1 00:00:05,600 --> 00:00:08,680 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Suan Almam. 2 00:00:08,720 --> 00:00:11,240 Speaker 1: This week's interest rate cut has delivered a bit of 3 00:00:11,280 --> 00:00:14,560 Speaker 1: relief to homeowners, but what about small business what's it 4 00:00:14,600 --> 00:00:18,040 Speaker 1: mean for them? There were positive science for Australian businesses 5 00:00:18,040 --> 00:00:19,959 Speaker 1: at the end of twenty twenty four and early twenty 6 00:00:19,960 --> 00:00:24,079 Speaker 1: twenty five, according to the latest Business Risk Index from 7 00:00:24,239 --> 00:00:28,640 Speaker 1: creditor Watch released today, but that positivity might be short lived. 8 00:00:28,760 --> 00:00:32,680 Speaker 1: Patrick Coglin is the CEO at creditor Watch. Patrick, Welcome 9 00:00:32,720 --> 00:00:33,520 Speaker 1: back to Fear and Greed. 10 00:00:33,760 --> 00:00:35,400 Speaker 2: Thanks for having me. Always good to be here. 11 00:00:35,720 --> 00:00:37,640 Speaker 1: So just up front, what's the effect of an interst 12 00:00:37,680 --> 00:00:41,760 Speaker 1: rate cut on small and medium sized businesses. 13 00:00:41,920 --> 00:00:44,760 Speaker 2: At the moment. It's probably psychological more than anything. I 14 00:00:44,800 --> 00:00:48,360 Speaker 2: think it's the We've often spoke historically about there being 15 00:00:48,400 --> 00:00:51,479 Speaker 2: two horizons to a recovery. One was, you know, the 16 00:00:51,520 --> 00:00:54,320 Speaker 2: first rate cut, and then the second was probably actually 17 00:00:54,400 --> 00:00:57,640 Speaker 2: starting to see that additional funds flow into the pockets 18 00:00:57,640 --> 00:00:58,840 Speaker 2: of consumers. 19 00:00:59,080 --> 00:01:02,480 Speaker 1: So what you're saying, I mean psychological. Do we need 20 00:01:02,560 --> 00:01:04,600 Speaker 1: a bunch of rate cuts for it to make much 21 00:01:04,600 --> 00:01:05,200 Speaker 1: of a difference? 22 00:01:05,560 --> 00:01:07,560 Speaker 2: I think it really like it releases the pressure of 23 00:01:07,560 --> 00:01:09,800 Speaker 2: our of a little bit. Okay, this, you know, we're 24 00:01:09,840 --> 00:01:12,240 Speaker 2: starting to get better. The worst is behind us. I 25 00:01:12,240 --> 00:01:16,640 Speaker 2: think we'll naturally see a little bit more spend. And ironically, 26 00:01:16,880 --> 00:01:19,959 Speaker 2: the industry that's copying at the worst at the moment, 27 00:01:20,000 --> 00:01:23,720 Speaker 2: hospitality is most likely to feel the positive effect of 28 00:01:23,720 --> 00:01:26,800 Speaker 2: that first, because I'm going to get my second coffee 29 00:01:27,160 --> 00:01:29,320 Speaker 2: in the afternoon, I'm going to get my sandwich from 30 00:01:29,560 --> 00:01:31,600 Speaker 2: you know, the local cafe. So I think it is 31 00:01:31,640 --> 00:01:35,480 Speaker 2: psychological in terms of you know, having the biggest impact, 32 00:01:35,520 --> 00:01:38,040 Speaker 2: but we will start to see some actual financial impact 33 00:01:38,080 --> 00:01:39,119 Speaker 2: as a result as well. 34 00:01:39,480 --> 00:01:41,440 Speaker 1: Something to look forward to. Take me through the headline 35 00:01:41,440 --> 00:01:44,680 Speaker 1: figures from the latest index bit of positivity in January. 