Archive for December, 2014

City Link collapse


Putting a business into administration on christmas day is quite extraordinary timing and about as unseasonal as you could imagine, but thee is of course no good time for bad news, despite what certain political spinners might have had us believe in the past.

Was City Link’s collapse predictable? Should creditors have been aware of the dangers?

My guess is that credit insurance cover had disappeared but given my current issue with credit agencies I would not be greatly surprised to find out that some suppliers have taken a hit.

City Links last accounts showed a net worth of £27m in December last year and a working capital of £11m. That could have given many creditors confidence but it wasn’t difficult to spot the trend in profits. A loss in 2011 of £40m was reduced to £32m in 2012 and then to £20m in 2013. A positive trend? Maybe but clearly further losses in 2014 would have tipped them over the edge.

Tight though. It could be interesting to see the actual final figures and I have seen businesses survive with worse ratios.

Was it worth it though? The business was in a very competitive field and it was perhaps hard to see where profitability could be generated.

Part of credit assessment is assessing a businesses place in the overall market and their opportunities. Quite frankly the field of logistics is a mature market and not perhaps an area offering up much scope for innovation

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Predictions for the new year. A selection

What can we expect from 2015? Many will be making their predictions and certainly there does seem to be a high degree of optimism in the air. Here are a selection starting with the entrepreneur James Caan. James Caan

Perhaps a little vague? A little too full of buzzwords? This IOD prediction is clear and concise and geared towards the economy, which to me is more interesting


However it is clearly predictions with an agenda and it takes little guessing that they are from a particular political wing. That should be balanced by a piece from the liberal media and this from the Guardian is smartly written but not it has to be said, political

The american viewpoint is concisely explained here CNBC but in more detail in this excellent piece from The Atlantic magazine


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EFG Loans. A failure?

Quite often I am asked by my clients for details of the availability of EFG loans, which are “enterprise loans” backed by the government.

Lenders do make this product available but you would have to search high and low to find the detail. The fact is that they may have signed up to the offering but are distinctly unenthusiastic.

Why is this?

This strongly opinionated article
gives a few clues

Here are reasons why from both sides of the fence

One of the most controversial elements of the scheme has been the security demanded of borrowers, with reports of directors being asked to provide personal guarantees of up to 100 per cent of the loan amount. The (state-owned) Royal Bank of Scotland has admitted that it requests 100 per cent personal guarantees under the scheme as a matter of course


Anecdotally, even those lenders that do subscribe to the scheme aren’t always keen to follow through. McCabe says, “We’ve found that the details of the scheme haven’t been properly promoted within the banks, from their central offices to the regions, and that there is a lack of promotion of the scheme to business customers as well.”

As is so often the case a government scheme is weighed down with bureaucracy and little understanding for the needs and aspirations of the those it is intended to benefit. It is telling that throughout the piece reference is continuously made to the amount of paperwork.

It may be a harsh assessment on my part but Public bodies never seem to understand that the average business owner doesn’t have to find tasks to fill the day but needs to keep unnecessary tasks to the minimum.

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To factor or not to factor?

shrug-gestureLast week I had an interesting conversation with another experienced broker. Unlike a few I’ve encountered he was knowledgable and good company. He knew the market well and we exchanged some interesting information.

There was one area that did we didn’t agree on and that was the business of factoring. He placed nearly all his clients in factoring arrangements whereas I veer strongly towards invoice discounting. Whats the difference? Essentially it revolves around whether you keep the credit control in house or not

In fairness I sensed he specialised in the type of clients for whom factoring would be a more appealing option but what separates one from the other?

As a credit management consultant with a lot of experience in a wide range of businesses I am firmly of the view that credit control is very a key component of the whole client relationship. Treating it as a task to be shunted off to a third party can be naive.

On the other hand outsourced credit control can work very well indeed and there is one small firm I could strongly recommend but the key is that you need to have control ultimate control over the process and the decisions rather than the lender. These decisions will be key to your business. More credit? Legal action? Stopped work? Big decisions

All factorers will claim that they can take full charge of your credit control but the truth is that the decisions and the disputes are the elements that take up a credit controllers time and these will remain your reponsibility. As they have to.

Also, rather cruelly, many credit managers would ask, why would a true credit professional want to work for a factoring company? I would agree with that question

There are instances where factoring does work best but the key is to understand your client and their clients and keep options open. One size does not fit all all.

It is essential that their needs come first.

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The near death of creditors meetings?


Meetings of Creditors are so often poorly attended and seen as little more than a rubber stamping exercise. More cynically still they are nothing more than a revenue generator for insolvency practitioners.

I have attended many over the years and also ignored quite a few. There have been some which have been, shall we say, interesting and others that have been a complete waste of time. One or two made me pretty angry including a disgraceful stitch up by a very large and notoriously arrogant firm

But change is in the air. Imminently there will be a requirement for a minimum number of creditors to agree to a meeting. Although this figure is just 10%, that is still a threshold that will not often be met, especially if i am right in assuming this is 10% of the number of creditors rather than the value

See Tony Grooms blog on K2

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London Overground. A quiet success story

overgroundtestingA good few years ago there was a long curling railway line that stretched from Richmond through to somewhere called North Woolwich. The units used were somewhat dilapidated two carriage trains that were shockingly unreliable. The line was considered something of a joke and was seen as a transport means of last resort, at best. It was threatened with closure on many occasions.

So what has happened since then?

As most Londoners know, there has been a thoughtful, well planned and stunningly successful development of a a network known as London Overground. Now comprising of a number of existing lines as well as some significant extensions. The passenger numbers have ballooned from 33m in 2006 to 133m in 2013. Yes you did read that right.

Such has been the demand that the trains are being extended to five carriages and the platforms lengthened. Also further lines are being added. Decent new trains, smart branding and reliability are all driving the unexpected success but it also goes to prove another point. For all the market research and for all the assumptions about the public’s attitudes and choices, the truth is the the market doesn’t often really know what it needs until it is given that choice

I think that London Overground is a perfect example of that theory

Also it is a triumph for TFL and those who gave their commitment and vision to this project. A lot has been made of major projects such as HST and relocated airports but its these relatively incremental but crucial developments that deserve most credit. They might not be glamorous or pander to certain politicians egos.

Someone somewhere should be very proud of this significant achievement

For those interested in the old North London line, here is a light hearted link6791764433_e15a1536a6

And for those interested in the current scope and future development this link is informative

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