Are you prepared for a crisis?

IN RECENT TIMES IT SEEMS THAT EVERY NEW DAY BRINGS WITH IT A NEW CHALLENGE.

From COVID-19 and influenza to principal contractor collapses, labour and materials shortages, rising interest rates, natural disasters and the ever-increasing costs of goods and materials. There is certainly no shortage of things sent to try us as we navigate our way through uncharted times within our industry. Whilst this may seem daunting, there are often good news stories which arise from hardship and things we can do to help prepare us for when the unexpected happens. In this feature we look at what our members have done to lend a hand to those in need, what you can do to protect against a principal contractor collapse, how small changes to your contracts can safeguard you when things go wrong and strategies to apply if you do need to weather the storm, including HR, crisis communications and debt recovery. As a neCA member you are entitled to free technical support, access to workplace relations specialists, free workplace health and safety advice, expert legal advice and industry representation at all levels of government and key industry groups. You don’t need to navigate a crisis alone, so please reach out to your local neCA branch if we are able to assist in any way.

PRINCIPAL CONTRACTOR COLLAPSES ARE LEAVING MILLIONS OWED

YeT AGAIn, THe SAYInG “TOO BIG TO FAIL”, PROVeD SIMPLY unTRue WITH THe ReCenT APPOInTMenT OF ADMInISTRATORS TO PROBuILD.

The collapse of principal contractors is a stark reminder that no matter the size of a business, it can fail.

Probuild may be the most prominent collapse of 2022 so far, but it won’t be the only building company to run into trouble. You can already add Gold Coast-based Condev, Hobart-based Hontondo and Perth-based Home Innovation Builders and new Sensation Homes to the list of builders running into financial trouble.

If rate increases lead to softening of demand, who could be next?

There are often tell-tale signs that a business is in poor health, but this wasn’t necessarily the case with Probuild, a large and prominent company with major projects on its books worth billions of dollars. Given the evidence of aggregate credit limits and cover in place from all Australian insurers, indicators were that this business was not on the brink of failure.

However, the appointment of Deloitte as administrators has revealed that their debts extended to hundreds of millions of dollars.

“A collapse of this size will send ripples through the industry and will have a far-reaching impact

on countless suppliers.” — nCI

There is only a small percentage of businesses that can soften the impact of this collapse, and they are the ones that have up to 90% of their debts protected by a trade credit insurance policy. It is this cover and protection that allows business owners, chief financial officers (CFOs) and credit managers to sleep better at night, comforted by their decision to insure their receivables.

So what is trade credit insurance?

Trade credit insurance protects your debtor ledger, one of the largest assets your business can carry. even the most rigorous and disciplined credit management cannot prevent bad debts, so any business with these exposures should ensure they are protected with trade credit insurance. Selfinsurance or a bad debt reserve does not replace monies lost, whereas trade credit insurance puts cash back in your hands.

Five reasons to consider trade credit insurance:

½ Preserve profit

Too often and too late businesses realise that a bad debt is really lost net profit. A bad debt reserve is not the answer - it won’t put cash back in your hands. ½ Protect liquidity and cash flow

The proceeds of a credit insurance claim injects liquid funds back into a business. ½ Confidence to expand

Allow growth, knowing that the cost of potential failures has been covered.

Hold a competitive advantage whilst others operate with uncertainty. ½ Strengthen credit management

Firm credit limit decisions are provided on the larger debtors of the business, based on sound analysis and information. ½ Added security

Insuring your debtors ledger often provides a new source of security to offer banks.

For more information, call 1800 335 014 or email necaguard@neca.asn.au

Alexander Joosten

Account Manager, Willis Towers Watson (WTW) www.wtwco.com

Disclaimer: While all reasonable skill and care has been taken in the preparation of this article, it contains recommendations only - based on WTW’s experience as an insurance broker. This document contains recommendations that are not intended to be financial product advice, legal advice or tax advice, and should not be relied upon as such. The information is general in nature and may omit detail that could be significant to your particular circumstances. The information is provided in good faith and derived from sources believed to be accurate and current at the date of publication. no warranty or liability is accepted by Willis Australia Limited, its shareholders, directors, employees, other affiliated companies for any statement, error or omission contained in this document. Copyright © 2022 Willis Towers Watson. All rights reserved. Willis Australia Limited | ABn 90 000 321 237 | AFSL no. 240600

SPARKIES PITCH IN TO HELP REBUILD LIVES

THe nORTHeRn neW SOuTH WALeS TOWn OF CORAKI DeRIVeS ITS nAMe FROM THe WORD GuRIGAY, WHICH MeAnS “THe MeeTInG OF THe WATeRS” In THe LOCAL InDIGenOuS BunDJALunG LAnGuAGe. THe TOWn SITS AT THe InTeRSeCTIOn OF THe RICHMOnD AnD WILSOn RIVeRS ALMOST HALFWAY BeTWeen LISMORe AnD eVAnS HeAD, AnD WAS DeVASTATInGLY IMPACTeD BY THe FLOODS In FeBRuARY AnD MARCH OF THIS YeAR.

After hearing from a friend working at Lismore Base Hospital about how this community had been affected, Kerfoot estimator Darren McGuiness rounded up a small team of volunteer electricians. This team made the 700 km journey north from Seven Hills, Sydney, to lend a hand.

“Reaching the town was the first challenge,” Darren said. “With most roads cut, we had to head quite some distance out before we were able to access a road that provided safe passage. We could tell from the drive how badly the area had been impacted, but seeing the mudstained remnants of people’s lives laid out

on footpaths as we drove through town, was something that I wasn’t prepared for. It’s a sight that will stay with me for life.”

upon their arrival, the Kerfoot team made their way to the local fire station where a raft of volunteers had already assembled to assist with the clean-up.

“They were thrilled when they learnt we were sparkies,” said Kerfoot General Manager, Josh Kerfoot. “It was one area where they were lacking resources and we were quickly put in contact with retired local electrician Phil who despite his own losses had been doing his best to help out.

“Phil had already been in touch with supply authority essential energy and had a good understanding of what needed to be done to restore power to residents, depending upon the damage to their homes.

“With many local wholesalers also affected by flooding, we called our local Cetnaj store in Wetherill Park (Sydney), who put us in contact with Sheridan Jefferson and the team at TLe Yamba. Sheridan agreed to keep the store open for an additional two hours while we made the trip from Coraki, whilst Philip newson from Cetnaj Wetherill Park generously offered to pick up the bill for any materials required.”

The team worked tirelessly over the next few days, often on the tools for over twelve hours, in an effort to get the town power supplies back up and running. In some instances, this consisted of installing temporary power outlets in switchboards; in others it was carrying out repairs and issuing Certificates of Compliance for electrical Work (CCeWs) in preparation for reconnection.

“Some of these locals had not only lost their houses, but also lost livestock and had their livelihoods ruined,” said Darren McGuiness. “It was very rewarding to be able to help out in some small way and restore services to the community. We were able to get the local petrol station back up and running, help set up temporary accommodation and get eight or nine properties ready for re-energisation.” The Kerfoot team left all surplus materials with the people of Coraki and are planning to return in the near future to offer further assistance.

neCA has developed a comprehensive free flood relief fact guide that provides advice to electrical contractors. The guide has been specifically designed around electrical safety hazards when assisting flood-affected businesses and households across Queensland and northern nSW.

For more information or advice, scan this QR code or contact neCA on 1300 361 099.