Archive for November, 2014


To my previous posts regarding poor credit ratings. We have subsequently found

– Creditsafe rated the business good for £25k. Over five times Experian limit. Given that Creditsafe are conservative with smaller businesses (that prejudice again) it’s a fairly strong bet that the top agency D&B will give a higher limit still. And that would be justified in my opinion.

– But how far would insurers go. Well the answer is £50k minimum. My credit insurance broker knows the market extremely well has indicated that cover of £100k is certainly achievable

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Wise words for business

Often I steer clear of tiresome platitudes and management speak but I did happen upon this list of quotes from historical figures who generally knew what they were talking about



• Do the hard jobs first. The easy jobs will take care of themselves – Carnegie
• Either you run the day or the day runs you – Rohn
• People rarely succeed unless they have fun in what they are doing – Carnegie
• The only thing we know about the future is that it will be different – Drucker
• If I had eight hours to chop down a tree, I’d spend six hours sharpening my axe – Lincoln
• Nothing in life is to be feared. It is only to be understood – Marie Curie
• Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better – Beckett
• You may be disappointed if you fail, but you are doomed if you don’t try – Sills
• If you don’t have a competitive advantage, don’t compete – Welch
• It does not matter how slowly you go so long as you do not stop – Confucius
• Our greatest glory is not in never falling, but in getting up every time we do – Confucius
• The best place to find a helping hand is at the end of your own arm – Swedish Proverb
• Setting an example is not the main means of influencing others; it is the only means – Einstein
• Some pursue happiness, others create it – Anon
• Leadership is the ability to lift and inspire – Dietzel

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Name and shame?

My previous post has generated quite a response and a lot of hits. That’s fair enough but there have been responses querying whether I should have named the agency in question

This is a difficult one. Last year I was passed a story from a very reliable source regarding pretty horrendous treatment by a major bank towards and invoice discounting client. I am certain it was accurate but at that time I was taken to task for not naming the bank in question.

Why did i not do so? Reason was that i could not entirely verify the story. In this case I can

Credit agencies serve a purpose and frequently they will offer a very good service but the other side of the coin is that they are judged on their opinions and their opinions only. In this case it was not so much disagreeing with the rating as the sloppy rational behind it. That was the concern.

There are whole blog dedicated to highlighting “bad behavior” by certain lenders. Each blog targets a certain lender. That is not something I approve of because it will give the appearance of being a little obsessive

To be clear, I am not interested in vendettas or targeting certain players in the credit and finance industry but at the same time I will not shy away highlighting bad practice when I see it first hand.

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Another useless credit agency

This time I am happy to name and shame Experian. Absolutely clueless.

This is the case study

A business that has been trading for 16 years supplying staff in the oil sector. Straight forward accounts and not exactly a difficult balance sheet to understand.

Unless you are Experian that is

They have a net worth of £246k and perhaps more crucially a working capital of just 10k less than that figure. Also the current assets are entirely debtors and cash. Just as importantly the net worth had increased from £77k to £146k to current figure over past three years

There was no other adverse information and why should there be? This business has a great balance sheet. So what credit rating do we get from Experian

£4500. Poor

Unbelievable. That is barely a small credit card limit.

My client took this up with this so called credit agency and the response was awful

They claimed that because the company doesn’t file profit and loss (under the threshold) they cannot tell if it is profitable. They also claim that that the stability and age of the client is not the issue but “the size ” is. What???

So without any other input of capital (no loans on the balance sheet) how on earth did they think the net worth was increased? Clueless

And size is stability is it? You must be joking.

They set the limit on turnover? Either way it is fairly clear from the debtors that this business is turning over between £3 and £4m a year.

Does this matter? Well in this case their “rating” was crucial to a financing arrangement i was working on but in the wider sense, amateurish judgements of businesses are bad for the whole credit rating industry. Suppliers and banks will lose faith and frankly i would not blame them.

Having said that the most well known name in credit ratings does still deliver in my opinion. Dun and Bradstreet

The other point to consider is that straightforward agency ratings should never be taken at face value. Advice should be sought because the opinion taken on board is crucial to any business

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Too Big to Fail

9780141043166This account of the 2008 crisis has been around a little while and whilst sometimes I wonder if I have read all I need to read about the events of six years ago (yes, six years) there is always another angle to explore.

Centered around the Lehman collapse but also focusing on the impact right across the whole american finance industry, this gripping read really does bring the events and characters to life. It is often laced with dark humour and whilst driven by the dialogue (similar in style to Bob Woodward’s reportage) there is plentiful by pithy analysis.

The absolute shambles that was AIG, the egos and friendships as well as the startling moments when its clear that top financiers could not grip what they were facing all stay in the memory. This is as much an account of human nature, panic and hubris.

Thoroughly recommended

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Should banks be liable for bad advice?

Here is a cross post from my friend Tony Groom of K2, who is very well known and respected in the turnaround sector.

An interesting and pertinent case study. What do you think?

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Dreadful product launches

indexThanks to the always excellent Real Business magazine for this entertaining piece

The two that stood out for me were Dasani water and Apple maps. In the first instance it was impossible to understand how they thought for one second that the origin of the water would remain secret. In the second it was a perfect case of hubris from a company that believed all it touched would turn to gold. I am an Apple user and a fan but Apple Maps was extraordinarily bad.

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