Archive
Insolvent pensions
http://insolvencynews.com/article/show/Regulator-accuses-IPs-of-using-pre-packs-to-evade-
Interesting points raised in linked article. My own view is that it there are pluses from the pre-pack process but it is understandable when there is also a bitter taste left in the mouth of laid off employees and unsecured creditors.
When that extends to pension liabilities then you can understand why many are starting to feel a bit queasy about the whole process.
Credit ratings. What are they good for?
Although not an avid user of Twitter, I have noticed that recent pieces in the media regarding variations in the credit limits suggested by various credit agencies have been “tweeted’ relentlessly
This is one article http://www.telegraph.co.uk/finance/festival-of-business/8841621/Small-businesses-subject-to-credit-ratings-lottery.html
Is this really such an issue? Does it matter that Experian suggests £8500 for one particular business and Dun and Bradstreet £105,000? Is this a new development with so many agencies now in the market place?
I will start by making a very hard nosed point. The simple fact is that any supplier who simply takes an outside agencies limit and applies without thinking is simply not managing its credit control correctly. If a credit controller or credit manager is operating that way, then frankly they out to redefine their job title to sales ledger clerk
Credit limits are simply suggestions. Firstly a facility of £100k may be rather a lot for a SME to extend but not really that crucial for a blue chip, so you cannot start with the one size fits all model. Secondly agencies (despite some quoted opinions) are allowed their opinions. Different agencies will weight the accounts in different ways.
Creditsafe, Experian and Dun and Bradstreet are the three agencies detailed and they all have differing methods. Creditsafe are the cheapest provider by far but also the one most reliant on the straightforward ratios on filed accounts. Experian and D&B look a little deeper and will often come to varying conclusions. One is particularly negative about directors associated with previously “failed” companies whilst the other is dismissive of intangible assets. With both of these factors, you again have to look a little deeper into the facts behind the figures
And this is the crucial element. A credit report should simply be a guideline from which you make your own decision. This is of little comfort perhaps for businesses that feel they are being unfairly rejected by an overzealous and perhaps lazy credit manager, as the article perhaps rightly suggests
Is this a recent development? Not at all. I recall such variations at least 20 years ago when it could be argued that assessment was somewhat simpler than today
But the key isn’t “regulation” of agencies (how can you insist upon an opinion?). It is the use of credit management in a professional manner. The credit manager or whoever is responsible should be thinking hard about how to make the sale work and what the real risks are
A credit manager’s first objective is to minimise bad debts, but running it a close second is making sure that good credit worthy clients and profitable business is not lazily turned away
Something to see…
http://www.whitechapelgallery.org/exhibitions/wilhelm-sasnal
Every now and then i will highlight something in London that has to be seen and as ever the Whitechapel gallery comes up trumps. This is a fine exhibition on an accessible and interesting painter who produces very striking work.
More than a just a fine way to pass time between meetings
The end for Saab?
I am a Saab driver and had the same car for 13 years. Admittedly cars do not greatly interest me but it is sad to see the likely demise of a fairly unique manufacturer.
Is there a solution? It would appear that the Chinese suitors have not exactly endeared themselves to the owners but having not produced a car for over six months (due to suppliers withdrawing credit) you do wonder whether momentum has all but disappeared
Help for small businesses ? Maybe not
Another excellent piece in Slate which has resonance for those suggesting that direct government intervention is required to boost small businesses borrowing.
Here is the key quote..
But there is another reason the program faltered—and might never have been able to succeed in the first place. Small businesses need credit to grow, to acquire equipment and hire workers to make sure more and more customers come in. But if small businesses don’t really believe that those customers are going to come in, well, they tend not to want to take on any debt. At some point, the problem isn’t a lack of credit. It’s an economy-wide lack of demand.
Things you didn’t know about Greece
1. The average public sector employee earns three times the wage of the average private sector employee
2. The public sector wage bill has doubled in real terms over the past twelve years
3. An annual eu 600m pension liability was never recorded. It was simply ignored
4. Goldman Sachs took $300m in fees in an “apparently legal but nonetheless repellent deal’ to hide the Greek government’s true level of debt
All from Michael Lewis’s new book Boomerang, a travelogue/analysis of the european debt crisis. You may be familiar with his previous books Liars Poker and the Big Short of course and by all accounts, this has stormed up the best sellers lists in the US
I will certainly be reading it very soon
The best way to consult with a client? Say nothing…
I exaggerate of course, but how many of you have encountered “experts” or “consultants” who rampage all over the place barely allowing for a word in edgeways?
