Geoff Gumley at CQ Fasteners
Geoff Gumley at CQ Fasteners

CQ small businesses cry out for better liquidation laws

IN 16 years of business in Central Queensland Geoff Gumley estimates he has lost between $250,000 to $400,000 in bad debt – from other companies who owe him money who are now in liquidation.

The owner of CQ Fasteners, which has stores in Rockhampton and Yeppoon, said while it is very frustrating, it has just become the norm in his type of industry.

“When you supply into the construction industry there is some risk you aren’t going to get paid,” he said.

“We can’t even get insurance to cover bad debt.”

And when one construction company goes down, three-quarters of the building industry suppliers in town take a hit goes down, he said.

This was evident with the collapse of JM Kelly in October 2018.

The $50m liquidation saw the loss of more than 200 jobs and hundreds of creditors owed money.

CQ Fasteners are also owed more than $8,500 from Busby Contracting who went into liquidation in February 2018.

This outstanding bill was for a couple months of supplies: power tools, hand tools, nuts, bolts and screws.

The $1.7m liquidation of Metro Homes in June 2018 is another one Mr Gumley has seen in his time.

In 2012, Mr Gumley took his biggest hit of $75,000 from the liquidation of Olimar.

The bill was for a massive amount of stainless steel.

“For a private owned business to lose $75,000 in one hit is massive,” he said.

Mr Gumley estimated he has seen 30-40 builders go bust over the years, losing between half a million to $1 million.

The collapse of a company is not always the fault of the company directors.

In Busby Contracting’s case, they lost $1.3 million from a contracting company WDS Limited, with further debts from Ostwald Brothers and Moorvale Earthmoving which all went into liquidation.

Mr Gumley said 95 per cent of businesses are “great traders”.

“In some cases the bigger guy above them burnt them and they couldn’t pay their bills.

“All they need is one job to go bad and it bankrupts them.”

For the last financial year just finished, Mr Gumley wrote off $12,000 in bad debt.

Some years it ranges anywhere from $20,000 to $30,000 while some can be $5,000.

CQ Fasteners run a 30-day account system.

Mr Gumley said credit accounts are a necessary evil.

“The hard part is, if we don’t get paid in payment terms which are 30 days from end of month, it makes it hard,” he said.

“For us to pay our suppliers who run strict credit controls and if we can’t pay them we can’t get stock.

“Every time you open an account you take a risk.”

Having learnt from being burnt in the past, Mr Gumley has put measures in place to protect himself but there is only so much he can do.

“If I can’t pay my suppliers, I can’t get stock and I can’t operate.

“You try as much as you can but there are so many unforeseens that happen.

“How do you cover every scenario?”

In terms of what could be done better through government legislation, Mr Gumley said there should be some sort of credit register where businesses can register a complaint if an invoice hasn’t been paid and the outstanding company is subject to black marks against their name, which businesses could utilise when doing credit checks.

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