SMEs in financial trouble urged to seek a helping hand early

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Small business owners experiencing financial difficulties are often leaving it too late to seek help from a trusted adviser before going bust.

That’s one of the key factors contributing to small business insolvencies being explored by the Australian Small Business and Family Enterprise Ombudsman’s Insolvency Practices Inquiry.

Ombudsman Kate Carnell says it’s vital for small businesses to recognise the signs of financial distress and seek help as quickly as possible.

“We know this is an issue that is important to the small and family business community because there has been an overwhelming public response to our inquiry,” says Ms Carnell.

Lean on trusted advisers

Ms Carnell says it’s vital that small and family businesses lean on their trusted advisers when financial concerns arise.

“They don’t have to go it alone,” Ms Carnell says.

“The sooner small and family businesses get help, the more likely it is they can achieve a more favourable outcome.”

Have your say

Ms Carnell says the inquiry is keen to hear from anyone who has been through a restructure or insolvency to help inform their interim report, which will be released in December ahead of the final report in February.

She says the inquiry has already received 230 survey responses and 20 submissions, and expects that number to grow.

Stories can be shared by completing the inquiry’s online survey or by providing a submission via inquiries@asbfeo.gov.au.

In the meantime, if your business is going through a rocky financial patch and you’d like to explore your options, get in touch. We’re always happy to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

6 tips to prepare your property for valuation

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Looking to refinance your home loan? A valuation is a vital part of the process. So today we’ll look at some ways you can help get your home in tip-top shape.

When you refinance to try and get a better deal on your home loan, the lender you’re applying with will arrange a valuation to estimate what your property is worth.

However, a survey by an online lender recently found that one in seven homeowners were unsuccessful in refinancing their mortgage because the value of their property had fallen.

With that in mind, it’s important to tick off as many of the below tips as possible to not only make the whole process smoother, but to give yourself the best chance at a favourable valuation.

1. Spring clean!

Roll up those sleeves, get out the spray and wipe, and get ready to apply some elbow grease.

Ensuring you present a well-maintained property can make a big difference when your property is being valued.

Inside, you’ll want to make sure your kitchen and bathrooms are spotless, your floors are mopped/vacuumed, your windows have been cleaned, and the rooms aren’t cluttered.

Outside, mow the yard, weed the gardens, rake the leaves, clean the deck, and don’t leave any toys or sports equipment scattered around the yard.

2. Get your documentation in order

If you have a copy of your building plans, give them to the valuer – preferably in advance of the valuation to help speed up the process.

Valuers sometimes also request council rates notices and/or land tax valuations, so it doesn’t hurt to have all relevant paperwork compiled in a dossier in case the valuer requests it.

3. Be present

Your valuer will need to be able to easily access every room in the house – not to mention your house itself.

By being present, you can speed up the process and be on hand to both showcase your home and answer any questions, which leads us to our next tip…

4. Compile a list of your property’s features

Sure, you’re not ‘selling’ your house to the valuer. But it doesn’t hurt to highlight its features.

Therefore compile a list of everything your house has to offer – especially if it’s not immediately apparent.

Not only will this ensure the valuer doesn’t overlook anything, but you can also give them the list to keep afterwards.

Your list could include things such as a newly-installed reverse-cycle air conditioner, insulation, solar panels, new carpet, top-of-the-range pool filter, or details of any recent renovations and how much they cost.

5. What’s going on in your neighbourhood?

Your home’s features aren’t the only factors that can impact its value.

If there are any community plans slated for nearby – such as a new bike path or bus stop – have the information ready so you can let your valuer know.

Likewise, it doesn’t hurt to have the details of any recent sales figures for nearby properties on hand.

Do try and read the room though. Some valuers don’t like to be bothered too much, so if you start to get the feeling they want some space then definitely give it to them.

6. Secure your pets

Sure, we love our furry friends. And they may even be considered a member of the family in many households. But not everybody feels that way about them.

Therefore it’s best to err on the side of caution and either secure your dog and/or cat, or ask a friend to look after them for a few hours.

In doing so they won’t get in the way of the valuer while they’re doing their job, and the valuer won’t have to worry about accidentally letting them out of the house.

A few final notes

A valuation can take anywhere between 30 minutes and 2 hours – it depends on the size of your property and how thorough the valuer is.

After the inspection, it typically it takes 24 to 48 hours for the valuation report to be returned to the lender.

So with all that said, if you’re looking to refinance and want to find out a little more about what the process involves, then definitely get in touch. We’d love to help guide you through it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are you a spender or a saver?

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Are you paid weekly, fortnightly or monthly? New research indicates that how often you’re paid has a pretty big bearing on whether you’re a saver or a spender.

The research, conducted by small business platform Xero, shows that Aussies who receive their salaries weekly are more likely to splash their hard-earned cash than those who are paid monthly due to a term they’ve dubbed ‘payphoria’.

This, in turn, can play a big part when it comes to your ability to save for a home loan deposit.

What the research found

The research analysed the payday habits of 1,000 Australians and found that a whopping 63% of workers claim to have financial difficulties before payday and rely on short-term fixes for support.

In fact, one in three workers have less than $100 in the lead up to payday, resulting in them foregoing luxuries such as coffee and eating out, or even delaying household bills.

“It’s not surprising that when payday does come around, Aussies are experiencing rushes of ‘payphoria’ and are wanting to reward their hard work by spending up,” explains Xero small business advocate Angus Capel.

Hence, the research suggests that the more paydays we experience, the more of these ‘payphoria’ spending sprees we reward ourselves with.

Below is Xero’s breakdown of Aussie savers versus spenders.

Characteristics of savers:

– 70% of Australians identified as savers (despite much of the research suggesting otherwise!)

