Episode 115: Insurance Insights: Protecting your Business Assets
23rd June, 2025
In this episode of Financial FOFU, we unpack the essentials of business insurance—what you need, what to look out for, and how to avoid costly mistakes. From floods to cyber hacks, we talk about the real risks businesses face and how the right insurance can be the difference between bouncing back and closing your doors.
We also share real-world stories of when things went wrong (and right), plus practical tips for reviewing your cover, understanding your policy, and knowing what questions to ask your insurer or broker.
If you're a small business owner or entrepreneur, this is a must-listen.
🎧Topics include:
✔️ Common insurance traps
✔️ Industry-specific cover to consider
✔️ Claims horror stories
✔️ When and how to review your policy
✔️ Practical advice for protecting your assets
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Just two industry experts (and guests) having a friendly chat and sharing our knowledge. We aim to raise your knowledge base and dis-spell any myths surrounding finance. tax and a range of other financial topics.
This is a safe space to ask questions and hear useful info on financial matters.
Read more about FOFU here
And, as always if you'd like to leave us a message, or suggest a topic, you can do so here
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DISCLAIMER- The information and material in this podcast, and supplementary and associated information available, is for general information only. It should not be taken as constituting professional advice from the podcast owners, and we recommend you seek independent suitable advice that is specific to your unique circumstances.
Podcast Transcript Available Here
Trudi Cowan (00:09.944)
Hello everyone and welcome back to another episode of the Financial Fofu podcast. Today we again have the lovely Lynne Walton from Access Intel joining us. Welcome.
Lynne (00:21.414)
Hi, lovely to be here Trudi and Sarah once again. Yes, yes, fine, busy helping businesses all across Australia protect themselves from bad debts and build and grow their companies.
Sarah Eifermann (00:26.074)
How are you Lyn?
Sarah Eifermann (00:41.212)
Yes.
Trudi Cowan (00:41.538)
And how are you finding the market at the moment? you finding that there are sort of a bit of an increase in bad debts that are becoming problematic for businesses or is it pretty stable at the moment?
Lynne (00:50.53)
Yes, insolvencies have increased dramatically. So generally, and I'm just looking at some some statistics here on on my screen. So it's looking as though we're heading towards 16,000 for this year. So it's a lot. Yeah.
Sarah Eifermann (00:54.364)
Yeah.
Lynne (01:19.89)
Well, considering that back in 2020, even though it was, you know, COVID time, we were talking about just about 4000. So, you know, four times. Yeah, yeah. So.
Trudi Cowan (01:31.852)
Wow, okay, so that's a big difference.
Sarah Eifermann (01:33.447)
Yeah. Look, Warren Hogan from Judo often talks about this and he calls them the zombie businesses that the COVID stimulus packages propped up. Like they should have gone bust in 2020 anyway, but they didn't because of cashflow boost and then JobSeeker. And so they managed to survive COVID and now they're going backwards. And look, I'm seeing it quite a lot. Um, and we'll see even more of it with the ATOs changes to its tax deductible
Lynne (01:38.354)
Okay.
Trudi Cowan (01:40.27)
Mm-hmm.
Sarah Eifermann (02:02.426)
debt of its payment plans. We'll start to see that impact even more for businesses, chasing it. Yeah. Now we had the pleasure. Well, I had the pleasure of you speaking on conference recently in Byron Bay. went to my commercial finance conference and you had some figures there. I think about the ATO in terms of, was it DPNs or was it what they were chasing?
Trudi Cowan (02:06.242)
Hmm.
but also the ATO is just being more aggressive generally in chasing, chasing deaths as well.
Lynne (02:14.823)
Yeah.
Lynne (02:31.154)
Yeah, so the ATO debt at the moment, when I presented at the conference, my figures were based on the end of financial year. It was 86 billion that the ATO were owed at that point. Yes. Yes. Yeah, yeah.
Sarah Eifermann (02:48.73)
Mm-hmm.
Sarah Eifermann (02:53.19)
last financial year, $86 billion. That's why they're chasing it guys. If you feel like you're being targeted as a small business, $86 billion outstanding.
Trudi Cowan (02:59.128)
Mm-hmm.
Lynne (03:03.451)
Yeah.
So at that time when I presented that to you, was, yeah, yeah. you know, that contrast that with financial year 2019 when it was 44 billion. So we're talking about half. And also we've just had figures announced that it's now up at 105 billion.