36 00:01:44,720 --> 00:01:45,240 Speaker 1: Good to see. 37 00:01:45,400 --> 00:01:47,880 Speaker 2: Yeah, that's right. It's nice to finally start talking about 38 00:01:47,960 --> 00:01:51,320 Speaker 2: some positive numbers. We've often said if things are going 39 00:01:51,360 --> 00:01:54,040 Speaker 2: sideways at the moment, that's that's certainly a positive. So 40 00:01:54,400 --> 00:01:56,880 Speaker 2: we've seen a leveling off of trade, payment of faults 41 00:01:56,880 --> 00:02:01,040 Speaker 2: and insolvencies. Of course, this has been a US seasonality, 42 00:02:01,280 --> 00:02:04,520 Speaker 2: but December and January as a caveat, is often quite 43 00:02:05,000 --> 00:02:08,480 Speaker 2: an uncertain period. But we are seeing, you know, strengthening 44 00:02:08,560 --> 00:02:12,040 Speaker 2: numbers from a retail sales perspective as well, and arrears 45 00:02:12,200 --> 00:02:16,959 Speaker 2: do unfortunately continue to trend upwards alongside court action, so 46 00:02:17,360 --> 00:02:19,480 Speaker 2: a bit of a mixed bag. But I think where 47 00:02:19,480 --> 00:02:22,480 Speaker 2: we're not going backwards's that's certainly a positive. 48 00:02:22,840 --> 00:02:24,720 Speaker 1: Okay, there was a drop off in the number of 49 00:02:24,800 --> 00:02:27,720 Speaker 1: insolvencies and trade payment defaults though, wasn't there. 50 00:02:28,160 --> 00:02:31,200 Speaker 2: That's right, Yeah, those two sort of lead indicators of 51 00:02:31,639 --> 00:02:34,720 Speaker 2: pain that's being felt. Is certainly the positive to take 52 00:02:34,760 --> 00:02:39,000 Speaker 2: out of this. Trade payment defaults, just for your listeners, 53 00:02:39,080 --> 00:02:42,840 Speaker 2: are a black mark or a default being lodged by 54 00:02:42,880 --> 00:02:46,200 Speaker 2: a creditor against their debtor for non payment. So that's 55 00:02:46,280 --> 00:02:50,240 Speaker 2: often the first red flag against a debta that is 56 00:02:50,280 --> 00:02:54,000 Speaker 2: heading towards administration. So if we can see those come 57 00:02:54,040 --> 00:02:58,640 Speaker 2: off naturally, we will see less administrations insolvencies in the future. 58 00:02:59,000 --> 00:03:01,760 Speaker 1: I mean, one of the great things about your data 59 00:03:01,880 --> 00:03:04,280 Speaker 1: is that you can actually split it into sectors. So 60 00:03:04,320 --> 00:03:07,520 Speaker 1: you talked about hospitality broadly, who's doing well, who's not? 61 00:03:08,200 --> 00:03:14,240 Speaker 2: Yeah, So the big names like manufacturing, for example, agribusiness, 62 00:03:14,320 --> 00:03:17,120 Speaker 2: which has often done it tough over you know a 63 00:03:17,240 --> 00:03:21,000 Speaker 2: number of years. They're just so exposed to weather and 64 00:03:21,120 --> 00:03:24,799 Speaker 2: you know, floods and you know locusts and all of 65 00:03:24,840 --> 00:03:27,399 Speaker 2: the plagues and whatnot. You know, it's really tough. 66 00:03:27,440 --> 00:03:29,720 Speaker 1: Biblical Patrick, very biblical. 67 00:03:29,320 --> 00:03:32,799 Speaker 2: That's right there, having a good run at the moment, 68 00:03:32,840 --> 00:03:36,680 Speaker 2: which is great. Not to obviously jinx them. Manufacturing, of course, 69 00:03:36,840 --> 00:03:39,200 Speaker 2: would be interesting to see, you know, with tariffs, whether 70 00:03:39,400 --> 00:03:41,280 Speaker 2: you know, even more comes back on shore as a 71 00:03:41,320 --> 00:03:45,800 Speaker 2: result of the tariffs, and of course healthcare is performing 72 00:03:46,080 --> 00:03:50,119 Speaker 2: is performing well. At the other end, obviously, hospitality by 73 00:03:50,160 --> 00:03:53,760 Speaker 2: far and away the most impacted industry of the lot, 74 00:03:53,840 --> 00:03:58,480 Speaker 2: and then construction sort of it's a sort of split 75 00:03:58,560 --> 00:04:01,960 Speaker 2: down the middle. You know, Residential very slow at the moment. 