– they’re more likely to be paid monthly

– they’re more likely to budget and keep track of expenses and spending habits (87%)

– they feel worried if they don’t have enough savings (95%)

– they’re more likely to be married with no children and live in metro areas

– their key financial goals are on financial management such as retirement, having an emergency fund and paying off mortgages.

Characteristics of spenders:

– 30% of Australians identified as spenders

– they’re more likely to be paid weekly

– they don’t want to give up luxuries that come with saving (77%)

– they believe lifestyle is more important than saving for the future (56%)

– they’re more likely to use their income to pay off debts like credit card bills

– they’re more likely to have children under the age of 18 and live in regional areas.

Get in touch

If you think you’re leaning more towards spender than you are saver, then get in touch.

We can provide you with some effective saving techniques that can help put you on the right path to saving for a home loan deposit.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Crunch time: tax debts can now be reported by ATO to credit agencies

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Got a large, overdue tax debt with the Australian Tax Office (ATO)? Then best listen up, because certain tax debt information can now be reported to credit reporting bureaus (CRBs).

A new Australian law means the ATO will be able to disclose the tax debt information of a business to CRBs when certain criteria are met.

What does that criteria include?

The ATO will only disclose tax debt information if the business meets all of the following criteria:

– it has an Australian business number (ABN), and is not an excluded entity

– it has one or more tax debts, of which more than $100,000 is overdue by more than 90 days

– it is not effectively engaging with the ATO to manage its tax debt, and

– the Inspector-General of Taxation is not considering an ongoing complaint about the proposed reporting of the entity’s tax debt information.

What’s the purpose of this law?

The ATO says the purpose of this law is to encourage businesses to engage with them to manage their tax debts and, where a business is unable to pay a tax debt in full by the due date, enter into a sustainable payment plan that’s agreed upon between the two parties.

The ATO adds that the law is also to support more informed decision making within the business community by making large overdue tax debts more visible.

Finally, the ATO says the law will reduce the unfair advantage obtained by businesses that do not pay their tax on time and do not engage with the ATO in managing their tax debts.

How much warning will I get?

The ATO will notify a business in writing if it meets the reporting criteria and give it 28 days to engage with the ATO and take action to avoid having its tax debt information reported.

This might apply to me – what are my options?

Get in touch with the ATO – you may be able to agree on a payment plan.

That said, not everyone enjoys the ATO hovering over their shoulder. If that includes you, it’s definitely worth also getting in touch with us to explore your options with business loan lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

7 ways you can use a reverse mortgage

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Got retirement on your radar? A reverse mortgage can help you improve your standard of living during your golden years. Today we’ll look at how some Aussies are using them.

From 2014 to 2054, the number of people in Australia aged between 65 and 84 is likely to more than double, according to ASIC.

This will likely see an increase in demand for equity release products such as reverse mortgages.

“Reverse mortgage products can help many Australians achieve a better quality of life in retirement,” says ASIC Deputy Chair Peter Kell.

With that in mind, today we’ll run through seven real-life ASIC case studies that show how a reverse mortgage can help older Australians achieve financial and lifestyle goals.

1. A loan for day-to-day expenses

Jenny was 74-years-old and living solely on a pension. She had only $664 in her transaction account and $15,260 of credit card debt when she applied for a reverse mortgage.

Jenny took out a $50,000 reverse mortgage to refinance her credit card debt, make home improvements, and cover day-to-day living expenses.

2. Spend quality time with your family

Caroline moved homes to be closer to her children, but found her pension did not allow her to spend time with them or go on holidays.

“I thought why should I sit here and twiddle my thumbs when I’ve only a few years left, so I arranged for some extra money to allow me to just enjoy my time,” said Caroline.

3. Finance a holiday

Fancy a trip overseas? Or perhaps campervanning around Australia is more your style?

Joey was 66-years-old, retired, and living primarily off his pension. He had a property valued at $360,000 and only $1,019 of cash in his bank account which was held by a different lender.

Joey paid for his holiday by borrowing a $70,000 lump sum through a reverse mortgage.

4. Help out a family member in need

Kathleen lived by herself and was saving for retirement. However, when one of her grown children unexpectedly needed extra support, Kathleen left her job to help provide care.

Without work income, she could not afford to cover her debt repayments so she took out a reverse mortgage.

Later, Kathleen was able to re-enter the workforce and made voluntary repayments on her reverse mortgage.

5. Renovate and downsize

Fred was 65-years-old and living alone after separating from his partner. He decided to quit his job and redirect his efforts into building his dream home.

Living on the Newstart Allowance, Fred chose to take out a reverse mortgage to cover the shortfall that losing his partner’s savings and wages caused in finishing the new build.

He planned to finish the home, staying in it no more than 12 months, then downsize in the same area to pay off the reverse mortgage.

6. Continue to live at your current home

Amy and Roger had lived in the same home for the last 30 years. They took out a reverse mortgage to finance home improvements that they believed would allow them to continue to living independently in their home as they grew older.

These improvements included building a ramp to replace stairs, replacing ageing carpets, and installing heating and cooling systems.

7. Early loss of employment

Tom worked for the same employer for about 40 years. After taking unpaid leave to recover from an unexpected illness, his employment was terminated with three weeks’ salary.

Tom was ineligible to receive the age pension so he took out a reverse mortgage to supplement his superannuation and cover his day-to-day living expenses.

Want to find out more?

It’s important to note that a reverse mortgage isn’t for everyone.

There will be some scenarios where it may be a good fit, and others where there may be other more suitable options available.

If you’d like to weigh up which category you fall into, get in touch. We’d love to chat with you about your future needs and whether a reverse mortgage could help fulfil them.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.