How to grow is an important factor for any business owner wanting to expand their company and maximise profits. But if not approached carefully, with full consideration for the current economic conditions and particular market, some companies experience significant setbacks.
Luckily for New Zealand businesses, there are promising signs that we are approaching a fertile period for potential expansion, with hiring conditions easing, business outlooks on the up and more favourable terms being offered from non-bank lenders. Here’s what you need to know if you’re looking to add another person to your payroll.
Hiring is becoming easier
The New Zealand Institute of Economic Research (NZIER) Quarterly Survey of Business Opinion for September confirms that a sharp turnaround in labour shortages continues, with many companies able to find both skilled and unskilled labour. It notes that many companies reduced their staff numbers in the September quarter, adding further slack to the labour market.
Business outlook is improving
NZIER says business confidence has improved markedly. A net 40% of firms were feeling downbeat in the June quarter, but this dropped to a net 5% in the September quarter. And, while a net 31% of firms reported a decline in business activity in the September quarter, only a net 2% are expecting weaker activity in the next quarter.
“The start of the easing cycle in the OCR by the Reserve Bank of New Zealand (RBNZ) since the August Monetary Policy Statement and expectations of lower interest rates for the coming year appear to have supported this sharp improvement in sentiment about the outlook ahead, despite demand remaining weak for now,” NZIER notes in its report.
September’s ANZ Business Outlook also shows that business optimism is on the up.
ANZ’s economists note that while markets are focused on downside risks, “this month’s survey showed not only that optimism about the future continues to grow, but also the first signs of improvement in current activity”. Indeed, there’s been improved business activity in interest rate-sensitive sectors such as construction and retail and a slight dip in wage growth – from 4% in April to 3% in September.
Customers are more optimistic
The ANZ-Roy Morgan Consumer Confidence rose 3 points in September, its third straight month of improvement. At 95.1 it is still well below par, but it’s at its highest level since January 2022. The lift was driven by expectations about the future, rather than views of the here and now.
Salary growth is slowing
In other positive news, the SEEK NZ Advertised Salary Index for August found that average advertised salaries grew 3.7% in the year to August, slowing from 4.4% the previous quarter. That’s a big drop from its peak of 5.1% in November 2023 and SEEK NZ expects the rate to continue to slow as we head toward Christmas.
That said, it’s important to note that new white-collar workers still want flexible working conditions. Research by recruitment company Robert Walters found that 90% would look for a new job if they had to be in the office more often.
Be sure, too, that you understand the expenses involved. According to Deel, many businesses underestimate their payroll costs, including that of compliance and mandatory contributions.
Paying wages with Invoice Finance
Payroll is the largest expenditure for many businesses and ensuring you have enough capital to pay employees and contractors can be time-consuming and stressful. Invoice Finance, also known as invoice factoring or debtor finance, can take the stress out of meeting payroll by allowing you to unlock the capital tied up in your unpaid accounts receivable. Gaining early access to unpaid invoices will enable you to pay wages without draining capital from your business, empowering you and your company to thrive.
Invoice Finance with ScotPac
ScotPac has been helping New Zealand businesses grow and thrive with fast, flexible funding solutions for over three decades. Our unique market knowledge and industry leading financial products and services are designed to help businesses bridge cash flow gaps, minimise late payments and capitalise on their biggest asset: their balance sheet.
To find out more about our Invoice Finance solutions or to discuss your goals for your business, get in touch with ScotPac’s lending specialists today.
