Keith McLaughlin: Centrix Managing Director on the rising number of liquidations

The number of liquidations is starting to rise as small and medium-sized businesses are suffering from a lack of sales. 

Businesses are seeing a lack of overall sales, with some people putting off big purchases. 

More people are paying their phone bills and mortgages on time in the month, but late payments are up year-on-year.  

Centrix Managing Director Keith McLaughlin told Mike Hosking that the level of liquidations in the month of May have been at a 10 year record. 

He says the trend is increasing, which is of more concern. 

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Episode Transcript

Speaker 1 (00:00):
The economy time or insight into where we're at. Centric
data shows people more than ninety days behind on payments
has fallen. In May two hundred and sixty nine companies
were insolvent. Though that's not good. Number of people in
consumer areres has grown or rears has grown about sixteen thousand.
The Centrics managing director Keith McLaughlin back, Well, this Keith,
very good morning to you.

Speaker 2 (00:18):
Good morning mikeel.

Speaker 1 (00:19):
In total issye better or worse or treading water?

Speaker 2 (00:23):
Well, I think on the consumer side of it, it's
treading water. I don't think we're seeing the dramatic arizal
forward styles or rares to concern, but I think we're
concern really at the moment is what's happening to the
small to medium sized business sector that suffering a little
bit from lack of sales coming through the front door.
And as a result of that, we're seeing liquidations starting

(00:44):
to rise or continuing to rise.

Speaker 1 (00:46):
Those liquidations in comparison to you know, whatever you want
to compare it to the GFC whatever, How bad is
it historically?

Speaker 2 (00:53):
Well, that's certainly. I mean, if you look at we
were ten years ago, it's mean teen years since We've
seen the level liquidations that we are at the moment
in the month of May, so it's unusually high. And
the trend is increasing, which is of more.

Speaker 1 (01:06):
Concern any sense of where that trend goes. Are we
going to peak shortly or we just don't know?

Speaker 2 (01:13):
I think on the company side, I think we've probably
got a few more amounts of pain to come. I
think consumers are now getting the head around what their
household budget looks like, and consequently, discretionary spending has fallen away,
which means that businesses are suffering from cash flow from
the lack of sales or if you're a builder, people
are differing decisions about buying your cars, about extending their property.

(01:36):
So I think that's having an impact on businesses and
I can see that nothing to really change that in
immediate future.

Speaker 1 (01:43):
Explain the consumer side of the equation are in telco
and mortgage, There, to my mind, two completely different things.
If you can't pay your phone bill, something's gone horrifically wrong.
The mortgage is a whole different thing, isn't it.

Speaker 2 (01:55):
Well. I think there tends to be a prioritization of
what people pay. For example, I'll mortgage first they'll pay
a second things like your phone is probably one of
the last ones that.

Speaker 1 (02:09):
You paid, So what are you saying it. It's like,
it's not the end of the world. You could probably
scrape together ninety bucks or one hundred and twenty bucks
or whatever the case might be. My point being, if
you can't pay the mortgage, you're like, you're in the crapper,
aren't you, as opposed to your phone, which you can
sort out.

Speaker 2 (02:22):
Yeah. Yeah, But I think we've seen a significant increase
in what we placify as hadounce, which is where that
borrow has approached the lender and said, look, I'm really struggling,
and consequently of either restructured or the third payments on
the mortgage. So I think, you know, we've seen more
cooperation between lender and borrow to avoid looks like mortgage
use sales. You know, it's not the end of the world.

(02:45):
And I think it's from a consumer side, people manage
from your spending that they could try to control their
budget's a lot better and I can I can see
that's plateau, so it's not deteriorating, which it's really good
to see.

Speaker 1 (02:55):
Good what's the demand for credit picture or we are after money.
Can we get money as it? Desperation is ad optimism
driving that. What's going on well.

Speaker 2 (03:04):
An increase in cred demand for home leading so it's
starting to come back into action. At the moment, we're
seeing probably more activity in the housing market and let's
lead into a little bit of an increase as far
as leaning on the housing market is concerned. Businesses are
borrowing a little more than they did, probably to try
and make me meet. And we're finding things like personal

(03:25):
loans are reasonably strong and again that's probably to balance
the household about it, but discretionary spinning like motor vehicles
that it's falling away quite dramatically.

Speaker 1 (03:36):
All right, good inside as always, Keith appreciated very much.
Keith McLaughlin, who's these centrics managing directly. Still for more
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