Archive for January, 2017

Vanity Fair

As ever a very good blog post from Philip King of the Credit management institute

Ive always liked this quote

t’s said that turnover is vanity, profit is sanity, and cashflow is reality

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Can you read a balance sheet?

balance-sheet-1024x682I do hope so because frankly it is a skill that many underwriters at both lenders and credit insurers appear to struggle with.

The biggest issue I come across and have just this week re-encountered is the underwriters desire to immediately dump “goodwill” or “intangibles”. Many will say this is fair enough but I will give an example

My client has goodwill valued at £1.7m. Against that they have lending of £1.5m. The goodwill relates to various professional services businesses they have paid for with the loans. These businesses have been generating around £300k net profit a year since purchase

The underwriter was happy to keep the liability (the loans) on the balance sheet but not the asset (goodwill)

In effect he was stating that various banks that lent against the assets had made a huge error and were lending against something of zero value. Zero value and generatimg £300k net profit a year.

I could slightly understand the point of view if this was relating to a volatile service business but this is entirely the opposite

A dated underwriting mentality and one that should be addressed urgently.

By finding the said underwriters something else to do

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Distracted brokers?


You may or may not be aware of how asset finance brokers make a living. Simply put we are paid a percentage of the clients service fee on a monthly basis. It works because the incentive is to find the best long term solution for the client.

Of course a broker should not need an incentive to do so. There should be no other criteria

The key to finding the right lender is not in how much they pay but how they will support your client. All lenders paid the same rate of commission. Until now

A significant lender is just about to double the commission rates paid. This is an exceptionally aggressive move in the market. and I do question whether they needed to go quite so high.

It will create a lot of turmoil but not at CPCM. However this also creates a difficulty.

When engaging with a client it has been a relatively simple process to explain that nearly every lender pays the same rate. Now I have to explain that one lender pays over the odds but also assure that it will not affect my recommendations. Tricky

Either way I know my own mind and will solely work hard for by far the most important partner in the arragement.

The client

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Joseph Stiglitz and the Euro


I do read a wide range of writers on finance and economics so please do not get the impression that another review of a Stiglitz book suggests hes my only port of call. That would be very unlikely under any event considering his politics are fairly firmly to the left although they are sensibly adrift of the current Uk opposition

The reason for this review is that this is a highly topical book and it is in his indomitable style, very readable. Maybe a few pages too long but and a shade receptive in places but absorbing all the same

The central themes of the book are how to save the euro, why the present solutions are wrong and whos is to blame. I need not give too much away but I felt a slight half heartedness in the solutions to save simply because how do you enthuse about saving something you do not believe should have existed in the first place? Which he certainly doesn’t

When it comes to attributing blame he most certainly pins inflexibility and a lack of imagination on Germany abut  is probably far too generous towards the mismanaged economies across southern europe. However its the final chapter on Brexit which is most eye catching. This isnt solely because we are more curious about the UK angle than the Euro but because he really hits his stride and his wide ranging contempt for the failures of the EU come to the fore. He is pretty optimistic about the UKs future outside the zone and I believe rightly signals that the effect of “trade agreements” on trade is wildly exaggerated

For that chapter alone the book is worth buying



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How dare they? Yet again its a major bank

I have a policy of not directly naming lenders who have acting in a what i would consider an unethical manner. It is tempting but also risky on a number of levels. However there is often sufficient signposting within my writing to identify the culprits. Treat it as a puzzle maybe.

In this particular case a major bank has for some time offered invoice financing arrangements with one months notice periods. This was attractive in a market place where most agreements are a tiresome 90 days and some are a dreadful 180.

Last year this bank wrote to its clients advsing them that they had unilateraly altered the terms to 90 days notice. This is without agreement or negotiation.

I believe I am on safe ground when I state that this would not stand up for a second if challenged legally. You simply cannot change a fundamental term after the agreement has been signed. Its akin to changing the agreed price and demanding settlement

This has already been presented to a client of mine intending to leave this bailed out bank. The moment he pushed back they caved in which tells you all you need to know

Quite frankly this is seedy and tacky behaviour. The bank conerned should be ashamed of themselves and whoever suggested this should be re-employed in something more suitable. Preferably a million miles away from dealing with the engine rooms of our economy, namely the SMEs

This particular bank is very keen for new business. Any broker who puts his client first is not going to seek lenders who take the opposite view and frankly cannot be trusted with a contract


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The arrogance of “economists”

It’s certainly been entertaining listening to various establishment economists trying to explain why their post brexit vote predictions were so catastrophically removed from the subsequent economic and market results. Of course the effects of brexit have not and will not hit home for some time to come but the fundamental mistake they have made is assuming that business would grind to a halt and put a gun to its head because we have voted leave.

This is of course nonsense. Business owners do not have the time to sit around pontificating and are quite simply not the type of personality to do so. Thank god. On the other hand various multinationals overstuffed with in house economists and time serving directors are a different story. Economies are often driven by confidence and sentiment and could it be that the so called experts have been talking to the former rather than the latter?

Now of course the guilty failing economists are trying to hit back and the arrogance is perfectly  encapsulated in this drivel from the Bank of England’s chief economist Andrew Haldane. Apparently the abject failure of his predictions is down to “irrational behaviour”. In other words it’s our fault and not his

He also appears to throw in a somewhat bizarre byline about the level of numeracy in this country. Given that economic forecasting is based largely on numbers then perhaps he’s has a point. Starting with overpaid deadbeats at the Bank of England perhaps?

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Happy new year… from Virgin media

Or not..

Bank account hacking stories are not particularly interesting perhaps but I will give a quick example of a recent experience

My virgin media email accounts was flooded with hundreds of mails from all sorts of sites. It now appears that I had been signed up to these by some sort of scam. Aside from having to block and manage this flood of mails, the objective was clear. Attempts were made to hack my bank account

First Direct picked this up immediately and acted swiftly. My card was replaced and their professionalism and service impeccable

I called virgin media to attempt to close my email account whilst it was being obviously hacked. Rather than the previously excellent staff at a Merseyside call centre I had endless conversations with you know where

Not only did they completely refuse or simply fail to understand my concerns but they were pretty rude to boot. My account was  not suspended and I lost the will to fight it

Virgin subsequently sent me a form on “satisfaction” . I gave them plenty of detail and asked for a call back


The worst costumer service I have experienced in many years. A dreadful company

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