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Good article on credit management
http://www.tvnewscheck.com/article/2011/04/14/50603/revaluing-the-role-of-credit-and-collections
From the USA, where they take these things a little more seriously
Thomas Cook it
Remember the old advert? “Dont book it, Thomas Cook it” Simply a case of dont book at all it would seem …sadly
The woes at thomas cook have been very much in the news this week and the share price has collapsed and the talk has now moved onto speculation about the very survival of the group. Bad news of course, but unexpected?
Well the results certainly took the city by surprise and I would imagine that many suppliers are a little nervous too. It would be interesting to know how the credit insurers have responded
But was any of this predictable? A quick look at the last set of accounts suggest so. I have credit checked large holiday firms before and the accounting is a certainly different and I wont go into drab detail. However it was clear that a drop in turnover was going to put some strain on the balance sheet,a s had been illustrated by the previous downward spiral. As in all credit assessment, you have to sometimes strip out the waffle and look at the fundamentals. And was a drop in turnover of some magnitude to be expected or not? Well it is not exactly the perfect market conditions for slightly upmarket package holidays and even if it was, the internet and general trend away from that product was bound to have some impact.
Predictable? Maybe not to the alarming extent reported but shouldn’t have been too surprising, but again this is a perfect example of how credit assessment merely starts with the balance sheet
Putting that aside though,they are (like HMV) a good company and high street presence and regardless of the cold facts, I wish them well
http://www.ft.com/cms/s/0/aa342ea0-1604-11e1-b4b1-00144feabdc0.html#axzz1edbZU63f
Dangerous advice…
Once again I have come across some naive and rather knee jerk credit management advice from a “small business consultant”. I am seriously worried that people are actually handing over hard earned cash to be regaled with sweeping statements based on zero experience
This time we are told that slow payments to SME’s is “unacceptable” and “something has to be done”. Well yes, it would be great to wave a magic wand but that “something” is the routine application of statutory late payments charges
I totally agree with this if you have your clients in a vice like grip where they are completely dependent (through gritted teeth maybe) on your business. And in the eyes of a “small business consultant” it would appear that this is precisely the relationship every small business has with its major clients.
So feel free to fire off those £80 late payment charge bills the moment Tescos or British Aerospace is a couple of days overdue with your invoice and have a great time trying to get them to raise the necessary purchase order to cover the charge before even considering the whole business of sign off
The beauty of this is that it is likely to be the last time you have to do so. And not because all future invoices will be paid on the dot….
More seriously, its is advice like this that angers experienced credit professionals. In most sectors (and granted that there are some exceptions) good credit control does not come about from throwing around fines and interest charges. Its about understanding the balance between sales and payment and risk. And thats before the appreciation of the value of a strong relationship with your client
Olympus. Who would have been an auditor…
Not me. It would appear that Olympus had some rather unfortunate friends and the full extent of this is now seemingly on the verge of being blown out into the open.
A fine article linked above and some of the practices described (I do mean financial..) are eye popping.
The big question of course is whether Olympus is the only major Japanese conglomerate engaged in these dubious long term associations and practices? I suspect not.
And any credit manager with exposure in the land of the rising sun may just be feeling a little nervous about some of his firms risk
Xmas at Starbucks
I spend rather a lot of my time working in various Starbucks around London (am I alone in thinking that the chain appears to be booming once again?) and i have to say the wifi is excellent
But it is November 17th and what am I am hearing? Endless bloody xmas tunes. Get a grip Starbucks please
I say it again, it is November the 17th….<a
Joseph Stiglitz
A very clear sighted and typically hard hitting solution to the current crisis from a high profile economist (you may well have seen his books in Waterstones)
His prescription is contrary to that currently being pursued by the western economies. Should we be worried?
http://www.slate.com/articles/business/project_syndicate/2011/10/how_to_end_the_global_recession_more_public_spending_and_financi.2.html
Olympus crisis but where were the auditors ?
http://www.bbc.co.uk/news/business-15632320
http://blogs.wsj.com/japanrealtime/2011/11/08/olympus-what-next/
Olympus appear to be teetering on the edge due the “decades old” hiding of losses on securities. the details are summarised in the BBC link above and with more depth in the Wall Street Journal piece
But this raises an obvious question? How were their accounts audited over the past 20 years? And who was responsible? Its in Japan and some will say that that is a reflection on their business climate but I wouldn’t mind betting that the same auditors have been in place all along
No suggestion of corruption (yet) but the thought that rotated audit firms with a fresh approach each time would be more alive to these issues does rather cross my mind
Late payments to SME’s increase. Is this news?
Another good article from James Hurley, but please do not proceed to the sanctimonious comments that follow, including the inevitable “I am not owed anything because I sue everyone!”
Needless to say, this news is not a surprise but the key question is what can be done about it? The much vaunted late payment interest charges have of course had no effect at all and the feeling remains that all the EU and Government initiatives are doomed to failure.
The simple answer? Good credit control. The solution comes down to people and you have to invest in the best
Greece and failure
No need to link the news stories on the decision by the Greeks to hold a referendum and I think that everyone will already have their own opinions, some of which will be unprintable
But what are the longer term consequences for exporters to Greece if they leave the euro? Well not very good. As I see it, many businesses in Greece will be indebted in euros but will then be stuck with trading with a hugely devalued currency (the “New Dracma”). Unless european banks come to some sort of write off agreement, then Greek firms will be collapsing like dominos
I would imagine that obtaining any credit insurance for exports to Greece at the present time and anyone who is exposed with unsecured debt should be very concerned indeed. In fact it would surely be suicidal to trade in that manner until this mess is resolved one way or another
But there is a silver cloud for the London business community. An early post of mine related the story of Wind Hellas who controversially registered in the UK to head into administration. Many professional firms did rather well out of that and whilst i wouldn’t suggest that UK IPs and lawyers set up a trade show in Athens (just yet anyway) i am sure that a few have their eyes very closely on the situation
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