Archive for January, 2011

HMV A credit insurance expert writes…

From my good friend Martyn locke…very good points

Hi Clive,
I have seen the press and your blogs on HMV with much interest as we have a major CD supplier as a client and they are also affected.
Unfortunately Robert Peston is somewhat uninformed (not unusual according to Fleet Street rumours) and I thought I would clarify a few inaccuracies- Insurers have reduced limits not cancelled and this only refers to future sales and does not effect the outstanding debts from the peak Christmas period which Insurers supported. This is quiet time so the short term impact is much reduced. It is evident that HMV had a very poor Q4, have given profits and breach of bank covenant warnings, closing stores and are facing increasing competition from the internet. It is difficult to see where HMV is going and certainly represents a high risk with no identifyable recovery plan.
The likening of the HMV scenario to Woolworths will, I am sure, infuriate the Credit Insurers who supported Woolies and were stuffed by the banks to the tune of £500m who pulled out after firm assurances otherwise. Once bitten and all that…………………………
best regards
Martyn Locke
Associate Director
UK Credit Insurance Specialists Ltd
Office 01628 482400
Mobile 07766 954373
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HMV the credit insurers bite..

January 19, 2011 2 comments

Oh dear. Now we are talking about the new Woolworths ? Or are we?

You may well recall that withdrawl of credit insurance cover finally brought Woolworths to its knees (and did you know that their fine head office building in Marylebone road is now being taken over by a ….. Bank?). So will the same happen to HMV?

Well there are a couple of thoughts that spring to my mind and this is an industry I know very well….

Firstly, the reduction of the limits might not be as difficult for HMV as indicated. The peak period is over and whilst we do not have the exact details, it may be that suppliers can operate wihin reduced limits for the next few months (although easter is suprisingly another busy period for sales).

Second, as alluded to in various news stories, the suppliers will be desperate not to lose the only major specialist high street outlet for music and video. There is a far greater degree of mutual dependency than with Woolworths and its suppliers. A lot of music and DVD sales are impulse and frankly you need the high street presence to make that work.

So maybe the suppliers will carry the risk. But who is taking the risk? It has been reported that the distributors are now insisting that without insurnace cover the labels must commit to carry the bad debt. To my mind this is disgraceful but having worked in that business, I am not greatly suprised. I would also suggest that if the distributors are all singing from the same hymnsheet on this proposal (or whatever it could be called…I have a word or two) then maybe this is for the men from the OFT? Will be interesting to see where this goes…

More comments and updates to follow…

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Download my articles…

Just right click on the links below for my articles in Accountancy magazine (on outsourced credit control) and Better Business magazine on credit vetting





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Thanks to CIMA for allowing me to present…

For a full hour and a half on “the wider aspects of credit management”. Really enjoyed and a good turnout of around 50.

Holiday Inn  Gatwick was a very nice venue too…

Practice makes perfect with presentations and I felt a lot more relaxed than when presenting to the ACCA (who I am returning to in April), but I was reminded yet again of a few points

1. Keep Powerpoint to no more than prompts. Do without it of you can. People listen or watch but rarely do both at same time. I want the audience to listen to me rather than stare blankly at some pointless pie chart

2. Use anecdotes. I find they come to mind when im talking and theres no real need to overrehearse. An audience always prefers to hear examples (which are far better with a humourous edge) than theory

3. Watch the audience and if they are shufflng in seats, yawning or reading the Blackberry, move on ….

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Greedy IPs?

An MP has a bit of a blast at insolvency practioners? Is he right?

For once I will back away from a stromg opinion here but i think its probably raif to say that he does raise some very valid points.

Most credit managers have come across insolvencies which were not seemingly handled in the manner that might have been expected (I am being polite). One of the very worst examples I came across was by perhaps the proudest of the big four firms.

On the other hand, ive seen some handled in waht can only be described as a reasonably economic and efficimnt manner

Any opinions?

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Further trouble at HMV

60 stores to close and “trouble with the banks”. Shares down 20% too

There is a case study here and I will be expanding on this shortly…

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