in coming years. Deloitte has described it as “the gift that keeps on giving, with growth rates the envy of many of our trading partners”.

SME’s cautious

But remaining optimistic can be hard for small business. The Westpac Grow NZ 2018 survey released a week after the Budget found SME confidence was down on previous years, with only 41 per cent of respondents believing conditions will be better, or a lot better, in the coming 12 months. That’s well down on the 51 per cent who answered the same question in 2011.

The latest survey also reports that fewer SMEs are planning to expand their business (31 per cent) compared to previous years (36 per cent in 2015 and 2011). The top barrier to expansion for SMEs is trying to maintain a work-life balance (22 per cent). The second top barrier is a lack of funds (10 per cent).

At Apricity Finance, we know that a lack of funds can put the brakes on your business, big or small. If you want to free up the income locked in your invoices, we may be able to help.

Business update

We wanted to update on you on some developments at Apricity.

New people

We would like to welcome Mornet Van der Merwe, as Head of Credit & Risk

Mornet brings more than 20 years’ experience in the banking industry, including ASB, Kiwibank and Heartland Bank LTD. Mornet has a deep understanding of banking and has led a variety of teams including specialist recovery, collections, turnaround, internal asset review and credit portfolio management teams. He is also a board member on RITANZ, the professional body for insolvency practitioners in NZ.

Mornet hails from South Africa where he completed a law degree at the University of Pretoria. He now lives in Auckland with his wife and three young children. You can read more about Mornet here.

New name

We are pleased to report that we have streamlined our business, with both Australia and New Zealand now operating under the one business banner, Apricity Finance. This amalgamation creates a number of efficiencies for our clients and our business. It also facilitates an ease of funding when across Australian and New Zealand businesses.

New digs

Apricity is very excited to have taken space at the B.HIVE at Smales farm, in Takapuna, Auckland. With innovative, flexible infrastructures, these buildings are future-proofed and showcase key features of environmentally sustainable architecture – saving energy and reducing operating costs. The B.HIVE provides access to technology, networking activities and communal meeting spaces. It really has to be seen to be believed. We welcome you to come to visit us any time.

Tauranga Chamber of Commerce

By Alan Hewitt

We recently presented at the Tauranga Chamber of Commerce. We were thrilled to be involved as it provided us the chance to engage with a number of businesses across a wide range of industries, with the majority sitting within the Finance, Professional Services and Mining sectors.

Following the event, we ran a survey which delivered us some very interesting results. Many of the businesses in attendance told us they regularly experience strain related to long-dated invoices from big customers. This is a subject we hear about so regularly from our clients, as our Invoice Finance facility enables them to bridge the gap in their cashflow.
Other reported issues include the stress of managing bad debts and struggling to manage business which was growing too fast. Additionally, a fair portion of attendees struggle to secure finance they need to support their business.
Of course, these issues are not unique to the attendees. Recent NZ Government statistics report primary causes of liquidation as companies inability to collect debts, withdrawal of credit facilities, lack of sufficient working capital and liabilities due to guarantees.
Another report in NZ National Business Review, said some small businesses were having to wait up to 120 days for their invoices to be paid.
In terms of what products businesses are using to assist with cash flow, bank overdrafts was common, followed by credit cards and personal loans. These have traditionally been the go to products for business. However, as banks tighten lending practices, more and more businesses are finding it difficult to secure finance when they need it. Not to mention that an overdraft will require property as security. What if you have already exhausted your resources in that area? What now?

However, this is also where Apricity Finance can help. Whether it’s a rapidly growing business struggling to pay wages while they await payment, or more established businesses that need to bridge a gap between periods of supplying goods and having invoices paid, for many Invoice Finance has become instrumental to growth and continued expansion.
We have a strong track record in helping businesses with their Invoicing Finance needs.

One of our clients shares his experience in working with Apricity Finance:

“Our company is a food importer, primarily focused and on niche, health related markets such as gluten free, vegetarian and vegan. We supply into health food chains, independent suppliers and major supermarkets across New Zealand.

Late last year, we successfully expanded into Progressive Supermarkets (Countdown in NZ, or Woolworths in Australia), when we were asked to supply to 160 of their 185 stores. This increase in volume was a wonderful opportunity for our business, although meant we had to dramatically increase our inventory stock. READ MORE.