Sarah Eifermann (03:11.782)
A couple of weeks ago.
Sarah Eifermann (03:24.473)
It's doubled.
Trudi Cowan (03:25.582)
We're going to begin,
Lynne (03:36.932)
So it's going up.
Trudi Cowan (03:39.234)
Yeah, it should be going down. Like people should be paying, we all hate paying tax, but you still gotta pay it, so we should be paying that down.
Lynne (03:44.434)
Yeah.
Sarah Eifermann (03:45.531)
Yeah, but it's going up based on cashflow management. Like Trudi and I just came out of a meeting with clients like cashflow management is a problem. have another client that wants a small overdraft, but they've waited too long. Like people are not managing their cashflow well. And we sound like absolute broken records now, like every episode it gets woven into our conversation because it is the key foundational.
Lynne (04:00.53)
you
Trudi Cowan (04:01.388)
Yeah.
Sarah Eifermann (04:13.122)
management piece of your business that if you are not managing your cashflow and looking at what's coming down the pipeline, you can't use the ATO as a bank and they've now made it even harder to use the ATO as a bank. But, but more than that, if you think that you're still getting by because you can pay your other creditors, but you can't play the ATO, do you have a business that's successful? Like
Lynne (04:39.206)
Yeah, well, I think you used to be able to get away with it to a uptis a point. But the ATO announced the Commissioner of Taxation announced that in Australia, paying tax is no longer optional. And the ATO have got a number of strategies and tools that weren't available to them before that are now.
Sarah Eifermann (04:43.494)
True.
Trudi Cowan (04:43.661)
Yeah.
Lynne (05:07.602)
And this is good for businesses. It's levelling the playing field even though there are businesses out there that are struggling. It should be that everyone contributes to our society and our community and our economy equally. So if one business is paying its tax and another isn't, then that's not a level playing field.
Sarah Eifermann (05:34.097)
think this was one of our first episodes that Trudi and I ever did, which was like 112 episodes ago. So it's part and parcel of being in business. If you're making money, are paying tax and what we're seeing and the reason we've got Lin on today is to talk about small business restructure. So SBR is it's become known. I'm seeing a lot of people going
Trudi Cowan (05:38.702)
you
Sarah Eifermann (06:01.382)
have has who's done an SBR this looks like it's a good option. It'll cost me 25k but I can wipe off 200 or 500 or $900,000 of debt. Yes, but no. So for those that don't know, Lynne, can you tell us what an SBR is or a small business restructure?
Lynne (06:20.496)
Yeah, yeah, so it's a form of insolvency, which is a softer touch, shall we say. So it was brought in during COVID to help businesses to more quickly and cheaply restructure. Now, it's effectively an arrangement with creditors.
Sarah Eifermann (06:25.638)
Mm.
Sarah Eifermann (06:30.266)
Yeah.
Lynne (06:46.226)
and it's governed by a small business restructuring practitioner. And the process involves the directors of the business making a proposal to creditors and the creditors vote on that proposal. They get roughly a month to present the proposal and then they vote. Now, other insolvency processes are more difficult to go
get through, but this process, the small business restructuring is a percentage majority in value. So large, larger creditors, predominantly the Australian Tax Office can approve or prevent the arrangement from going through. because they're the largest creditor,
Sarah Eifermann (07:32.378)
Mm-hmm.
Sarah Eifermann (07:37.828)
Yep. Yep.
Lynne (07:43.814)
they often make decisions that affect the whole, whether it's approved or not. Now, when this was first introduced, the ATO were approving 90 % of the small business restructuring proposals that were put in front of them. We understand that that has reduced because they're becoming more selective.
Sarah Eifermann (08:10.746)
Yeah.
Trudi Cowan (08:11.136)
Yeah, I am hearing that.
Lynne (08:11.343)
They're choosing businesses that have got a good chance of continuing.
Sarah Eifermann (08:17.772)
Which is my next question. Why would the ATO agree to just wiping off say 75 % of their debt or whatever it works out at cents in the dollars on if the business is going to fail anyway?
Lynne (08:33.188)
Yeah, so I think that that's, you know, that's the change that has taken place recently, since more and more businesses have looked at this. mean, insolvency is a necessary part of a healthy economy. It means that those businesses that are, you know, are cancerous really, and they're pulling down the businesses that are around them, are
Sarah Eifermann (08:50.278)
Correct.
Lynne (09:03.175)
moved out of the economy to enable the other businesses to thrive and prosper.
