The danger of paying upfront in tough times - The Prosperity Project

When a business shuts its doors, consumers can be left out of pocket. Photo / Tim Mossholder

One of the country’s best-known receivers says the number of businesses failing is likely to rise, as data shows the economy is still struggling to grow.

While it might already feel like businesses are failing every other day, partner at PWC John Fisk told Nadine Higgins on target="_self" rel="" title="https://www.iheart.com/podcast/1049-the-prosperity-project-258474717/">The Prosperity Project podcast there’s likely worse to come.

“There is always a lag between what’s happening in the economy and what happens with insolvencies. I think we are going to see some turbulent times for a while.”

Fisk says there is a flow-on effect to everyday Kiwis from the industries where the majority of failures are occurring. “Retail, accommodation, hospitality, construction - consumers are often impacted directly by those sorts of businesses.”

He warns consumers to be wary, especially if they’re making a big purchase. “It comes down to how significant is this for you? So if you’re buying a toaster, you’re probably not going to worry too much about what your warranty rights are … but if it’s, if it’s something major, then care is needed”.

One of the industries to take particular care with is construction. “The construction industry is notorious for operating on very thin margins. So, when things go wrong, they can go very wrong. That’s why we see such a high statistic of construction companies.”

Fisk suggests, where possible, not paying for things before you receive them. “I’ll say to the builder, ‘I’ll pay you the deposit when you’ve delivered the timber and the steel to the property’, so I’ve got something if the builder falls over after they’ve delivered it. At least I’ve got something tangible for the money that I’ve paid over.”

While it isn’t always possible to tell if a company is heading for trouble, he suggests being wary of pushy sales tactics. “If there’s a lot of pressure being put on you to pay a deposit or to sign up for a contract, just slow it down and make some more inquiries, because that could be a warning.”

While Fisk’s work involves dealing with the fallout of businesses failing, he says it’s very meaningful work.

“We are walking into a situation where people have lost a lot of money sometimes, and our job is to try to get the best possible outcome for them. So, I find that incredibly rewarding.”

Listen to the full episode of The Prosperity Project for more from John Fisk.

The podcast is hosted by Nadine Higgins, an experienced broadcaster and a financial adviser at Enable Me.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes are released every Monday.