John Linton ......but it appears not all is well in every section of it.
There are many indications in the financial press that things are not as good as the vested interests would try and make out. I have no more understanding of 'financial cycles' than I do of quantum physics so I can only comment on the more solid of the 'facts' that I am privy to. These include financial statistics the are produced within our own business and 'input' from people outside our own business who do have some firm grasp of elements of what is happening in the more general financial 'world'. There is also the Australian media that tends to be so unreliable in terms of comment and analysis but the actual figures are usually useful.
I doubt whether the actualities of Australia's financial situation at any point of time mean anything to people in business and almost certainly not to people generally outside mortgage interest rates for those people who borrow money to buy the homes they live in and whether or not their employer stays in business and pays their superannuation on time. But I have noticed some signs that, at least to me, seem to indicate that all is no beer and skittles are the country.
A very minor thing is that our bank keeps approaching us to do more business with them - always a sign that their business is tougher than they are comfortable with. For instance we do very little foreign currency transactions but what we do we recently moved to American Express simply because they approached us and said they would offer much better rates and much easier and faster services. After 2 or 3 months our bank noticed we had taken that business elsewhere. They called up and enquired why and immediately promised to 'beat any rate' we got quoted from another financial institution. So we have gave them two opportunities and on neither occasion was their quote better so we continued to use AMEX. They then 'got serious' and the next time they actually did give a better rate, after initially bidding too high. The net improvement they are now making is around 3% better than their 'old' rates. Not very spectacular you might say but after years of taking whatever we were offered a 3% improvement is very significant and anyone who has had any dealings with banks would know they don't reduce rates without a very good reason.
While on, banking indications our 'other' bank has been pushing us to put in place a leasing facility for some many months now although we have continuously told them that we have, from the inception of the company, always paid cash for our capital purchases and we are well aware of all the reasons why we shouldn't do that but are too conservative to 'change our ways'. However they have persisted and continue to reduce their indicative rates and made their offer more attractive in other ways month by month to the point where we have eventually agreed to sign the documentation allowing us to lease up to $A2 million of capital equipment on a 'stand by' basis. We said that we never intended to use it but they were more than happy to go ahead on that basis. So they get $300.00 in 'documentation fees' and seem very happy about that.
Within our own operations the number of people who didn't pay their December 1st residential ADSL invoices (and therefore had no internet for the whole of December) reached a record number of cancellations by us at the end of December. December always produces a much, much higher level of such cancellations than any other month and it is almost entirely due to foreign (and some Australian) students ending their tenancies at the end of the University year and just abandoning their ADSL services knowing that their providers won't be able to 'track them down' in their home country. We, like every other supplier to such people recognise their inherent dishonesty and live with the costs. However this year it was higher than usual (over 120 incidences) which is likely to mean something. Similarly we had a much higher number than usual number of business customers who didn't pay their bills on time which while not resulting in cancellations is not a good sign.
There are many other instances of conditions being more financially difficult than you would expect in a 'boom' and I think the conclusion that we need to draw is that they may well become more obvious in the not too distant future. We need to be very careful.
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