Archive for April, 2011

Late thoughts on the Budget

I will be presenting to the ACCA in Huntingdon in a weeks time on the Finance Bill 2011. The challenge will be to make this entertaining….

What is there to do other than parade a load of stats on Powerpoint? Plenty I think. the budget is a starting point for a wider discussion about finance and business and then i will hopefully be on a roll. I have been looking at quite a few sources but my friend Anthony at Orchard Growth has a very pithy piece from which i will draw inspiartion

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Trade references. Why bother?

Most credit management guides will offer the traditional advice that when opening a new account, trade references should be sought. And in my early years as a credit manager I followed this advice, because it was exactly what we were taught to do. Get two trade references off the new client and send them out and wait for the responses. You could frame a few questions and get a detailed response, but was it worth the effort? What did it really tell you?

And thats is exactly the question i asked during a recent discussion on Linkedin. Someone (who I suspect was selling a service) strongly advocated trade references. I demurred…

Why was that? Well it is because i have worked for two companies that were shocking payers and in dire straights financially. Naturally enough you would have expected this to be reflected in the references wouldnt you?

Not a chance. We could always supply 2/3 tame referees and we did so, frequently.

There is nothing wrong with gathering as much information as possible before making a credit decision but the key is the weighting of that information. My view on this is that if you take references, good responses should be treated with a pinch of salt but there is value in taking on board the occasional mediocre or even bad reply. And from time to time these will occur . However it has to remembered that the references given will be also be suppliers who often simply have to be paid on time. The key marker is payment habits towards lesser suppliers. Stationary businesses are a good example. Regular but not high value and immersed in a reasonably competitive market

Can you get hold of that information? Yes, believe it or not. The higher quality credit reports will give details of payment patterns by businesses are these are obtained (discreetly) from such sources.

You will pay more for the report but ultimately save the time and effort of sending out reference letters as well as tapping into a more objective source

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CVA or administration?

Interesting comments in The Grocer. Would appear that creditors are increasingly accepting CVA’s rather than administration because of the “risks” with the latter process

Perfectly understandable and unfortunately there is a downbeat assessment of prospects in the retail trade in coming months

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Officer club

Insolvency news

Update from the excellent Insolvency news but perhaps the headline should have been “400 jobs saved but a lot of unhappy creditors?”

Perhaps im being a bit churlish but the double edged sword of the pre pack administration is amply illustrated

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Concerns for Oddbins?

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Lipstick on your balance sheet?

As perhaps a perfect example of why credit risk is often highest at the end (hopefully?) of a downward cycle rather than the beginning, the above figure is up from 161000 at the first quarter of last year. Also…

The report also reveals how specific sectors are suffering: year on year, the number of businesses showing signs of distress is up by 68 per cent in the bar and restaurant sector; by 60 per cent in the leisure and culture sector and by 23 per cent in the sports and recreation sector.

Not too surprising given that these are not exactly essentials, but a good illustration of why understanding of a sector and a businesses positioning within that sector, is a major element of credit analysis.

Then there is also the “lipstick effect”. During downturns consumers spend more on cheap treats rather than big ticket items. Now I do hasten to add that I cannot vouch for that particular example from personal experience, but you can see the point im sure

Which is why I suspect Superdrug and Poundland are doing rather well at the moment.

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GLE Credit control course

The GLE have been hit quite hard by Government cuts in recent months. In fact its probably fairer to say they have been hit very hard indeed. Given that their role is to encourage and advise small businesses across the London area, it could be argued that this is a little counterproductive in the current climate

In recent months I have been running workshops on credit control for small businesses and very rewarding it has been to me personally (not financially I hasten to add). Fortunately these will be continuing but this time around there will be a charge.

However with the likely charge pegged at under £100 for a half days workshop, then I believe that is exceptionally good value. One piece of good advice can save that and more in an instant. Not only that, laying the foundations for strong credit control and collections is vital for any burgeoning business

And this is not just geared towards start ups. Established firms are set to benefit just as much (if not more)

So when are these courses? The next one is scheduled for the 10th May details as follows

Given that many courses on this subject cost considerably more and only cover the fairly obvious, then i think this is a good deal.

Feel free to contact me for details


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