‘Tough year’ breaks more city businesses

JOHN VAN KLAVEREN
A “tough year” is creating a surge in Geelong businesses going broke, according to a debt collection agency.
Prushka chief Roger Mendelson said the rate of business failures in the city was much higher than normal.
“Geelong trade and small enterprises are finding 2011 a particularly tough year to do business,” he said.
Mr Mendelson warned that a “bad debt cycle” was also affecting parts of the region’s economy, with businesses waiting for money owed to them before they could pay their own debts.
“The attitude of debtors in Geelong is also making it harder for businesses to recoup money owed,” he said.
“There is an increasingly bad attitude toward repaying debt in some sectors of the community. Some debtors are angered by the fact that money they owe is being chased up.
“Some debtors don’t seem to care about outstanding debts even when they have a court judgement taken out against them.”
Insolvency specialist Jenkins Peake’s Geoff Ridgeway said stronger Australian Taxation Office regulation was also affecting business liquidity.
“The taxman has tightened the screws and there are a lot of demands going out.”
Geelong Chamber of Commerce president Jim Walsh said many businesses were doing it tough.
“Consumers are being cautious, discretionary spending is tightly controlled and the high Aussie dollar makes it tough for local manufacturing.
“Our interest rates by world standard are relatively high and those parts of the country that don’t get a lift from the mining boom are doing it tough.”
Mr Walsh said small business had to try riding out the “testing trading environment.
“It’s not entirely bleak because the fundamentals are not bad. Recovery in the US is the key to global confidence and there are some positive signs.”
Geelong has experienced a series of high-profile business failures this year including franchises of Angus and Robertson bookstores and Corio Shopping Centre’s Ed Harry menswear store.
The owner of Breakwater traffic management business 24/7 Traffic, Brian Munn, said he was forced to close his Geelong operation this week and merge it with his Melbourne base.
“Our contract is coming to an end and we are having a few debtor problems.
“No one is losing any jobs but we’re losing money and, in this economic climate, you know what it’s like.
“I don’t want to be caught holding the bag in 12 months time.”