Happy holidays

To get you in the mood, here are a selection of pictures from the well known photographer Martin Parr. Yes they are slightly grotesque and perhaps patronising but enjoyable all the same

“Quarterly capitalism” under attack.

From both Mark Carney and Hilary Clinton as described in Will Hutton’ excellent piece.

The point is a familiar one but one that is increasingly being highlighted. The public company is a fine innovation which has led to great prosperity and enterprise but focus shifted far too significantly towards the short term reward? This is described as the tyranny of the quarterly report in the USA

We can liken this to a football club. Increasingly supporters demand instant results and have little patience for longer term building. The other side of the coin is of course that as Keynes said, “in the long term we are all dead”. There has to be a balance of course but if our corporations do lose ground in the international market because of a lack of longer term thinking, then we will know where the blame lies

Late payments “tsar”

Oh dear. I really do think this is nothing more than window dressing. Good intentions for sure but we are into the world of being “seen to do something”

These are the proposals

the commissioner would:

Be a point of first contact for small businesses and provide advice and support on how to avoid disputes and how to resolve them
Offer access to mediation services to sort out issues quickly and affordably, “at a fraction of the cost of going to court”
Investigate complaints over unfair business practices and regularly report its findings

Mediation is fine and yes we should welcome a lower cost service but disputes are are completely different to entrenched late payment or extended terms.

“Unfair” business practices are what exactly? If a client tells a supplier its “90 days, take it or leave it” is that “unfair”? Frankly no.

None of this will make any difference at all. Its a free market and no one is forced to sell to anyone but there are a couple of suggestions I would make which may improve the nature of supplier client relationships

Complaints about bullying should be made under complete guaranteed anonymity. Tricky because any specifics would soon identify the parties involved and that would have the expected repercussions, but its a thought

Secondly I believe that client contracts should be examined for “unfair terms” before they are tested in court. One notorious retail chain has a clause that demands that in the event of failure or contract cancellation the supplier has to collect all their goods from all of the retailers stores of which there are over 100 across the country, within 24 hours. Otherwise they will retain title but not pay for the supply.

Ludicrous of course and typical of a particularly unpleasant business but no supplier should have to worry about having to fight such a disgraceful term in court. Frankly it should be banished in advance and very publicly too

Maybe that would make the bullies think again.

The “new lenders”. Hubris?

At a recent Turnaround Management Association Event there was a speaker from an “alternative crowd funding” lender who was very dismissive of the current providers of asset based finance and gave a distinct impression that his form of lending would soon dominate the whole market. I wasn’t there so I will refrain from naming names but I was aware that the comments did ruffle a few feathers.

But did he have a point? Readers of this blog will be well aware of my views of the established market and certain dated and rather shoddy attitudes that remain prevalent. Certainly, on that basis I have welcomed the new additions to the market and they have at the very least, freshened up the available options.

All this makes the role of the broker more valuable.

My view is that no one form of asset/invoice lending will prevail. Claims to the contrary are misplaced simply because with upwards of 50 lenders active in the market, there will be a constant scramble for market share and specialisation

One size cannot fit all. Those requiring flexibility will have to pay a little more because regularity has its own cost benefits to a lender. Risk will also always be a driver of cost and the views of what determines risk will constantly vary across the market

Funding circles and those reliant on investors are naturally going to have to show a return. That return will also be geared towards risk and as in any market, an increase in the real or perceived risk will increase the demand on the return.

It goes without saying that a low cost deal for a borrower is not going to be a lucrative facility in the short term for an crowd funder or established bank. However a longer term view might be taken over a contract. To give an obvious example, would you rent your house out for one month at the same rate as per month for a three year tenancy

Our friend’s message to the TMA was clearly that their offering was going to so attractive to borrowers that they would not be able to compete. Maybe so but this is his message for the investors

Crowdlending through x gives Investors the chance to realise significantly better returns than those offered by banks and many other alternative investments

Lets see if they can square that circle

Greece. The reaction

Maybe it is to be expected in certain quarters but the knee jerk rather dim witted response to Greece has been along the lines of the little nation being bullied by the big nations. This truly awful article is a case in point but at least it elicited a perfect response

please tell me what should be done to “ease their pain” and not be “cruel” to them.
Facts…borrowed money,agreed to terms,pissed it up the wall,refuses to pay.

If it was an individual we would be up before the beak,declared bankrupt and maybe do a stretch for fraud, even embezzlement in this case … you suggest they just need a hug…Idiotic journalism…I must read this newspaper just to piss me off.

Far more considered is this fine piece from a fine journalist speculating about the longer term divisions that this crisis has created.

Two shows at the Tate

There are two shows at the Tate Modern covering two well regarded female artists who are very contrasting in styles and maybe popularity.

Art is often well appreciated when comparing differing artists. Many great shows have taken this as a theme. My suggestion is that if you visit the Tate this summer take in both shows

Sonia Delauney’s show is the more popular by far. As you can see above, her colours are vibrant and striking. Agnes Martin is the polar opposite. Straight lines and the palest shades, reflecting the sun drenched bleached landscape of her latter home in Arizona. Delauney’s abstracts are full of movement, Martin’s are hypnotically still

Which did I prefer? Perhaps preference is the wrong description in art, Do I “prefer” Turner to Warhol etc? But it felt unavoidable with these two shows

Agnes Martins extraordinarily hypnotic pieces stole my imagination. As a member at the Tate, I can return again and again to lose myself and I have done so. Maybe think of Rothko for Martin and Kadinsky for Delauney and you have a rough idea of the contrasts. Very approximate but you will get the idea

Enjoy

Enjoy

Sly and disgraceful behaviour by a major clearing bank?

