Archive
What I would like to see in 2014
Im not one for resolutions or seeing one year as significantly different from the nexy but here are a few random developments I would like to see next year
1. Personal guarantees. There is a wide chasm between the perception of the lenders on the borrowers on this issue and frankly I know which side i come down on. The PG is demanded in invoice financing to “concentrate the directors mind on collections if the business fails”. What rubbish and i wonder how often this is effective. So why not a warranty rather than the heavy over the top approach? Its a competitive market out there, so stop complaining and make yourself competitive on this sensitive issue
2. Asset lending. Think it through. It is a reflex response from lenders that lending can only be made against “tangible assets”. Why? A brand has value and whilst the book value can be overstated treating it as zero is unrealistic. When MFI went bust, guess which asset realised the highest value?
3. Underwriters. Stop acting like a herd and think commercially. The same mantras about the same debtors are trotted out time and again and often they are a little laughable. I had a perfect example at the end of last year which tempted me to name and shame the slew of underwriters who would be kicked down the stairs if they had refused the same credit in a genuinely commercial environment
4. Banks. We need more players in the market. With the unwelcome fading of the Co-op and retreat of Clydesdale, the business banking options are still too limited. There are some new players but they are too risk adverse and the major players are frankly far too often out of touch with the requirements of SMEs
5. Penalties. For lenders who are obstructive with changing providing obligatory details for changing banks and facilities. There should be a statutory time limit and heavy fines for non compliance
6. Companies house. No more suggestions from Vince Cable that accounts filing requirements are to be considerably loosened. Aside from the difficulties it will create for credit managers, this will only lead to restrictions in lending. A dangerous idea
And in the wider world
1. The EU. Because the crisis is less prominent now and certain countries appear to be getting back in track, there is a danger that the lessons will not have been learnt and that the idealistic push to greater integration will continue apace. I believe that it will be far from just the uk that will be very uncomfortable with this agenda. I would like to see the EU scale back it’s reach and concentrate on the trade and economics rather than politics
2. American resurgence. I want to hear less about the supposed success of the chinese model from those of an authoritarian bent and witness America lead the world once again. It’s free market can be a little raw for some tastes but fundamentally the values and freedoms as well as the remarkable spirit of enterprise is only to be admired.
3. London. The worlds number one city and booming as never before. But i want to hear less rubbish about how this “drains” the rest of the country and more about how it is the Uk’s economic driver. It is an international city and competing not with Birmingham but New York and Frankfurt. Envy from the regions at the capitals success has to stop. For a whole host of reasons, you would be worse off without us
4. London again. Crossrail is 20 years too late but will be a huge success (witness the stunning development of the London overground). Stop dithering and kick off the much needed crossrail 2 now
Happy new year
Non Bank lending “highest since 2008”
http://www.ft.com/cms/s/0/4d3a0830-3738-11e3-9603-00144feab7de.html#
The trend continues.
The future of Heathrow and why Boris is wrong
I should of first declare an interest here. I live fairly close to Heathrow and yet avoid the flightpath so effectively, I have the best of both worlds. I would also add that it is or at least has been, a pretty horrible airport. But should it go?
The whole of London is aware of the ongoing debate and most prominently we have had Boris Johnson promoting his plans for a new airport in north Kent. You can see the attraction on some practical levels and certainly you can see why any politician hanging his hat on this will be expecting to be viewed as a “clear eyed visionary” rather than a purveyor of supposedly muddled solutions.
A new airport does look very straightforward on paper but there are a couple of very important points that are seemingly often overlooked and yet i believe to be crucial
Firstly a wide range of businesses have located their international head offices around the Bath Road and M4 Corridor. The Heathrow effect stretches right out to Reading and beyond. There is a huge commitment to location for any number of firms, most especially in the vital technology sector. If Heathrow were to close, the assumption would be that they would relocate to Kent or south east london. Fine if they do, but equally Amsterdam, Geneva and Dublin would be on the agenda. That would not be welcome
Secondly there is the simple issue of location. Just because Heathrow is a “London airport” its reach obviously stretches a lot further and it is glaringly obvious that the west of London is a lot more accessible to the rest of the country than the distant south east. This not only applies to those travelling out but also those travelling in and that can include those that are vital to the wider economy
There is more of course but lets address these points first?