Sarah Eifermann (09:08.56)
Yep. And that that frees up employment. It frees up clients. It frees up a hot like it is part and parcel of the economy and nobody likes it. We don't like seeing you go bust, but at the same time, it happens.
Trudi Cowan (09:10.318)
Thank
Trudi Cowan (09:19.394)
Cheers.
Lynne (09:22.788)
Yeah, yeah, but I think COVID has a lot to do with this. As you said, there were all those businesses that were propped up. Many of them are still propped up to a certain extent, but it's being able to distinguish the wheat from the chaff when it comes to these businesses and support those that have got a good chance of survival.
Sarah Eifermann (09:28.283)
Yeah.
Sarah Eifermann (09:42.84)
Hmm
Lynne (09:50.778)
And it's not an exact science, but the ATO do look at whether that business has been a good corporate citizen, meaning that they've tried to pay when they can. And they're, yes, that's it. That's it.
Sarah Eifermann (10:08.646)
Behavior, behavior, behavior.
Trudi Cowan (10:11.084)
And then the behavior with the ATO in particular is so important. I often say to clients, even if you can't get a payment plan or you can't pay the full amount, still pay what you can because that's still better for you. When you do get to a position you can negotiate an arrangement. Then if you just do nothing, if you just do nothing, you're just ignoring the problem and it typically gets bigger and the ATO typically becomes less likely to wanna negotiate with you.
Lynne (10:22.321)
Yeah.
Lynne (10:27.641)
Yeah.
Lynne (10:31.526)
Yes.
Sarah Eifermann (10:35.142)
like Trudi, if you owe me $100 and you can't pay me back $100 because you don't have $100, but you pay me $1 a week, it sucks. But at least I know you're trying. And that's the difference. I know that you're trying you acknowledge that you owe me the money and you're trying to make it work.
Lynne (10:35.217)
Yeah.
Trudi Cowan (10:40.663)
Mm.
Trudi Cowan (10:48.258)
Yeah.
Sarah Eifermann (11:00.406)
So in terms of the amount, it's got a cap on it. You can only do a small business restructure if it's under a million dollars in. Yeah. Yeah.
Lynne (11:08.358)
That's correct. Yes.
Trudi Cowan (11:10.614)
is that that's total debt across the business. So that's not just ATO that's creditors and loans and anything else you might have.
Lynne (11:12.88)
That's Total Day.
Yeah, that's total debt. Now, what we've been seeing and the legislation was brought in quickly. It has to a certain extent been beneficial for a lot of businesses. But what we've been seeing is that directors are giving a small business restructure and
practitioner a list and it may not include all of the creditors. And so when it is approved and carried through, there are some businesses that may not know that they are now a party to this arrangement, which may be that, you know, they've got 15 cents in the dollar rather than the 100 cents that they were expecting to get. So that's one of the issues with it.
Sarah Eifermann (12:13.478)
So if it's happened, but they're not on the list, therefore they haven't had voting rights, does it still only they get zero? Do they get their 15 % whatever's allocated?
Lynne (12:23.782)
they get their 15%, whatever has been approved by the SBR.
Sarah Eifermann (12:29.102)
Yes. Correct. So if you're a business, broken record coming out again, if you're a business that is not using access Intel's platform to do its monitoring of debts, debt positioning, which one is that one? It's called access. The one that does the monitoring monitor. was like, it's called access monitor, right? So if you're not using access monitor to monitor your,
Trudi Cowan (12:36.501)
You
Lynne (12:36.582)
you
Lynne (12:50.446)
Access monitor. Yes.
Sarah Eifermann (12:58.276)
people that are paying you, why not? Like it's cheap, it's affordable, but the risk prevention is huge. And then at the same time, if you're not registering with a PIMSY or an all PAP on the PPSR to become a secured creditor so that you've actually got a seat at the table and you get voting rights because you're listed as a secured creditor, then what is wrong with you? Again, you've got to pay as you go.
option, which I think you said was, is it $11?
Lynne (13:30.258)
Yes, yes, so it's $11 per year to monitor one customer.
Sarah Eifermann (13:34.24)
yeah. So there's a setup fee they pay. It's about $135, I think with GST, to get set up and then it's everyone after that, or is it just $11?
Trudi Cowan (13:38.413)
which is super tasty.
Lynne (13:50.606)
It's just $11. So we've got a pay as you go, pay as you go account where you can create an account, access Intel with 2Ls.com. Up in the top right hand corner, just click on create an account and just sign up for free and you've got access to monitoring then.
