Archive for January, 2013

Interesting article on late payments

See here

Some interesting stats and the general theme is that SME’s are hitting back at late payments. Apparently 22% of SME’s will “not do business with those that have paid late in the past”


Its think its a case of they would say that wouldn’t they?

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Stop press 2e2

January 29, 2013 1 comment

A quick response to my blog from a someone i know well in the asset finance sector 

Just saw your blog-i saw a comapny this morning with 100% concentration with 2E2, fortunately for them the contract hasn’t yet started. I credit checked them and at 10am ish they had a rating of 3.1m and it was gone this afternoon!

So here i am saying credit check…

But of course it is down to who you credit check with and who carries out the check . 2e2 breached their banking covenants a few weeks back (just about time my client was paid) and how an agency cannot pick this up is beyond me. 

Unless they are one of the too many cheap nasty agencies who offer useless ratings

Even ignoring that, how can a business with a negative working capital of £43m with huge borrowings possibly justify that rating on a £400m turnover?

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Want some more bad news?

001 Consumption stuck well below pre-crisis highsConsumer spending in the UK is likely to stay below 2007 levels until 2017 according to Deloitte’s

Maybe so, but how do they know? Sure there will be this model and that model and yes there is probably a strong basis for believing this to be a likely outcome. However economic predictions are hardly an exact science and five years ahead is quite a big call

All the same it would be interesting (or morbid) to look at the reasoning behind this because clearly this is the driver behind the whole economy.

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Another administration. Not a business you may have heard of being in it and telecoms but significant all the same. A turnover of £400m and a lot of staff at risk

So why am i posting this seemingly unexceptional story in this day and age? Purely personal. A client of mine for whom i offer credit management consultancy were owed around £15k by @e2 late last year. Their perception was quite understandably that they were a major player and their close links with o2 offered credibility. But they weren’t paying.

Lets look at their financials. Yes they made a £13m profit in 2011 but that followed a heavy £30m loss in 2010. And the balance sheet was a disaster. Simply put, if 2012 did not boom, the banks would get twitchy.

I wont bore you with the ratios and the items in detail, but the quick answer was, we better get paid

And my client did. Right at the end of December

I will happily take the credit for saving them a bad debt and justifying my modest monthly fee, but the key lesson is that credit checking is essential not just when you first win the client but on a continuing basis.

Said it before and I will say it again until you and all your clients repeats the mantra daily

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Jackson Reforms

?????????????The what you may ask? These have been in the news for some time and are due to be implemented on the 1st April. You may be vaguely aware of the outline but not the detail, so here goes

– Claims in the small claims court can now be anything up to £10k rather than existing £5k. In the future, this is intended to rise to £15k. Good news in my opinion

– Lawyers can now charge a success fee based on % of collected settled debt. Costs will have to be deemed “proportional” but not surprisingly, this isnt nailed down at this stage

– Commercial claimants will find it easier to reclaim costs from defendant (but don’t ask me for the detail just yet) but it is a good idea to firm this up in the terms and conditions

– Mediation is going to be encouraged and if the case goes further, the judge will question why it wasn’t tried. If the answer is unsatisfactory, then costs can be awarded either way

– If an offer is made to settle and then that is “beaten” when the case reaches its conclusion, then the judge can further impose “enhanced costs” and a penalty of 10% of debt against the seemingly uncooperative party. I’m not entirely sure whether this applies to just the claimant against defendant or both ways. Interesting and I will look into this

Happy to be corrected on these points, given that i picked them up from a webinar, which was informative but had slightly painful speakers

Personally speaking, I believe that these changes are positive. I am particularly taken with the last two points.

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Nasty lender

A story today from the world of invoice financing…

A major lender phoned through to a recruitment agency that their facility was immediately being withdrawn. This was because they had not passed on a direct payment within a fairly tight time limit. That is a breach of course and borrowers should be be aware. However more often than not it is dealt with by a slap on the wrist. The sum involved was not substantial

Bad enough given that the directors immediately had to find £100k to pay wages to contractors

But when do you think this lovely lender chose to advise the client of this action?

7.30pm Christmas eve


Now I am not at liberty to say who the lender was but it is not a what you would diamond encrusted behaviour.

What i do know is that the account was quickly picked up by another clearing bank with a better reputation for service

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Linkedin endorsements

linkedin-ipo-is-set-for-thursday-d718f1c915You may well have noticed quite a few changes to linkedin this year, some of which are perhaps more welcome than others. It is certainly less easy to connect with a past contact now but that has stopped some of the spam style “connecting” (usually from some outsourcing business in India)

The other slightly odd addition is the “endorsement” I have been nicely endorsed for a few things which I am glad to be associated with and on the other hand i have been endorsed for a couple of things that are, shall we say, not my expertise

But this doesn’t worry me as much as a friend who has been

“endorsed for liquidation”

By Tony Soprano maybe?

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