A perfect example of this was a conversation I had with a “business consultant” about the increasing trend for large debtors to impose extended terms on their suppliers. To my mind its a tricky situation but he had a solution. “Put your prices up by 10 %!”. I laughed but he indicated he was being serious. “A client of mine did that and they didn’t notice”
Well thats great news and I can imagine him imparting this wonderful piece of wisdom on every client he works for. But is that consulting? Of course not.
The very idea that every business is in a position to “get away with” 10% price increases to their clients is ludicrous (as I was tempted to tell him) and before offering up such a blanket solution, it would perhaps make sense to understand your client’s limitations and requirements.
So when it comes to consulting, it is essential to listen and form a picture first. A slapdash knee jerk solution offered will quickly lose credibility (“yes I am going to slap 10% onto Tescos aren’t I ? you **** )
Whenever I took a new credit management role, I spent a good deal of time absorbing the culture and dynamics of the business. When consulting, I do not have that time but now I do know what questions to ask. It is vital to form an accurate picture. Thus it is essential to listen
Personally I find consulting fascinating. Guiding and training staff is rewarding as is helping a business resolve difficult debts and issues as well as bringing some structure to their risk and collections (the effect of which can be dramatic), but it is essential that confidence is built and maintained
And the greatest reward is the maintaining of that relationship. Far more valuable than a 10% surcharge thats for sure
Insolvencies “rocketing”
http://www.insolvencynews.com/article/show/Q3-company-insolvencies-up-9
I suppose credit managers will often be seen as harbingers of gloom, constantly berating businesses about the need to be careful with credit. But when you see figures such as these, the message has to be clear. It still astonishes me that businesses let their assets walk out of the door without even a cursory check.
Business insolvencies were up 9% on the previous year and the sectors most affected were, as expected, retail, construction and hospitality. Perhaps the most interesting stat was that London was particularly severely affected. Up 21%. The general view is that the capital has been relatively lightly affected by the downturn up until now. Why that is I am not sure but maybe the drop in interest rates were a greater boost to spending power in a part of the country where mortgage payments take up a substantial chunk of income. And maybe that effect has begun to wear off. Just a theory of mine perhaps but with all credit assessment, its valuable to look at the bigger picture.
Unfortunately its difficult to see improvement in the short term and maybe even in the medium term. The process from a downturn to actual insolvency is often longer than imagined and my feeling is that the worst is yet to come
Apple genius
I wonder if anyone has ever credit checked Apple Inc? In the last ten years anyway. It would be great to have access to Dun and Bradstreet’s records. Or maybe thats a little cruel
Either way, the passing of Steve Jobs has bought into focus what a giant of a business this is. A lot has been said but I do believe job’s reference to Henry Ford’s quote is very illustrative of his thinking
“Ask the public what they want and they say, Faster horses”
And that was the key. My view is that other tech providers didn’t quite grasp that we don’t wish to fiddle around with anti virus software and we don’t wish to have a flimsy built laptop that has to be repaired every year and we don’t wish to have customer service levels of Dixons and Curries
And they are beautiful machines.
Its all been said elsewhere but RIP Steve Jobs.
A thank you to Atlantic Risk Management and specifically Jo Bennett Coles
Its rare that I mention my best contacts on this blog and perhaps I should do so more often. None of us work in isolation.
My first priority when starting out in brokering of invoice discounting and factoring was to accumulate as much knowledge of the providers as possible and just as importantly, get to know who is representing them. You cannot offer the right service to clients unless you do so Thats obvious
The next step is to find someone who knows the market well and its hard to imagine anyone does so comprehensively as Jo from Atlantic Risk Management. She’s been a great help with keeping me appraised of current trends that I may have missed and helping point me in the direction of possible solutions for some of the more exotic and difficult deals. Its pretty clear to me that Atlantic know exactly what they are doing
Knowledge is key to obtaining the best results for your clients and the quality of your sources is vital
A big thank you Jo
And they haven’t paid me a penny for this…
Their website is http://www.atlanticrms.com/atlantic/
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