Sarah Eifermann (13:52.73)
There's really no excuse.
Sarah Eifermann (14:15.014)
Yeah, it's ridiculously cheap to provide you with the risk management to stop yourself from potentially losing a couple hundred grand. Um, and this happens regularly. And I had a client ask me yesterday as last week, but he sent me the forms through yesterday. They, lost $200,000, um, in a business, a large building company that was contracted to a large, well-known not-for-profit charity that works in the aged care space.
Lynne (14:23.175)
Mm-hmm.
Sarah Eifermann (14:44.222)
and they've, you know, the community lost like $1.4 million and only one of those clients was listed, had put an all pap. sorry, I think it was actually a Pimsy because they did scaffolding. they had put, a Pimsy on it. And even then, like, again, I think they got like five cents of the dollar of what they're owed. But when I went through the list, I was looking at all of the creditors and then how many of them had, and it was like four. And I was like, this is a business practice needs to change.
Trudi Cowan (14:55.758)
Thanks
Lynne (15:12.7)
Yeah.
Sarah Eifermann (15:13.294)
and it can pretend protect your outcomes in the event of you're on the receiving end of one. But for those that are considering it in their business, we already, when you did your description to start with, I really want to like nail home for people that you are appointing an external administrator. It will show up on your credit file for the business, which links to you personally through the directorship listing to your personal file. So
Trudi Cowan (15:18.542)
Hmm.
Trudi Cowan (15:39.598)
and
Sarah Eifermann (15:41.219)
Often I've had clients say, but I was told by my administrator or my liquidator that it wouldn't impact my credit score. And it doesn't technically impact your personal credit score. However, it is linked via the directorship linkages. Can you talk to a little bit about.
Lynne (16:00.016)
Yes, yeah. So again, also within our platform, you know, there's always a person behind a business and there's also always there's often a person behind multiple businesses. So within our platform, our clients are able to see which business a particular individual is involved in and whether there is a history.
Sarah Eifermann (16:09.254)
Mm-hmm.
Trudi Cowan (16:09.422)
Mm-hmm.
Lynne (16:29.146)
of insolvencies because if there is, then the risk may be greater than someone that has never had an insolvency event before in any businesses that they've run. So it's good to be able to see that. It's also, we are approved by the Australian Taxation Office as a recipient of their
Sarah Eifermann (16:54.692)
Mm. Yep.
Lynne (16:57.872)
disclosure of business tax debts legislation. So we receive notification. And last year, there were 38,400 businesses that were notified to us that had a tax debt. And we share that with the clients that we have that are monitoring particular customers.
Trudi Cowan (17:00.568)
Mm-hmm.
Sarah Eifermann (17:05.126)
Mm-hmm.
Trudi Cowan (17:14.51)
Hmm
Sarah Eifermann (17:22.244)
Yep. So if you've got access monitor and you've got your customers set up and it comes up through the ATO that they've got outstanding tax you get notified as an access Intel monitor customer, which means you can make a decision as to how much credit you extend them. And you can reduce your risk in terms of payment.
Lynne (17:36.497)
Yes.
Lynne (17:40.676)
Yeah, yeah.
Trudi Cowan (17:40.94)
Yeah.
Lynne (17:44.304)
Yeah, yeah.
Trudi Cowan (17:44.524)
Yeah. And in terms of those disclosures of debts as well, just so people are aware, the ATO doesn't do it without telling the business. The business is well aware this is coming up. The ATO, you know, takes a number of steps before they get to the point of notifying those debts. And they do send out letters saying, if you don't take action, we are going to notify your debts. And there's always plenty of opportunities to stop that from happening. And the businesses are certainly aware that is happening when those debts are notifying.
Lynne (18:06.78)
Yeah.
Lynne (18:13.668)
Yeah, one of the other things that we're seeing increase, know, one of the other ATO tools is directors penalty notices. So for those listeners that don't know what that is, the ATO has a tool at their disposal which enables them to serve a notice on a director of a business that is not engaging.
Trudi Cowan (18:24.674)
Yes.
Lynne (18:43.058)
and not paying tax and it's a 21 day notice. When that notice expires, if the director has not taken any action to either appoint an insolvency practitioner or pay the debt, then the debt jumps from the limited liability company to the director personally.
Sarah Eifermann (19:09.776)
Hmm?
