Business and Finance

MKP Insights – Solutions for your business

Rising interest rates, a downturn in the housing market and increasing pressures on wages and the cost of living have left many business owners uncertain about the state of the economy. But there are reasons to remain positive, and with the right planning and processes in place, businesses can safeguard cash flows and continue to capture opportunities when they arise.

It has been a turbulent time for Australian businesses, with increased pressures throughout the economy forcing many within the earthmoving and construction sector to evaluate their growth strategies. But it’s not all bad news. At Moody Kiddell & Partners, we’ve identified four key considerations that businesses should factor into their planning to ensure their cash flows remain robust and they can continue to capture growth opportunities.

    Equipment Finance interest rates reached historical lows of under 4% back in early 2021. This period of historic lows helped businesses navigate out of the COVID-economy by reducing interest costs and improving financial ratios which enhanced access to additional balance sheet debt. However, these historic lows were always going to be unsustainable.

While interest rates have risen, they have only risen to more balanced levels in the high single digits. Returning to this normal priced environment is more sustainable, offering rates that remain affordable and allow business owners to maintain a profitable bottom line. Remember, businesses have operated at normal interest rate levels during many previous economic cycles. To put the current rate rise into perspective, a 1% increase on a $100,000 purchase financed over a 5 year term translates to a $10 increase in repayments per week.

    The recent downturn in the housing market has seen house prices fall from historical highs. Even with this small reduction, equity positions remain strong: house prices have still maintained a significant valuation uplift in comparison to most of their original purchase prices (particularly for properties acquired more than 4-5 years ago). Those who purchased properties in the last year will unfortunately experience some valuation pressure, however, used equipment values have improved significantly due to supply chain delays, resulting in an uplift in business balance sheet equity. The net wealth of the average Australian has improved considerably throughout this period.
    Pressure on business credit facilities will see a slowing of businesses paying their creditors and suppliers. Before supplying any goods or services, business owners should be meticulous when engaging new customers with their due diligence to ensure the customer’s ability to pay is evident. Businesses under pressure will seek out new relationships as prior relationships are fragile and under strain, usually due to non-performance or non-payment. A detailed and planned collection process will safeguard a business’s cash flow now and into the future.

To further mitigate risk, businesses can take out an MKP Credit Insurance policy. Trade Credit Insurance can protect your business in the event that a customer or client is unable to pay, by insuring receivables, safeguarding hard-earned revenues, providing an additional layer of due diligence on new clients whilst also providing quick access to replacement capital. Trade Credit Insurance transfers the risk of non-payment to an insurer, to protect your cash flows while giving you the confidence to pursue new opportunities.

    After two years of minimal action, the ATO is becoming increasingly proactive in their recovery activity, using disclosure of outstanding debts to credit reporting agencies and Director’s Notice of Demand to collect outstanding taxes. Removing this priority creditor is key and should be a focus for all business owners. Tailored specifically for business owners, an MKP Home Loan can help pay off your tax bill.

With an MKP Home Loan you get access to more of the equity in your home so you can strengthen cash flows, restructure or consolidate loans and refinance business debts, including tax debts.

Opportunities for growth within Australia’s earthmoving and construction sector remain. Partner with Moody Kiddell & Partners today to see how we can help position your business to best capture them. Call 1300 000 657 or visit

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