76 00:04:02,480 --> 00:04:04,920 Speaker 2: You know, a lot of people trading down in terms 77 00:04:04,960 --> 00:04:07,560 Speaker 2: of instead of putting another level on, they'll just renovate 78 00:04:07,600 --> 00:04:11,400 Speaker 2: their bottom level, instead of doing a kitchen renovation that 79 00:04:11,520 --> 00:04:13,400 Speaker 2: they might just you know, spruce up the bathroom a 80 00:04:13,440 --> 00:04:15,920 Speaker 2: little bit, that sort of thing. So part of commercial 81 00:04:16,000 --> 00:04:18,719 Speaker 2: is doing well, but there's obviously plenty of pressure on 82 00:04:19,040 --> 00:04:20,360 Speaker 2: you know, commercial landlords. 83 00:04:20,600 --> 00:04:23,360 Speaker 1: I noticed that the big property companies have been reporting 84 00:04:23,400 --> 00:04:25,000 Speaker 1: the last few days, and this is the other end. 85 00:04:25,080 --> 00:04:27,240 Speaker 1: This is the large business, not the small business. But 86 00:04:27,279 --> 00:04:29,840 Speaker 1: it certainly seems to be residential that's struggling more than 87 00:04:29,920 --> 00:04:32,120 Speaker 1: office even now, or more than retail now. 88 00:04:32,640 --> 00:04:36,919 Speaker 2: That's right, and they're just so exposed to consumer spend. 89 00:04:37,720 --> 00:04:41,400 Speaker 2: We're seeing far less you know, new builds and obviously 90 00:04:41,440 --> 00:04:45,240 Speaker 2: renovations taking place as well. And that's twofold. One, consumers 91 00:04:45,240 --> 00:04:48,440 Speaker 2: are spending less. Two it's really expensive as a result 92 00:04:48,480 --> 00:04:49,400 Speaker 2: of the inflation. 93 00:04:49,760 --> 00:04:51,799 Speaker 1: Stay with me, Patrick, we'll be back in a minute. 94 00:04:58,720 --> 00:05:01,839 Speaker 1: I guess this morning is comp and CEO at Credit 95 00:05:01,920 --> 00:05:05,680 Speaker 1: or Watch. So let's let's I mean, we've been talking 96 00:05:05,720 --> 00:05:08,400 Speaker 1: about what's been going on. Let's think about the future. 97 00:05:08,640 --> 00:05:12,760 Speaker 1: What are the big factors this year for businesses as 98 00:05:12,800 --> 00:05:13,440 Speaker 1: you see it. 99 00:05:14,320 --> 00:05:17,159 Speaker 2: Probably the first one is the same big factor that 100 00:05:17,200 --> 00:05:20,279 Speaker 2: we were hoping for last year, which is another rate cut. 101 00:05:20,400 --> 00:05:20,640 Speaker 1: Yep. 102 00:05:20,880 --> 00:05:22,760 Speaker 2: You know we are at that elevated level, so we 103 00:05:22,800 --> 00:05:26,680 Speaker 2: want to see that continue to come down. Inflation, you know, 104 00:05:27,200 --> 00:05:29,760 Speaker 2: everyone wants confidence that that is under control, and we 105 00:05:30,040 --> 00:05:32,560 Speaker 2: don't see that start to go back up. And then 106 00:05:32,760 --> 00:05:35,120 Speaker 2: I think there's a lot of there's a lot of 107 00:05:35,160 --> 00:05:39,520 Speaker 2: capital that's being held on to at the moment by investors, 108 00:05:39,680 --> 00:05:44,720 Speaker 2: private equity VC. You know, the IPO markets closed as well, 109 00:05:45,440 --> 00:05:47,839 Speaker 2: So if we can start to see that get spent 110 00:05:48,000 --> 00:05:51,120 Speaker 2: get distributed. You know, new businesses get started off the 111 00:05:51,120 --> 00:05:54,040 Speaker 2: back of you know, successful you know I pos and whatnot, 112 00:05:54,040 --> 00:05:56,760 Speaker 2: where employees go out on their own and start there. Right, 113 00:05:56,800 --> 00:05:59,320 Speaker 2: So there's there's a whole ecosystem that's connected there. So 114 00:05:59,320 --> 00:06:01,320 Speaker 2: they're probably the three big ones for me. 115 00:06:01,920 --> 00:06:04,800 Speaker 1: What about