Lynne (19:12.238)
It can be absolutely massive for some individuals that aren't aware that that can happen. And so that's why we're seeing a lot of SBIRs occur. That 21 days means that directors are very motivated to take action and they see the SBIR as a good way to deal with that and still retain their business.
Trudi Cowan (19:31.64)
Thank
Sarah Eifermann (19:39.749)
Mmm.
Trudi Cowan (19:40.074)
And preferably we don't let it get to the point of a DPN because as you say, there is a 21 day period, which is not very long in the scheme of things when you're dealing with these types of debts because they're not typically small ones that the ATO is issuing DPNs on. So there's not usually a really quick fix to get those amounts paid either.
Sarah Eifermann (19:42.758)
Lynne (19:51.175)
Yeah.
Lynne (19:58.204) Yes. Sarah Eifermann (20:00.591)
And lending for that type of debt for the purpose of repaying ATO debt is not an easy sell. Like your majors usually won't touch it. There are some residential lenders that will allow you to refinance your house to pay out ATO debt, but there's six weeks. Like 21 days isn't a long time. You need to be on top of it. A lot of our FinTech lenders that give us fast finance, they won't touch ATO debt. So unless you qualify,
Lynne (20:15.761)
Yeah.
Lynne (20:26.738)
Right, okay.
Trudi Cowan (20:26.882)
Yeah. You're not paying the ATO then why would you pay anybody else?
Sarah Eifermann (20:31.814)
Well, I mean, and especially like you're looking the interest rates are up around the 24 18 to 24 plus percent. had a client the other day that took out a Prosper facility and they're paying 52 % annual percentage rate. So Prosper notoriously used to be at 38. Like you could, you could comfortably say you're at 38. It's 26 % simple interest. So times that by 20, like two really, which is only 24. So it's even a little bit, um,
Lynne (20:34.962)
Hey
Trudi Cowan (20:49.356)
That's really hot!
So.
Trudi Cowan (20:59.127)
Yeah.
Sarah Eifermann (21:01.446)
Like the way it works out, you can, it's around 50%. 50%. So for every dollar you borrow, it costs you 50 cents to pay it back. Like hugely problematic.
Trudi Cowan (21:07.202)
Thanks.
Trudi Cowan (21:11.586)
Yeah, problematic. Now, Lynne, we're talking a lot about ATO debt here. Do you ever see an SBIR where the ATO is not the biggest creditor or is it really typically that businesses are leaving the ATO till last to pay?
Lynne (21:16.582)
Yes.
Sarah Eifermann (21:22.391)
Hmm
Lynne (21:26.962)
I don't really come across them that often unless, you know, it's our clients that are seeing the SBR. So just to give you an idea, we've got one client that sees six SBRs a day. They supply alcohol.
Sarah Eifermann (21:27.194)
Good question, Trudi.
Lynne (21:54.758)
to the hospitality industry. you know, and they're struggling along with construction. So, yes, so we are saying that, but sorry Trudi, what was the question again?
Sarah Eifermann (21:55.258)
Yeah.
Sarah Eifermann (22:02.47)
Mm-hmm.
Trudi Cowan (22:11.118)
Are you seeing SBIRs where ATO is not the biggest creditor?
Lynne (22:14.582)
so we don't really get to see what's behind it, but generally the ATO features in there. I've never heard of one where the ATO hasn't been involved to some extent.
Trudi Cowan (22:17.816)
Yeah.
Trudi Cowan (22:24.43)
Hmm.
Yeah, because I guess I've heard anecdotally that, you know, with the ATO often being the biggest creditor, they often have the biggest say, I guess, in what's actually agreed as part of the SBIR as well. So guess as a, you know, if you're waiting on funds, if you're one of the other creditors, you know, you kind of just get told what's going to happen if you're just a small fish in that, in that pond.
Sarah Eifermann (22:29.092)
wasn't primary. Yeah.
Sarah Eifermann (22:40.539)
Yes.
Lynne (22:55.268)
Yeah, that's the thing. Now, one of the other features of an SBR is that it's not a formal, it doesn't have to be an insolvency practitioner as such. It is a small business restructuring practitioner who are probably in some respects
Trudi Cowan (23:15.32)
Mm-hmm.
Lynne (23:19.332)
not held to the same standard as a formal insolvency practitioner.
Sarah Eifermann (23:26.256)
So pre-COVID, pre this legislation, you could only do any type of external administration, voluntary administration, liquidation via a registered practitioner. So then they brought in SBR and who would these people be? Would they be accountants or would they be? Okay. Yeah, lawyers. Yeah.
