Welcome to 2023, it feels like for the first time in ages we are starting the year with more positives than negatives.

Despite the Federal Reserve trying to use interest rates to control inflation, the underlying demand continues to be strong. Full employment and a shortage of supply mean that most businesses continue to have a positive outlook for the next year and beyond. It’s likely that inflation is close to its peak meaning that we may have seen the worst of the interest rate rises.

Here are our observations for the coming year.

Continuation of strong demand amidst rising operational costs

Whilst Interest rates have risen by 3-4% from their abnormally low levels of a year ago, they are not much higher than what they were pre-covid. The market confirms that they believe we have seen the worst of the rises with the gap having closed between the 1 and 5 year fixed interest rates.

Full employment may be a positive for the economy however the shortage of skilled and willing labour is the negative for most businesses. Immigration is only very slowly having an impact which has led a number of our customers to be actively recruiting skilled labour from places like the Philippines. Let us know if you need an introduction to an international labour recruitment expert.

Most businesses have seen price rises in labour, energy and raw material costs start to eat into margins. The positive however is that your customers now expect you to adjust prices, they have accepted that this is the new reality and are doing the same for their customers. If you are not already doing this, now is the time to be pro-active and ensure your margins are not undermined.

The opportunities for the new 12 months

Continual improvement and automation have been a consistent theme across our customer base over the last half year. Finding ways to offset rising input costs through improved internal efficiencies, as well as across the supply chain, continue to be the focus. Automation continues to be the change which has the greatest impact for most businesses. Don’t forget to explore Artificial Intelligence opportunities, AI is becoming more accessible and affordable.

Despite our Industry Lobbying, it appears that the Federal Government will not continue the 100% Instant Asset Write-Off (Temporary Full Expensing) in its current form past 30 June 2023 – If you are looking to purchase equipment, now is the time to do so.

Government grants continue to be available with the new Federal Government looking to release a revised suite of grants for business. Many of our clients are successful in securing grants, however it needs a long-term approach. Please let us know if you need an introduction to a suitable expert.

FBT exemption for electric vehicles was a nice recent announcement from the Federal Government which has led to a spike in enquiry over the last month. The exemption provides a cost-effective way for business owners and employees to get their hands on a new low emission vehicle.

A couple of things to continue to beware:

The ATO is getting serious about tax arrears. The flow-on effect of not being up to date with taxes is detrimental to a business being able to secure finance. Please speak to us before you enter into arrangements with the tax office; additional working capital lines may be a better solution.

If you haven’t reviewed your PPSR registration processes lately, its timely that you do so. The implications of not correctly recording your interest over business assets can be drastic, as was the case with one company who lost security worth $23 million due to an administrative error (read more here). We can introduce you to the relevant experts if needed.

We are here to support your business

Please speak to us about all things finance. Working Capital Finance including Trade Finance, Property Finance including Construction Finance, Insurance Premium Funding and Equipment Finance as well as Motor Vehicle Finance. And yes, we also do Home Loan Finance.

We know that the banks are treating business customers worse than ever – please make us your first point of contact every time – we will get you a better outcome with a far better experience.

Please feel free to call me to chat about any of the above on 0407 746 474 or get in touch via email at andrew.sutherland@halidonhill.com.au