5 steps to minimise SME debt

With 97 percent of all enterprises in New Zealand employing 20 workers or less, SMEs are the engine room of the New Zealand economy. Due to the smaller size of their business, SMEs are not only less able to carry debt, but it can also be a physical and mental drain on a business.

Often SMEs try to do everything themselves and only bring in the experts when a small problem has become a big one - the biggest piece of advice Baycorp has for SMEs is to get professional support sooner rather than later. Getting expert debt resolution assistance means a business can free up resources to focus on day-today operations.

There are a number of ways that Baycorp can help SMEs, including ensuring a business has the right tools and processes in place to help prevent debt becoming an issue in the first place, as well as resolving the debt if it becomes a problem.

Baycorp has an advisory service to help SMEs through the debt resolution process, including keeping across significant legislative changes such as District Court Rules, Credit Contracts and Consumer Finance Act, and the Responsible Lending Code.

Here is Baycorp’s simple best practice checklist for SMEs when it comes to credit management:

1. Ensure your terms of trade cover the collection recovery costs
2. Display your terms of trade on your website, invoice, and in your office
3. Notify your customer of your terms of trade BEFORE you commence the work
4. Have a policy that requires a deposit up front if the value of work exceed a certain amount e.g. $500 or more
5. Ask prior to commencing the work how payment will be made and by when