Lynne (23:36.9)
Yes, that's correct.
Lynne (23:43.292)
accountants and lawyers predominantly. Yeah. But the other feature that's very, very different is that when an insolvency practitioner is appointed, they are normally personally liable for what the business does during their period of control. Yeah. So, but in an SBR, it's very, different.
Trudi Cowan (23:46.689)
Yeah.
Sarah Eifermann (23:59.717)
Mm-hmm.
Trudi Cowan (24:00.472)
Thank
Sarah Eifermann (24:04.55)
Administration period. Yeah.
Lynne (24:11.538)
The directors are still in control of the business and the insolvency practitioner or the SBIR practitioner has no personal liability.
Sarah Eifermann (24:22.552)
I have heard that used as it's been a sales tool used for my customer to have the SPR go through because you're still in control. And that's their argument why it's not an external administration, but there's still an appointment.
Trudi Cowan (24:22.594)
Hmm.
Lynne (24:31.282)
Mm-hmm.
Trudi Cowan (24:36.206)
There's still an appointment. Yeah.
Lynne (24:37.298)
Mm-hmm.
Sarah Eifermann (24:37.69)
There's still an appointment. so credit looks at it is that you've appointed an external administrator, which means you can't manage your own affairs. You haven't been able to pay your debts when they're fell due, which means you are Trudi trading insolvently. Why would we give you money? It's a behavioral factor. I have heard, and we heard from Mark at conference that he managed to have a lender proceed with a small overdraft once the SBR had gone through because the only
Lynne (24:44.838)
Mm-hmm.
Trudi Cowan (24:45.037)
you
Yeah. So that's it. Yeah.
Sarah Eifermann (25:07.78)
real creditor on that was an ATO debt. But in that instance, it's still, and it was for, I think it was for a home loan refinance with a cash component for the business. So it was a little bit different. They also had more security, but it's something you have to bear in mind that yes, you still have control of your business, but the implications that go with it. You need to know what they are.
Trudi Cowan (25:34.274)
Yeah.
Lynne (25:34.544)
Yes, yes, absolutely. Going into it with your eyes open as a director who's considering SBIR, but also as a creditor of that business, going into it fully aware of what's going on within the business. And that might be ATO debt, it might be court actions, it might be a whole host of other things that we're able to
Sarah Eifermann (25:46.49)
Yes.
Trudi Cowan (25:49.611)
Hmm
Sarah Eifermann (25:50.99)
Mm.
Lynne (26:03.996)
present you with within our monitoring platform.
Sarah Eifermann (26:07.28)
So what else would you need to know if you are on the flip side? You are the creditor. One, you'd need to be really secured probably to even have a say.
Trudi Cowan (26:16.91)
Mm.
Lynne (26:17.106)
Yeah, PPSR, that's one thing. So you'd want to make sure that you've got that. But the types of things that we're able to tell you about the business depends largely on what sector you're in. So if you're in hospitality, we can tell you whether they've got their liquor license.
Sarah Eifermann (26:18.378)
Lynne (26:43.394)
If you're in construction, we can tell you whether they've got a valid construction license, whether it's been suspended, which areas that it's in, know, all sorts of things like that. We can also tell you the credit bureau scores that come back as well. So we have access to that. Also mercantile agents, so debt collectors.
Sarah Eifermann (26:48.326)
Mm-hmm.
Sarah Eifermann (27:00.868)
Yeah. Yep.
Lynne (27:11.548)
We get data from them so we can tell you which of those are collecting from your customer. And we can also tell you how well that customer is paying other suppliers that they trade with.
Sarah Eifermann (27:25.454)
Yeah. So before I forget, this question's a little bit out of like flow, but preferential payments is a big thing that a lot of people don't realize. Do, so if a company usually goes into administration and a business has been paid for services, they've genuinely provided, so labor and product. But if they've been paid before a secure creditor has, an administrator can claw back.
Trudi Cowan (27:26.701)
Yeah.
Lynne (27:34.215)
Yes.
Sarah Eifermann (27:53.755)
the payments under the preferential payments part of the legislation. Do preferential payments have a play with SBR?
Lynne (28:03.236)
So preferential payments only come into force when liquidation occurs.
Sarah Eifermann (28:11.034)
There you go. So it's a forced, it's a forced administration rather than a voluntary.
