Industry-Talk

The bleak economic outlook in certain parts of the world today presents a worrying trend. Much has been said about China’s slowing economy, and just across the causeway, political uncertainty is exerting greater pressure on the Malaysian economy. These factors are likely to have repercussions on our economy.
Ho Meng Kit, CEO of Singapore Business Federation (SBF) shared with The Business Times that “The continuing decline in SME business sentiments is worrying. With global demand for our goods and services remaining weak and Singapore’s top two trading partners, China and Malaysia, going through a bad patch, the Singapore economy could be hovering on the edge of recession.”

The Business Times also reported that except for the Commerce/Trade Sector, all other industries have reported lower business expansion outlooks. The Small and Medium Enterprises (SMEs) are likely the most affected firms. More specifically, the largest three sectors, which include the Construction/Engineering sector, have all reported less than optimistic sentiments for the next two quarters.

Some of the plausible reasons laid out in the article included the less robust residential property prices and scarce opportunities in the commercial and industrial property sectors. Mr Ho also warned that “the lower turnover and profit expectations may lead to lower hiring expectations.”

However, the business climate is not all “doom and gloom,” as the Chief Operating Officer of DP Info, Lincoln Teo shared: “What it does indicate is that SMEs expect their rate of sales and profit growth to be slow.”
In relation to the recent profile of cases that KX-Unit has taken on, there appears to be an increasing trend of corporate clientele from the Construction and Renovation sector. This is especially so for the third party sub-contractors typically sought by other (larger) construction firms to support their renovation works. Subsequently, some of these Construction and Renovation firms may not be able or willing to pay their third party sub-contractors. This increase in such cases logged with staffs at KX-Unit appears to coincide with the local business climate.

In response, KX-Unit has identified a few simple ways business firms, especially those in the Construction Sector, can use to evaluate their partnerships. Firms can look at a company’s ability to make payments by assessing if they have multiple on-going projects, and if they do, broadly assess the performance of these business projects against the sector’s performance. It would be helpful if firms can gain some understanding of a company’s payment history. For example, does a particular company have a history of defaulting on payments?

Public or industry news about the company is a bonus too. These assessments include any publicly available information such as Audited Accounts Information. If the business deal entails a large amount, it is advisable to have an assessment done by a Professional Consultant before any official business dealings. However, the above-mentioned ways are not always foolproof. It would be good to correlate the various information sources to construct a better picture of a company you intend to work with.
Nonetheless, the surge in these cases undertaken by the staffs at KX-Unit has provided them with an advantage in terms of a keener understanding and appreciation of both the clients and their debtors. Besides sharing the word of caution, KX-Unit is also well placed to provide advice and consultation to anyone who may have fallen victim to these circumstances. Should you have queries regarding KX-Unit’s services, feel free to call 8112 7790 or drop them a mail at enquiries@KX-Unit.com.

C.J. Bervyn

admin

About admin

No Comments

Leave a Comment

@ KX-Unit 2018. All rights reserved