We all complain about rising prices and operating costs. Since 2020, costs have increased, driven by rising interest rates, wages and, of course, fuel. It’s tough being a fencing contractor or business owner in the current economic climate. Smarter financial management can help.
UDC Finance has provided finance to Kiwi business owners for over 86 years and has multiple locations across New Zealand. This allows us to combine wide experience with an understanding of both the local and national markets.
Business owners need to be smart with their finances. Here are some tips we’ve picked up from working with those in the fencing industry:
Cost control is key: Firms compete on price. Costs can be reduced by economies of scale – consider mergers and partnerships. Make sure you work with your financial partner to identify savings.
Invest in technology: Smart RUCs and online finance management tools not only save time, but they can also produce insights on waste and improvements.
Form a team: Get a good team of advisors, including an accountant, to develop a plan and continually monitor your progress against it. Ensure your advisory team is prepared to challenge the numbers you put together, doing what’s called ‘sensitivity analysis’ in the finance game.
Gear depreciates: Wear and tear, and the increase in maintenance costs can affect your bottom line. It is important that you have a plan in place to upgrade your equipment versus paying upfront. The age of the asset impacts the ongoing maintenance costs significantly. Older vehicles and heavy machinery are more likely to require more complex or costly repairs, which could also take more time to fix. Equipment issues combined with warranty expiry, failing or worn engine and driveline components, brake issues, unforeseen breakdowns, lack of follow-up repairs and tyre wear can be just some of the issues you need to prepare for.
Communicate with your funder: By having open, honest conversations early on, you can work with your funder to support delivering your plan. This can help you protect your business and ensure you are as well positioned as possible when the next upswing comes. By sharing your plan, your funder can better understand any challenges you may be facing and can work with you to overcome these.
The team at UDC would love to have a chat with fencing contractors and provide them with further information. Contact details for all UDC commercial managers can be found in the asset finance section of our website – udc.co.nz. The UDC team is located up and down the country, so you can get in touch with your local representative, who understands your region, and take it from there.
Article supplied by: UDC
Published in WIRED issue 73/JUNE 2024 by Fencing Contractors Association NZ
This article is a general market commentary and does not constitute financial advice. UDC Finance Limited lending criteria, fees, standard terms and conditions apply to any loan.