A few months ago a client of mine was offered a £80k overdraft facility by a major bank to “take them out of invoice financing”. Given that my client had a turnover of only around £800k and a less than wonderful balance sheet, I was a bit startled by this offer. Unsecured lending to an amount which was a huge multiple of their assets? It didnt weigh up. The bank made it very clear that it was to clear the invoice finance facility. My client was happy with the facility and didnt bite.They smelt a rat.

My client has since gone bust but what was the banks offer all about? I could guess

Last week another client of mine received an offer of £100k from same bank to “take them out of invoice financing”. He replied that he would rather have a £100k loan. A loan is obviously more secure and diminishes in risk as it is paid back. You would think the bank would much prefer that option rather than the overdraft

No. They insisted on an overdraft “to clear the invoice financing”

Why is this bank so keen to offer substantial overdrafts that are unsecured? I think you may well have guessed already

Their own invoice financing has a poor reputation on any number of levels. Few brokers would choose it for a client

But what if the bank sucked a client in with this “overdraft” quickly to be withdrawn and forced onto their IF ?

I think its fair to assume that that is the tactic here. I think its fair to say that this banks behaviour stinks

The client would end up much worse off than before. You can be they would not have the facility and service I found for them

If you want to know which bank this is, feel free to mail me

The unreported fall out from Greece’s imminent crash?

Seventy Uk businesses are owned by Greek companies and cumulative turnover of around $700m. It is reasonable to say that all of these firms are at serious risk of failure if Greece exits the euro

Is this all bad news? Not necessarily because in the past the UK has been used by major Greek companies to file for bankruptcy. Hellas being a case in point

Whether the regulations have been tightened to prevent such “insolvency tourism” i have yet to find out, but its quite possible that Greece’s failure could greatly benefit the UK insolvency

Another Tube Strike

Once again London is hit with a damaging strike which yet again appears to be based on the flimsiest of grievances. Tube drivers are exceptionally well paid and frankly very fortunate to be in the bargaining position they are. Most Londoners would welcome the whole lot being fired tomorrow and replaced with labour at a true market rate.

The dispute is over the running of the tubes during the night. Who couldn’t welcome this? A major boost to London’s appeal to tourists and massive assistance to the many night workers in basic low paid jobs. Far left labour candidate Jeremy Corbyn certainly did not consider benefits to other far less well paid shift workers when tabling his commons motion against the proposed changes. At least it distracted him from his sinister fawning over anti semitic terrorist organisations and preachers

Another great benefit is that it will hammer the Black cab trade. Perhaps the second most reviled London “profession”. Cyclists like myself will feel safer.

The other side of the coin is that the mayor is a poor negotiator as demonstrated with the previous issue of closure of ticket offices. Ill thought out and in many ways lazily considered it reflected a mayor who seemingly has he mind on other matters. Which we know to be the case

Londoners deserve better from both sides

Independent brokers or not?

I have taken the liberty of copying this piece from another website. I will be selfish and not link because effectively they are competitors of mine and whilst it isnt well written the sentiments are accurate

Regulation of factoring brokers

Unfortunately there isn’t any regulation of factoring brokers which means that anyone can call themselves an invoice finance broker and dispense advice whether they know what they are talking about or not. Poor advice may well work out very expensive for a company and in some cases by introducing a company to one of the poorer performing factoring companies the results of that advice could be terminal for the client as many of the factoring companies desperate for business are happy to sign now and perform the due diligence once the ink is dry causing untold problems if they find that not everything is to their complete liking

In this age of the internet there has been a large increase in so called “internet brokers” who are in reality nothing more than lead generators capitalizing on some web design skills. The lack of any form of regulation within the industry means that someone with little or no experience of the factoring industry can design a catchy website bandying about such terms as “experienced”, “independent” and “impartial” in order to convince an unsuspecting company that they are a worthwhile company to deal with, but in most cases they are just passing the leads generated onto someone else.

I would add a few points to this

– Experience of “the industry” should not be a pre-requisite. In fact there are various reasons why i believe it can be a negative, the most significant of which is the nature of developed cosy relationships. A little distance is important I believe and most lenders would hopefully confirm that I am far from a back slapping golfing boozing insider

– Factoring service is an issue and one I am aware of but the emphasis here is on collections. My view is wider and most of my arrangements retain the credit control “in house”. The biggest factor (excuse expression) in wrecking a business is being tied into an inappropriate contract where the clients facility needs are not supported. Lenders vary wildly on what they will lend against and how. The biggest challenge in ensuring this is ‘squared off’ beforehand

– Certain lenders can in fact profit considerably from a businesses failure. Others take a longer term view and believe in support. Some lenders will be difficult with termination of contracts ( the large banks often the worst) wheres others can be surprisingly helpful

– Is a contract always the best solution? Many brokers will only consider this for obvious commission reasons but the objective should be a longer term client relationship