Blockbuster to close completely
http://www.bbc.co.uk/news/business-25345257
Inevitable and it was pretty surprising that anyone thought they had a future. There are certain businesses which simply cannot turn back the tide of progress regardless of how well managed and well branded they are
Many outside of credit management believe that analysis simply revolves around balance sheets. Completely wrong. A strong credit manager will always look at possible trends and the debtors place in the market
It has also been remarked that Blockbuster became a little complacent and perhaps lazy minded (they turned down a chance to Netflix in its early days). Although that is not a factor that is easily defined it is perhaps a case of you know it when you see it
Lloyds bank fine
http://www.bbc.co.uk/news/business-25330366
I have good contacts at Lloyds and I am sure that there is a genuine commitment to customer service amongst many of their staff but this massive fine and the appalling details of the case will only reinforce the view that the big banks have entirely lost the plot
Not only were their staff disgracefully pressurised but clearly customers were being pushed towards totally inappropriate products
In the past week, I have experienced on behalf of one of my clients, service from a another clearing bank which was complacent, lazy and frankly disgusting
These fines will perhaps go some way towards addressing the abuses but competition will be key and we need more of it frankly
More sloppy journalism.
http://www.theguardian.com/commentisfree/2013/dec/09/britain-now-developing-country-foodbanks-growth
It is difficult to believe that the writer of this sloppy and frankly stupid article is an “economics writer” Using desperately selective statistics (“roads in Chile” I kid you not), he appears to be desperate to portray the UK as a failed economic state
Now i’m no cheerleader for either side on the political front and I keep politics out of this blog, but perhaps some reference to the UK’s growth firing ahead or the fact that we top the “ease of business” tables might have been produced as a counterpoint to “investment in Mali” (surely a skewed statistic given the recent history there?)
And to think he was paid for this drivel
The slowest payers in the UK are… the Scots
Tempting as it is to portray a stereotype, the regional variances in this report were frankly pretty limited. I am not sure they mean an awful lot
But more significant is this quote for a business owner
Mr Jones spends a day a month chasing invoices alongside a fellow staff member. “A lot of MPs don’t realise that business owners like me are forced to use our valuable time to chase invoices,” he said. “This takes time and stunts growth; you can’t invest because you’re not sure of cashflow.”
More fool you. Aside from the fact that this is inadequate chasing (half an hour a day would make more sense) this task is easily outsourced at would be a cheaper rate than his “valuable” time
SMEs and cashflow
The headline indicates that half of SMEs have cashflow concerns.
http://www.telegraph.co.uk/finance/yourbusiness/10504363/SMEs-in-the-grip-of-cash-flow-crisis.html
Drill down the figures in the article and the picture is perhaps a little confusing. Im not sure the right questions were asked. Either way the results are significant and I would suggest that if anything the figures are underplayed
Business owners will by instinct “big up” their position and some might not even really be aware of the extent of their cash flow problems.
Ian King. Good columnist but what rubbish
This is one to make you choke on your cornflakes. Ian king is a decent Times columnist but opinion pieces such as these reinforce the impression that there is a gulf as wide as the Grand Canyon between those in the finance industry and their insiders and those who are compelled to use their “services”
The last line in particular takes some swallowing and is frankly complete rubbish. Insulting rubbish to those who had to dip in their pockets to bail these people out
Good old Fred Goodwin. He hasn’t been chief executive of Royal Bank of Scotland for more than five years but, like Churchill or Hitler, he will be helping writers to make a living for decades to come. At this rate, he will also be a handy scapegoat for RBS for a while yet.
One of his henchmen, Derek Sach, stands accused of destroying scores of viable SMEs, and yesterday Mr Goodwin was a convenient Aunt Sally for the new RBS chief executive, Ross McEwan, as he sought to explain a computer glitch on the night of what we must all, drearily, now call “Cyber Monday”.
The chances are that while RBS may well have underinvested in IT for years, as Mr McEwan alleges, it is hardly unique. HSBC has suffered four major IT failures like this since June 2009. So did Barclays, also in June 2009, while Lloyds and Halifax customers were similarly locked out of ATMs in October last year.
What should be more startling, frankly, is that there are not more such snafus. More than 10 billion card transactions and 5.7 billion direct debits are conducted annually. While doing all this, bank IT systems must also be able to withstand cyberattacks from any part of the world while remaining vigilant for possible fraud, money laundering and other criminal activity. Doing all that 24/7 would test even the finest systems. And all this infrastructure, thanks to the insane structure of Britain’s retail banking market, is provided free of charge. Customers who demand free banking should not be surprised when IT systems that are, in some cases, 30 years old topple over from time to time.
Newbury Racecourse dresscode. The perfect way to lose your customers
Those of you that know me will know that I am a big fan of National Hunt racing. I am lucky enough to live in a part of the country where many of the top courses are located and following the seasons narrative is a big part of my winter
Newbury is one of those courses and a special one too. Quality racing and the feeling that you are at one of the true centres of the sport. The audience there is a lotmore country set orientated than Ascot or Sandown say, most especially in the members stand which is one of the best of its kind in the country
And that is where they have the lost the plot
http://www.theguardian.com/sport/blog/2013/dec/01/newbury-hennessy-dress-code
Frankly turning people away because they are wearing jeans is bad enough (“go into town to buy trousers” was the verbal instruction) but checking women’s “length of skirt” is beyond satire
Racing remains a popular visitor attraction in this country but like any other it has to fight for its market share. Or should know it should have to. Turning away paying guests on this most flimsy of pretexts is about as damaging to your marketing as it is possible to envisage. And this from a course which has had its share of financial difficulties too.
You would struggle to find a worse example of PR than this baffling behaviour
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