things like an election, a federal election? Does 116 00:06:04,839 --> 00:06:07,960 Speaker 1: that worry people that people not spend as much just 117 00:06:08,000 --> 00:06:08,479 Speaker 1: in case? 118 00:06:09,040 --> 00:06:10,800 Speaker 2: That's a very good point, I think. I think the 119 00:06:10,839 --> 00:06:13,320 Speaker 2: biggest problem we will have out of that is not 120 00:06:13,360 --> 00:06:18,359 Speaker 2: necessarily the natural slow down through an election cycle. The 121 00:06:18,400 --> 00:06:21,200 Speaker 2: good thing is it's likely to be short, right, even 122 00:06:21,200 --> 00:06:23,480 Speaker 2: though we're technically in a shadow one at the moment, 123 00:06:25,600 --> 00:06:28,240 Speaker 2: is a is a you know, a hung parliament or 124 00:06:28,279 --> 00:06:32,760 Speaker 2: a minority government. It's it's it's always challenging because we 125 00:06:32,839 --> 00:06:34,599 Speaker 2: know that a lot of bills you know, get held 126 00:06:34,680 --> 00:06:37,600 Speaker 2: up and there's there's a slow down, and so that's 127 00:06:37,600 --> 00:06:40,320 Speaker 2: probably one of the one of the bigger, bigger challenges 128 00:06:40,480 --> 00:06:41,320 Speaker 2: that we might face. 129 00:06:42,200 --> 00:06:46,480 Speaker 1: Does the legislative agenda, particularly around industrial relations and stuff 130 00:06:46,520 --> 00:06:49,040 Speaker 1: like that, does that sort of thing make much difference. 131 00:06:49,040 --> 00:06:52,120 Speaker 1: I'd imagine things like construction retail where they employ a 132 00:06:52,160 --> 00:06:55,800 Speaker 1: lot of people if there's uncertainty around that that can't help. 133 00:06:55,880 --> 00:06:59,520 Speaker 2: I suppose, Yeah, that's right. I think it becomes quite 134 00:06:59,640 --> 00:07:03,760 Speaker 2: grand new right. You start to see you know, manufacturing, 135 00:07:03,800 --> 00:07:07,960 Speaker 2: industrial construction get hurt with you know, just red tape 136 00:07:08,160 --> 00:07:10,239 Speaker 2: or they just go, I'm not going to hire people 137 00:07:10,280 --> 00:07:13,320 Speaker 2: because it's it's too much househole or it's too expensive. 138 00:07:14,000 --> 00:07:15,880 Speaker 2: So you then start to see a lack of a 139 00:07:15,960 --> 00:07:21,040 Speaker 2: lack of investment. So red tape across any industry, any state, 140 00:07:21,160 --> 00:07:24,880 Speaker 2: you know, national level, et cetera. Is always very painful, 141 00:07:24,960 --> 00:07:28,120 Speaker 2: but it often takes a bit of time to actually 142 00:07:28,880 --> 00:07:32,120 Speaker 2: come into effect and then and then really be felt. 143 00:07:32,800 --> 00:07:37,080 Speaker 2: Businesses a pretty savvy once they do. Whence it does 144 00:07:37,120 --> 00:07:40,480 Speaker 2: come into effect of operating, you know, in a new 145 00:07:40,520 --> 00:07:41,280 Speaker 2: sort of paradigm. 146 00:07:41,560 --> 00:07:44,720 Speaker 1: And what about the Donald Trump factor? People, we talk 147 00:07:44,760 --> 00:07:47,160 Speaker 1: a lot about it, but does it actually matter that much? 148 00:07:48,760 --> 00:07:52,800 Speaker 2: Look, not not yet. I think there's there's some Australia's 149 00:07:53,320 --> 00:07:56,400 Speaker 2: the lucky country. We obviously have a huge amount that 150 00:07:56,440 --> 00:07:59,880 Speaker 2: we dig out of the ground and sell overseas, which 151 00:08:00,080 --> 00:08:05,000 Speaker 2: which keeps the economy floating a floating in tough times. 