Archive for July, 2008
July 22, 2008 12:00am
MORE Queenslanders than ever before are defaulting on their mortgages and losing their homes to the banks, caused by high interest rates and petrol pain.
State court records show the number of property repossessions has escalated in the past few months and housing experts blame rising petrol prices as much as interest rates for the spike in cases around Brisbane’s urban fringe.
Records show the number of repossessed residential and commercial properties hit a record 1019 last year and continued at the same rate – about 85 a month – until May.
But a Courier-Mail search of electronic court files has revealed the state’s Supreme and District courts handled 100 property repossession cases in June and another 83 cases by July 17, with two weeks of the month still to go.
The figures show a majority of the recently surrendered homes were in suburbs surrounding Brisbane and on the Gold Coast.
Browns Plains couple Robert and Bettina Bengtsson have to come up with a seemingly impossible sum of money within days or have their Browns Plains home repossessed.
Aged 31 and 27, with a nine-month-old baby to look after, the Bengtssons have already cashed in their super, looked for higher-paying jobs and tried to start a business.
But they are still about $14,000 behind in their mortgage payments, which they have defaulted on numerous times.
Mr Bengtsson said the nightmare started when they both lost their jobs. Mrs Bengtsson was pregnant when she lost hers.
“Everything was going great and then the company I was working for decided they were going to close down nightshift, so I took an involuntary redundancy and my wife, because she was a casual … they just said she wasn’t needed any more,” Mr Bengtsson said.
“When we first got the house it was only $437 a week, so we were paying $500 a week.
“And now it is up to about $550 a week, so it has jumped over $120 in those two years.
Bray Park, Scarborough, Narangba, Alexandra Hills, Kingston, Browns Plains and Thorneside are the top targets for repossessions in Brisbane, while Carrara, Arundel, Ormeau Hills, Currumbin, Tallebudgera Valley, Runaway Bay and Surfers Paradise were some of the affected suburbs on the Gold Coast.
National Shelter chairman Adrian Pisarski said the figures demonstrated the compounding effect of high petrol prices on already financially stressed homebuyers.
“It always seems to be in areas poorly serviced by public transport,” he said.
“People there are double-whammied. Their housing costs are going up and their transport costs are very high because they are car dependent.
“I think many households would cope with one or the other, but not both.”
Housing Industry Association chief economist Harley Dale said a higher rate of mortgage defaults was expected, given the increased burden of interest rates and petrol prices.
HIA calculations show the repayments on a $250,000 loan would have increased by $449 a month in the past three years, while the monthly cost of petrol for an average household would have risen by $150 in the same time.
It has been estimated that about 160,000 Queensland households are experiencing mortgage stress.
“There is no doubt it is a much more difficult environment out there in 2008 than it was in 2007,” Mr Dale said.
Mortgage and Finance Association Queensland president Bruce Mawson said stalled property values had exposed some stretched homebuyers, who had been in the habit of using the equity in their home loans to pay off other debts.
He urged anyone having trouble making their mortgage repayments to talk to their bank as soon as possible.
Credit crisis to crunch harder next year
Author: adminCourier Mail
July 11, 2008 02:22pm
NEARLY half of Australian businesses have been affected by the fallout from the global crunch but the worst could still around the corner, a credit insurance company says.
Atradius Australia and New Zealand managing director David Huey said payment defaults and insurance claims reported to his firm had doubled since last year.
“Our enquiry rate for new business has also doubled, in part due to the high-profile insolvencies like Beechwood Homes, which has meant that industry segments like construction have been looking at insuring themselves against non payment,” Mr Huey said.
Companies in United States had the highest response in a 14-country survey.
About 68 per cent of US firms said they had been affected by the credit crunch, followed by Mexico, at 60 per cent.
Other nations where companies said the credit crisis had a high impact were Italy with 58 per cent, the UK, 46 per cent, Spain, 44 per cent and Australia/New Zealand, 43 per cent.
The Atradius credit crisis survey analysed comments from 2,500 respondents about their company’s experiences and the likely effect of tougher financial conditions.
“Factors that may be contributing to these reports include reliance on the building and construction or the financial services industry for GDP growth, a relatively large percentage of GDP tied to trade with the United States or heavy use of receivable securitisation,” Mr Huey said.
Restrictive credit and increased default payments would dampen growth and raise business defaults globally for the rest of 2008 and into 2009, the survey said.
Some 71 per cent of companies said an increase in payment defaults was their biggest concern, 67 per cent worried about restrictions in sales growth and 65 per cent feared increased capital costs.
Mr Huey said it was essential for a healthy company to be aware of how to protect themselves from risk exposure.
“The credit crisis is highlighting the importance of protecting your cashflow,” he said.
“The reality is that without good cashflow your business will be in jeopardy.”
Do your finances need a new hair style?
Author: adminLike bad hair, how long can you afford to let things go? If your fringe stopped you from seeing properly & you nearly had an accident as a result of it getting in the way or distracting you, would do something about it & get it cut!
In terms of your cash flow is it starting to go grey and thinning? Just like my hair!? Perhaps it’s time for a new finance hairstyle. One that will help with the working environment! Bottom line -improve the amount of cash you have, to do what you need to do, when it’s required.
Hairstyles can go out of fashion, but for now perhaps the number 4 is required with a few highlights. Keeping it simple, but works for the foreseeable future until it grows a little and then it can be developed into another style.
Some instances where you may be able to adopt the Number 4 could be:
Self employed – who have taken on a ‘Lo Doc home loan’ in the last few years. No doubt the debt had been capped to a % of the value of a residential property. That was great before because you didn’t have to provide financial statements and alike. The down side is you are likely to be carrying a lot of ancillary debt on top of this. Like credit cards, car & equipment loans etc etc. All of which drain your cash flow resources.