Trudi Cowan (28:14.35)
Thank
Lynne (28:18.49)
Yes, so it's a liquidation, so it's a wind up scenario. And what happens is the insolvency practitioner looks at the date that the liquidation occurred and they look at what the business has done in the six months prior. Now, the preference element comes in when one creditor
Sarah Eifermann (28:41.797)
Hmm.
Lynne (28:47.632)
within that six months has been preferred over another creditor who's in the same group as them. So it's generally ordinary unsecured creditors that have been preferred over other ordinary unsecured creditors. If you register on PPSR, you become a secured creditor. So you're not in that group. So it's an ideal defense against an unfair preference claim.
but it's only liquidations that that applies to. Yes.
Sarah Eifermann (29:18.658)
It's only forced liquidation. So I didn't, I didn't think it applied in this instance, but again, wherever I can educate people on this because they often have no idea. I will take the opportunity because I can appreciate how heartbreaking it would be if you've put 250 K into a project, you weren't secured and now you've been paid above another ordinary unsecured creditor and you have to give back your 250 K.
Trudi Cowan (29:20.29)
questions.
Trudi Cowan (29:25.848)
you
Lynne (29:27.825)
Yeah.
Lynne (29:42.674)
Yes, yes, yes. I've always thought that legislation was when I was an insolvency practitioner, I thought it was like pretty harsh because it penalizes good credit managers, you know, for collecting well. There are certain
Trudi Cowan (29:44.268)
Yeah.
Sarah Eifermann (29:48.742)
It's not... yeah.
Trudi Cowan (29:57.752)
Yeah.
Yeah, you can understand it if there was a related party or some sort of related context between the businesses, but when it's a completely separate party, it's quite harsh.
Lynne (30:05.477)
Cheers!
Sarah Eifermann (30:09.702)
Yeah. So, I mean, what should you do before you restructure? Like you've touched on it a few times in terms of advisors versus registered versus non-registered for SBR. Is there a, how do you get the right advisor for this type of work?
Lynne (30:29.81)
Ooh, wow.
Trudi Cowan (30:31.648)
recommendations, speak to your existing advisors and see who they can refer you to.
Lynne (30:37.198)
Yes, so there are a number of insolvency practitioners that have good relationships with accountants and lawyers and they have traditionally, you know, they've been around for a long time. So I would probably say that if they are, you know, a registered liquidator.
then, you know, and they're doing SBRs, then they're probably a good call. If they're not a registered liquidator, I would probably be a bit more cautious about dealing with them because...
Sarah Eifermann (31:18.064)
She's polite. Don't use them if they're not registered.
Trudi Cowan (31:19.726)
And look, most of the ones that I've seen and dealt with have been either currently are or have previously been liquidators and registered liquidators and they've taken a either do this alongside the liquidation work or they've taken sort of a career via and then this is something that they now specialise in but they've definitely got that background of liquidation.
Lynne (31:34.682)
Yes.
Lynne (31:41.744)
Yeah. And I think it comes down to your gut feeling. Does it make sense that they're there to help you or do they seem to be there to help themselves?
Trudi Cowan (31:56.238)
Yeah.
Sarah Eifermann (31:56.423)
Yeah, that's the perfect, perfect description. And too often I get told, they want $85,000 or they want $25,000 or the liquidation I was looking at yesterday, they $240,000. Now I'm not saying that there wasn't work there, but $240,000 was charged and we had local trades that were owed 1.4 mil, but the liquidator got paid his $200 and
Trudi Cowan (32:21.613)
Mm.
Sarah Eifermann (32:24.23)
$40,000 out of what he clawed back. So yeah, the ethics of it are tough.
Lynne (32:30.972)
They do a tough job, Sarah. I've been there.
Sarah Eifermann (32:35.062)
I know, I understand. And look, they have a right to be paid. I'm not saying that but your what you said is are they there to help you? Are they there to help themselves is probably the best way to unpack that. Curiously, is there any reason why you wouldn't do other than the lending like the implications to credit? Is there another reason why you wouldn't do an SBR?
Trudi Cowan (32:41.261)
Yes.
Lynne (32:46.812)
Yeah.
Lynne (32:59.906)
I mean, let's face it. A lot of these directors are faced with no options. know, the debt jumps to them personally. They lose their house, they have to take kids out of school, all of those sorts of things. Or they appoint an SBR. So a lot of the time they've got to do it. So there's no option.