152 00:08:05,480 --> 00:08:09,960 Speaker 2: We're very strategic as well, So I don't see having 153 00:08:09,960 --> 00:08:12,840 Speaker 2: a big impact, you know. But in saying that, who 154 00:08:12,880 --> 00:08:16,400 Speaker 2: knows what you know? The President's thing, well, I think 155 00:08:17,440 --> 00:08:20,760 Speaker 2: is the ultimate businessman, which which I think should should 156 00:08:20,760 --> 00:08:23,200 Speaker 2: be a positive that people look at because if a 157 00:08:23,240 --> 00:08:25,840 Speaker 2: deal is there to be done, he'll happily take a 158 00:08:25,880 --> 00:08:29,160 Speaker 2: deal and look at the positive pr off the back 159 00:08:29,160 --> 00:08:29,760 Speaker 2: of that as well. 160 00:08:30,560 --> 00:08:33,760 Speaker 1: Okay, So the prognosis for twenty twenty five from where 161 00:08:34,000 --> 00:08:35,800 Speaker 1: you see it, and you get a lot of data, 162 00:08:35,800 --> 00:08:38,959 Speaker 1: and you know how small businesses and MENA sized businesses 163 00:08:39,000 --> 00:08:41,240 Speaker 1: are traveling, what do you reckon the next twelve months 164 00:08:41,280 --> 00:08:42,040 Speaker 1: holds generally? 165 00:08:42,559 --> 00:08:44,120 Speaker 2: Look, I think I think it's still going to be 166 00:08:44,200 --> 00:08:46,360 Speaker 2: really tough for the run through to the end of 167 00:08:46,400 --> 00:08:49,560 Speaker 2: financial year, particularly for small and medium businesses. You know, 168 00:08:49,600 --> 00:08:51,880 Speaker 2: the rate cut, even if we've got a second rate cut, 169 00:08:51,960 --> 00:08:55,560 Speaker 2: it takes time for that to flow through to obviously 170 00:08:55,600 --> 00:08:57,960 Speaker 2: the mortgage and then the consumer's pocket and then for 171 00:08:58,000 --> 00:09:00,679 Speaker 2: them to have confidence and then to start to spend. 172 00:09:01,320 --> 00:09:03,440 Speaker 2: So certainly through to the middle of the year is 173 00:09:03,480 --> 00:09:05,640 Speaker 2: still going to be exceptionally tough. But then I think 174 00:09:05,640 --> 00:09:09,480 Speaker 2: we start to see improvements from there as the perse 175 00:09:09,520 --> 00:09:14,440 Speaker 2: strings both consumer and commercial start to be released. More hiring, 176 00:09:14,960 --> 00:09:18,680 Speaker 2: if that's even possible at the current unemployment rate, and 177 00:09:19,080 --> 00:09:21,760 Speaker 2: just in general, probably more investment. And that's not just 178 00:09:21,840 --> 00:09:25,080 Speaker 2: investment from an IPO you know, capital markets perspective, but 179 00:09:25,520 --> 00:09:29,880 Speaker 2: also you know, buying machinery, investing in technology. While we're 180 00:09:29,880 --> 00:09:33,120 Speaker 2: in this really tough phase of you know, high interest 181 00:09:33,200 --> 00:09:37,720 Speaker 2: rates and uncertainty, even good businesses will will tread water 182 00:09:38,160 --> 00:09:41,199 Speaker 2: just to see what is coming. Once they've got that, 183 00:09:41,400 --> 00:09:44,040 Speaker 2: you know, that foresight certainty, they'll start to spend, which 184 00:09:44,080 --> 00:09:45,480 Speaker 2: is which is great for everyone. 185 00:09:45,920 --> 00:09:47,720 Speaker 1: Patrick, thank you for talking to Fear and Greed. 186 00:09:48,040 --> 00:09:49,280 Speaker 2: Thanks for having me again. 187 00:09:49,400 --> 00:09:52,880 Speaker 1: As Patrick coglan, CEO of Credit Watch. This is the 188 00:09:53,040 --> 00:09:55,520 Speaker 1: Fear and Greed Daily Interview. Join us every morning for 189 00:09:55,559 --> 00:09:58,360 Speaker 1: the fuller side our fear and greed daily business needs 190 00:09:58,360 --> 00:10:01,080 Speaker 1: for people to make their own decisions. I'm chan Alman, 191 00:10:01,720 --> 00:10:02,319 Speaker 1: enjoying your day.