There are lenders that can role several debts into one. In a lot of instances there will be a requirement for financial statements to be provided however there are others that will consider the situation without profit & loss statements. The end result being that perhaps hundreds or even thousands of $$ can be saved on a monthly basis.
The structure of your debt may need to be looked at, are there commercial assets that could be structured over longer periods?
What sort of debtors do you have? Is there an opportunity to have those funds quicker?
Can you gain discounts for quick payment?
All these sorts of questions need to be asked of you when looking in the financial mirror. Could you need a new finance hairstyle?
What have you got to loose in asking the question? Ask Finance Know how!
SMALL businesses that deal mainly with householders are now finding it harder to be paid because of rising interest rates.
Author: adminCourier Mail April 07, 2008 12:52pm
SMALL businesses that deal mainly with householders are now finding it harder to be paid because of rising interest rates.
Plumbers, electricians, accountants, architects, builders, mechanics and even schools have to use tough tactics if they want to extract from householders what is owed to them, said debt collection agency Prushka.
“An air of nervousness has afflicted the business-to-homeowner sector as we have witnessed a marked increase in organisations taking a much tougher, almost relentless attitude to recovering overdue debts,” Prushka CEO Roger Mendelson said.
“The trend has become quite noticeable. Prushka is receiving accounts from this sector at a much earlier stage in the cycle than previously, with businesses less open to negotiate terms directly with their customers.”
“Now for the first time we have tangible signs that the last interest rate rise has started to bite.”
He said the signs came from the company’s existing clients who have businesses that deal with householders.
“Our best test of the changing environment is in tracking our existing clients,” said Mr Mendelson.
“Their debts are fresher, which means that they are under pressure for the money that is owed to them.
“The feedback is that it is becoming harder to collect the money that’s owed.
“But this isn’t happening with business-to-business clients,” he said.
“The household budget is now under more pressure, while business cash flows are still reasonably strong.”
He believes, however, business-to-business arrangements will be affected soon, that there will be a flow-on effect when one business’s cash flow is affected because of the non-payment of bills by householders.
He said small businesses used to be lenient with their payment terms but, as things have tightened up, this has changing.
“They are now tightening up on the credit they allow,” Mr Mendelson said.
“They are not concerned if they upset a client. Instead they are putting pressure on them.
One option for business owners was to offer an instalment payment plan but, if that failed, the next step was to take legal action, he explained.
Demanding the money upfront before the job began was not an option for small businesses, said Mr Mendelson.
“This would be difficult to do in a competitive market.
“All they can do is take more care in allowing the credit they used to offer.”
A big concern of small businesses was dealing with householders in the mortgage belts because, as well as having difficulty meeting their obligations, many are also losing the equity they have in their homes.
“By the time the banks sell them up, it’s too late for businesses. There’s nothing left. Two years ago if the bank sold up, there would still be some money left to pay outstanding bills.”
Mr Mendelson said he believed things would tighten up more before they got better.
How to ensure you are paid
- Make sure you have only quality credit
- Do more credit checks on new clients
- Be more concerned about who you deal with
- Act more quickly to retrieve debt
April 21, 2008 10:48am
CASH-strapped small businesses know a website will open them up to the world - but too often they skimp on marketing and it fails.
Internet expert Jasmine Batra said it did not have to be so difficult.
“A website can be such a level-playing field and small business can compete against the big corporates,” she said.
Ms Batra, the director of Arrow Internet Marketing, said there were measures businesses could take to optimise their presence on the internet.
Her own company was ranked first for searches on google.com.au for “SEO (search engine optimisation)company” thanks to clever use of optimisation.
Ms Batra said experts could identify what people were searching for and how best the small business could tap into that demand.
One step was to find out what search words people were using when looking for goods or services.
It helped, she said, to put yourself in their shoes. For instance, were people searching for “used baby goods” or “second hand baby goods”.
She said when websites were developed they generally had access to tools to track who was visiting the site.
Traffic statistics can not only show how many people are visiting but how long they stayed.
Ms Batra said people should look at this information at least once a month.
“I like to look at my traffic stats every week,” she said.
“There are lots of insights in them. If you were running a retail store you would be interested to know how many people walked in the door.”
She said people could install Google Analytics which would help them find out where their visitors were coming from and how they interacted with the site.
She said it also was important to manage the content of the site, keeping it up-to-date and relevant.
Google has more than 300 criteria when ranking websites. Blogging, RSS feeds and repeating key words were all advantageous and would optimise a site.
It was pointless for a business to spend a lot of money on a site and not market it Ms Batra said.
“They need to be spending money on the online marketing of the site as well,” she said.
It was also important to identify your target market.
If, for example, you were targeting Generation Y, you might be interested in pursuing bookmarking and social networking sites such as MySpace, Flickr and Del.ici.ous.
“There are a lot of opportunities to make the most of it,” she said.
She said some businesses might find Pay Per Click promotions, such as Google AdWords, effective.
Businesses might like to run Google Adwords in the short term, at particular times of the year in their business cycle.
But she said it was important for businesses to know how much the service was costing them and how much it cost to get each client or sell each product.
Some clients offering professional services had found Google AdWords beneficial.
Ms Batra said one of her clients, which sold solar panels, had been able to work out that using AdWords it cost it $30 to sell a $1500 panel.
- Jasmine Batra will be a speaker at the 7th annual CeBIT Australia’s Exhibition at Darling Harbour, Sydney, May 20-22, on issues such as eMarketing and search engine optimisation. CeBIT features more than 750 technology solution providers. For more on CeBIT go to www.cebit.com.au. For more on Arrow Internet Marketing go to
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