Court applications to wind up companies plummeted in 2020, bucking expectations of widespread business failures.
But an insolvency expert says there are still warning signs that some companies are in for a tough time this year.
Wind-up applications dropped nearly 32 per cent from 707 to 481 between 2019 and 2020, figures from the Restructuring Insolvency and Turnaround Association New Zealand show.
Liquidation appointments, which includes both solvent and non-solvent ones was also down while receivership appointments rose only slightly from 105 to 115.
John Fisk, national leader of restructuring for PwC and chair of Ritanz, says he is not as pessimistic as he was back in July last year when he told media to expect a watershed year of business failures in 2021.
"But I still think there are warning signs there."
He sees the biggest risk as another lockdown for any extended period of time.
"That could have a big impact depending on how the Government responds again."
Fisk questioned whether businesses had learned the hard lessons from 2020 and made changes.
"When we did first go into lockdown even quite successful businesses found they were getting themselves into trouble very quickly. There was a real lack of resilience there."
He said many were found wanting when it came to having a rainy day fund or cashflow forecasts.
"Since then businesses have been given an opportunity and many have survived who, even without Covid, were looking at grimmer prospects. The key thing is; have they learned from that? And are they ready for another downturn - if one comes."
Fisk said businesses needed to know their cash flow situation and what their plan B was if they couldn't get supplies from overseas.
"That is becoming a real risk at the moment."
He said those in the accommodation and tourism sectors were now facing an even longer period without overseas visitors.
On Tuesday the Prime Minister indicated New Zealand's borders would largely remain shut in 2021.
Fisk said a number of tourism operators he had spoken had been hoping things would be looking better by August.
"That sounds like it is largely off the table at the moment. That is one area which is probably going to feel a bit of stress but there are other areas going incredibly well."
He pointed to construction which has been booming in the face of the housing shortage but is facing issues over getting enough labour.
Fisk predicted supply chain issues would continue to be a big problem for businesses this year.
"Anyone taking orders from customers and hoping that stuff will arrive. I think that is where confidence could be knocked if things take too long to get here and there will be pressure if the cost of freight goes up - who is going to pay for that?"
Where to from here?
Fisk said it was hard to see a massive increase in insolvencies in 2021.
"It might get back to where it was as a more normal year but it has still got quite a long way to go to do that."
But he also pointed to signs that some businesses could face financial pressure.
Inland Revenue's recently released annual report shows 147,000 businesses and individuals set up installment arrangements last year.
"That is a lot of taxpayers that have spread or kicked the can down the road in terms of debt that needs to be paid. There was also about a 30 per cent increase in GST and PAYE that was outstanding compared to 2019 - there are some worrying signs there."
He said the biggest creditor applying for court wind ups of companies at the moment was Inland Revenue.
"Last year was very much a case of we are here to help taxpayers and try and get them through but if taxpayers can't meet their installment arrangements or company debt now that is going to come back on the agenda for Inland Revenue to take recovery action."
What can businesses do?
Fisk said contingency planning was really important and the key to that was understanding cashflow.
"Having a good handle on that and then also taking the opportunity to think about how you can do business differently and more effectively. I think there has been a lot of businesses that have used this time wisely to change the way they do business but there will be plenty of others that haven't."
Fisk said planning was also about how to deal with supply chain disruption and protecting the positions of creditors when goods had to be imported.
"How do you ensure you don't get into a position where you end up trading insolvent. One thing that will probably be a bit more of a focus in months ahead is insolvent trading."
Fisk said the key was to be prepared for the uncertain climate.
"There is going to be more turbulence. The old saying of prepare for the worst and hope for the best is still good advice I think in this environment at moment."