Safety Net For Building Industry Bad Debt
CreditWorks Provides Safety Net For Building Industry Bad Debt
High risk builders and contractors with poor credit performance will be put under the microscope as a result of new technology backed by the Building Industry Federation and launched today by the Minister of Commerce, Lianne Dalziel.
Credit Reference Industry Solution (CRISworks), developed by CreditWorks Data Solutions, is part of a broader loss prevention initiative by the Federation. It is a response to the escalating bad debt problem faced by New Zealand's building industry. In Auckland alone, the building industry has amassed more than $150 million in bad debt during the past five years.
CRISworks is a positive data credit reference solution, the first of its kind in New Zealand. It enables suppliers of goods and services to assess credit risk, using current data, which will help to improve cash flow and reduce bad debt. Already, building merchants representing 90% of the timber supplies in New Zealand have signed up to use the system, however, it can be easily extended to include other industries.
In launching CRISworks to a 200-strong audience of industry leaders today, the Minister of Commerce, Hon Lianne Dalziel, applauded the initiative. "CRISworks raises the bar in the building industry. It encourages responsible business practices which will help to make the building and construction sector a better place to trade in, as well as improving the reputation of the industry overall."
Led by the New Zealand Building Industry Federation, CreditWorks provides
up-to-date credit references for customers. "This protects their business and the credibility of the industry in the marketplace," said John Pfahlert, Chief Executive of the Building Industry Federation. "CreditWorks ensures greater transparency of companies with poor credit worthiness and ensures that responsible operators are not disadvantaged."
This initiative is also supported by leading industry professional bodies, including the New Zealand Building Subcontractors Federation, the Registered Master Builders Federation and the Certified Builders Association of New Zealand.
The CRISworks online portal shows a consolidated view of a company's indebtedness for Current, 30, 60, 90 and 120 day ageing. CRISworks' view of a company's total exposure shows changes in payment performance, which can provide users with an early warning of potential bad debt. Because data is aggregated, it cannot show individual business relationships with each supplier. Ernst & Young undertakes regular checks to validate the accuracy of the data matching, system processes and terms of trade agreements.
"CRISworks eliminates the guess work on assessing risk because it provides a definitive view of customers' debt exposures which is currently not available. It provides the enquirer with a snapshot of their customers' debt exposure, which should
improve cash flow and shelter contributing users from bad debt," said Ronnie Tan, Managing Director of CreditWorks. "It's our aim to make the building and construction sector a safer place to trade in, by enabling contributing users to make better, more informed business decisions. This will lift the performance and professionalism of the industry as a whole."
CRISworks operates on a reciprocal basis - only companies
that contribute their own data are allowed access to
consolidated debt information. Contributing users pay a
license fee and a fee for each enquiry made on the system as
per the individual terms agreed with CreditWorks. They have
access to the companies' office details, consolidated group
credit limits, details on enquiries made by other users, and
public information, reporting, the number of suppliers,
weighted average of day sales outstanding, weighted average
funding costs and industry association memberships.