Sarah Eifermann (33:10.234)
Mm-hmm.
Sarah Eifermann (33:16.847)
Yeah.
Sarah Eifermann (33:25.838)
Hmm. But how do they know when's the right time to do that?
Lynne (33:30.418)
oof, well.
Trudi Cowan (33:33.806)
As we did with Sarah, was probably three months before they actually do it.
Lynne (33:35.046)
you know, in insolvency.
Sarah Eifermann (33:39.418)
probably six months before they do it.
Lynne (33:40.464)
Yeah, so when I did insolvency in Scotland, used to come, I mean, I'm talking about back in the 90s, businesses came to us early. They could see that their projections said that they weren't going to pay their debts as they felt due in a year. So they came to us at that time looking for restructuring. And, you know, I had one business that owned the building, a business called Camp C Netwear.
Trudi Cowan (33:41.294)
Thank
Sarah Eifermann (33:58.747)
Yep. Yep.
Lynne (34:10.33)
in Glasgow, they went to building they traded from, everyone got paid in full and even money went back to the shareholders. So that has changed considerably. Businesses, yeah. Yeah.
Sarah Eifermann (34:10.427)
Yep.
Sarah Eifermann (34:16.198)
Mm-hmm.
Sarah Eifermann (34:22.692)
Yeah. And the asset pool has changed as well. A lot of people leverage to borrow. They don't go in with savings. They don't maintain a savings. They pull their money out of their businesses as fast as they can. get div seven a loans. Yeah. There's less of an asset position and there's, there's less room in it too. Like the cost of everything is creeping up. So those potential profit margins are shrinking completely. So it makes it much harder to have the cash, but yeah.
Trudi Cowan (34:51.884)
Yeah. And as we're always saying, Sarah, cashflow planning is so important. But if you're not doing that cashflow planning at that six, 12 months, you're not going to know that in 12 months time, we're going to run out of cash and therefore we need to get some help. Now people are just literally getting to that point of going, no, we've run out of money. do we do now?
Sarah Eifermann (34:55.842)
Nyeh...
Sarah Eifermann (35:05.338)
That's right.
Lynne (35:10.768)
Yeah. Have you noticed my oddly shaped ears? And I talk and these ear earplugs like make their way out of my ear and fall out.
Sarah Eifermann (35:12.314)
That's exactly the problem, unfortunately.
Trudi Cowan (35:13.038)
You
Sarah Eifermann (35:25.368)
Yeah, you need the new ones, the little, the smaller ones that AirPod Pros are smaller because I have the same problem. But yeah, so, True, did you have any final questions for Lynn? Because like always, we're already at 35 minutes and we could keep talking, so.
Trudi Cowan (35:28.77)
No,
Trudi Cowan (35:40.174)
Look, my last question that I really want to know is how long does it actually take to do an SBR? Like is it a quick process or is it quite slow? Or does it just really depend on the amount of creditors and debt involved?
Sarah Eifermann (35:45.702)
Mmm.
Lynne (35:52.69)
So it depends on the offer. So if you made an offer of 15 cents in the dollar and you came up with that money and all of the terms of the SBR are satisfied, then it's at an end. If your arrangement is based on future earnings, then it may go on a bit longer.
Sarah Eifermann (35:55.887)
Hmm.
Trudi Cowan (36:15.319)
Hmm.
Yeah, okay.
Sarah Eifermann (36:19.354)
Yep. Okay. Interesting stuff. People can contact Lynne access Intel with two L's.com no.au. you can sign up on their website for creditor, the access Intel monitor, which will monitor your creditors. And then you can also use like the pay as you go PPSR, which I have personally set up and I use where it's appropriate.
Trudi Cowan (36:41.527)
Hmm
Sarah Eifermann (36:48.85)
if they've got any other questions yet to reach out to you, I think this is an important topic that comes up quite regularly. And a lot of people don't realize the implications of it. And sometimes it is, like you say, their only choice that they have, but they need to know what they're choosing. Right. And what that looks like. So once again, thank you so much for coming and joining us. Have the best time on your trip back to the UK and we'll see you on the flip side.
Trudi Cowan (36:59.149)
Yeah.
Lynne (37:04.614)
Yeah, that's it.
Lynne (37:16.252)
Thanks, Sarah. Thanks, Trudi. Take care. Bye.
Sarah Eifermann (37:18.512)
Okay, cheers.
Trudi Cowan (37:18.722)
Thanks, Lee.