A tsunami is created underwater, so you do not see how it starts. It can only be measured as its happening.

But something as large as an earthquake or an underwater volcanic eruption creates submarine landslides. A tsunami needs something dramatic to happen, to be dramatic itself.

Along with the “Zombie Company” conversation, in talking to many insolvency practitioners, there has been the reference to a tsunami of work coming from the COVID epoch, and when this tsunami will start.

So, what will be those earthquakes and volcanic eruptions in the business work to cause a tsunami of work for insolvency practitioners? 

For the bulk of SME’s, it is the Australian Taxation Office. The ATO is big on policing by marketing, so eventually they will stop giving money away and will return to chasing it. What they say and what they do may differ. 

They will make statements about finally cleaning things up, but SME’s can be assured that unless they are a particular case, nothing significant in the way of robust collections is going to occur from the ATO until March 2022 (and I have already taken bets on that).

So that is one dormant volcano, and as the ATO is involved in giving the Federal Government’s money away with the stimulus package, we do not see any significant earthquakes coming from there.

Perhaps we will hear from landlords as they wish to collect up what is owing to them. We don’t have a lot of experience here in our consultancy company, but apart from some dodgy deals done by landlords with some pubs, most of our clients are in repeat mode saying to their landlords “we will give you what we can”.

One gets the feeling that the landlord/bank/tenant triangle will work itself out case by case. 

In Melbourne where every third shop is a coffee shop (yes that is an exaggeration, but I did it for effect), will landlords be throwing out tenants who will be challenging to replace? And if they do this, will they bother to chase them for the money?

So, we do not see a significant geological event created by landlords.

Perhaps it is the banks and finance companies that will become robust and create a cataclysmic event. 

In the world of the SME’s, banks stopped long ago giving businesses loans and started giving mortgages heavily disguised as a business loan. While banks will be concerned about these loans, they have security to cover them, eventually. Banks are not about to go back to the bank bashing of the royal commission nor finance companies, so they will muddle along dealing with worrying loans “in their way”.

And besides, banks and finance companies are in a unique position in business, their product, money, now is nearly free.

For the insolvency industry, the geological event (sticking with the metaphor), is not going to be caused by the usual suspects – the Australian Taxation Office, landlords or finance companies.

Maybe the significant suppliers to trades will get tough – although many tradies are all out on new infrastructure projects and are doing fine.

Or could the question be how long it will take to get back to “what it was before” for the insolvency industry?

Yesterday reports from the industry showed there were six liquidations and nothing else, that is as quiet as it could get. 

Is it worth considering that the real irony is, after all the talk of business collapse that the insolvency industry will instead of having a tsunami of work could be considered an industry with an oversupply problem? 

Along with a massive stimulus package from the Federal Government (now continuing into cherry picked industries), the new budgets (yet to be seen from the state governments) and a level of tolerance from the Australian Taxation Office, (along with other levers of business), means our landscape (sorry wave scape) isn’t going to be what it appears it might be.

The insolvency industry may need to find new efficiencies and products in these new times.

I will slip in hear that our Fast Rabbit company provides a service where we take bank statements and turn them into accounts that make reports, checking for voidable preferences and an understanding of the business’s performance quickly.

You can put away the highlighters and the need to load up an excel spreadsheet; we can do all that for you.

If you take on the role of  Small Business Restructuring Practitioner, with the Government’s product of “debtor in possession”, we can take a bank feed and tell you overnight if the business makes or can make money, and if the plan being proposed by the business owner has legs.

Contact us at Fast Rabbit and let us know if we can help you with a job. And maybe you have a comment for our blog.