Excellent summary of the economic impact past and future of COVID

Stephen King is an excellent and very readable economist. At times he can perhaps tend towards the pessimistic side but is always very clear, engaging and free of jargon

His latest piece is accessible here. Thoroughly recommended

 

My services

Its not often that I promote my services through my blog and maybe its about time for a gentle reminder

My website is cpcmfinance.com but here is a little more detail of my current offering over and above the finance brokering

Inevitably the asset finance market is relatively quiet at the moment and whilst I am working on a handful of leads, the focus has switched towards assisting clients both old na new on issues surrounding cash management

Credit management, financing and cashflow control has never been more vital. You do not require me to tell you that these are very uncertain times 

These are my areas of experience. 

My usual arrangement is a small retainer whereby I assist at any given time on the following 

1. Credit assessment of current and future debtors
2. Assistance with resolving difficult outstanding debtors
3. Legal advice sourced for disputes 
4. Advice on financing including HMG loans 
4. Cash flow forecasting and management

This may well be of interest to you or your clients and I am of course, very happy to discuss in more detail

07956 138895

Is this invoice financier serious?

Logging onto one of the major banks invoice finance interface has been a bit of a shocking experience. This is not something I am rarely obliged to do for clients but it has reminded me that I should take a closer look at the systems provided by the lenders

This banks system had not changed one iota since I last accessed its horrible clunky interface around 6 years ago. Thats fine, but even at that time it appeared 20 years out of date. To put in context, its the first and only site I’ve used that couldn’t process a “recommended strong password” generated by my laptop.

You may be wondering which bank I’m referring to and I will leave you to guess but the complete lack of investment in this area perhaps confirms the rumours that they are disposing of this division?

The leading auditors. The FRC verdict

A third of audits of audits have been deemed to be “unacceptable” by the FRC

The full details are here  but consider this statistic. Is there any other profession where a a failure rate of a third is considered acceptable? Or shall we put it another way? Imagine a third of construction projects being “unacceptable” or a third of surgeons operations?

This sector is a complete and utter shambles and its is serving to totally destroy confidence in declared accounts which will naturally and rightly, deter investors and/or lenders. Is this the sort of economy we desire?

Of the big four firms, only Deloittes came away with mild criticism whereas PWC (not everyones favourite firm) came in for perhaps the heaviest criticism. Outside the big four, its certainly no surprise to see that Grant Thornton were very heavily criticised

 

 

Invoice financing. The current market

Changes in the invoice finance market are currently so volatile,. that this is a piece that could be updated weekly.

Im in touch with the vast majority of the lenders and without sounding too self righteous, I see it as my role to keep very close to market trends. This is vital for my clients and my ability to serve their requirements. Contrary to the beliefs of some, the offerings from asset financiers vary enormously and it can take some skill to find the best possible arrangement

Enough of the lectures and onto the current trends

Firstly the market is quiet. One major lender admits that they have less than half the open cases compared to this time last year and are losing more clients than they are gaining. Their publicity emphatically states otherwise of course but naturally they would not have furloughed so many staff if they were that busy. The difficulty they and many others have faced is the impact of the government loans which are in a number of cases, being used to take out existing finance arrangements. That was not the intention but that’s exactly how it is.

With Bouncebacks being so much more freely available than the larger CBILs, it is the smaller end of the market that is being most adversely affected and there has been already been one collapse of a small factoring firm.

On the other hand, other lenders are more positive and claim not to have been affected one way or another. These are off the record opinions I trust and these particular lenders are perhaps at the higher end fo the market. Also they are offering CBILS alongside their existing products and perhaps this is the key to their relative success

Brokers are also suffering. Maybe there will be little sympathy for those in my trade but with many client’s invoicing substantially down, our commissions have been hit hard. One large “broker” permanently made redundant 40% of its staff. Given their modus operandi, they will not be missed by those that believe the sector requires true customer service to clients, but it’s certainly not a vote of confidence in the market.

Having said that, I do sense that there is an increasing appetite for risk compared with the dark days of late spring. Prospects will receive a serious hearing.

Rumours continue to fly around the major banks appetite for invoice financing and one lender that was supposedly seeking an exit has temporarily halved fees for its clients to “assist with the crisis”. That is not indicative of a desire to leave the market

 

 

Bounceback “frauds”

Further to my last post, it would appear that fraudulent Bounceback claims are being exposed, but how many?

The above tale is fairly typical of what we are hearing in the market and the feeling is that the authorities will simply never have the necessary resources to catch up with the many fraudulent claims. Its disarmingly easy to qualify for a quick £50k and not much less difficult to syphon off the funds and then crash the company(s) with the assistance of a compliant insolvency practitioner

And that is perhaps the point at which investigations should start?

Bouncebacks. A warning

There has been a significant uptake of the Bounceback loan scheme and across the industry, there is a sense that obtaining the borrowing is perhaps a little easier than it should be. Certainly I’m aware of contacts who have taken the loan for purposes far removed from survival. It’s exceptionally cheap borrowing

Arguably the interest rate was set just a little too low but even so, there is almost certainly going to be a level of fraud which could be embarrassing to the government further down the line. Im certainly aware of lending to SPVs set up to simply buy property

Worse still, an insolvency practitioner I know well has been approached by businesses wishing to quickly liquidate after they’ve taken the loan and moved it quickly into the directors personal account. To their credit, this IP is refusing such enquiries but others will not

So what’s the risk?

This useful article in the Yorkshire Post highlights various ares that those who misuse taxpayers money should be very aware of and personally I hope that HMGOV uses its powers to follow up thoroughly

Its interesting reading and clearly this is the statement that should grab attention

“There are some hidden pitfalls and HM Treasury have clearly warned that any misuse of the scheme could result in prosecution for fraud.

 

“Big four” accountants shake up

Welcome news. As the recent events at Wirecard have demonstrated, too frequently “audits” by the big four accountancy firms are not to be trusted. The system is broken and frankly  action has been long overdue as made very clear by a Parliamentary sub committee following the collapse of Carillion

MPs said the failure Carillion exposed the UK’s audit market as a “cosy club incapable of providing the degree of independent challenge needed”.

But does this go far enough? Does anyone really trust “ring-fencing” within an organisation and should auditing be taken completely out of the hands of these firms to be replaced by a truly independent body?

Also why stop at the big four? I have no axe to grind with Grant Thornton but I can’t help thinking after some high profile cases, they will be breathing a hefty sigh of relief.

For now

 

 

Lendy’s “fraudulent” invoices

The collapsed PTP lender Lendy is currently under intense investigation for fraud

in the latest investor update, Lendy administrator RSM revealed that it was looking into £6.8m in payments made to entities registered in the Marshall Islands.

Although the money was said to have been spent on marketing services, RSM said that “it is the administrators’ position…that these payments were ultimately for the benefit of Liam Brooke and Tim Gordon.”

Marketing services out of the Marshall Islands? Are they serious? .

There are two obvious points here:

The arrogant owners Liam Brooke and Tim Gordon, were certainly not as smart as they think they are. If they wished to syphon off funds with dubious invoices, then at least try to use transactions that are somewhat credible.

More importantly, this is another blow to the sector which is gaining an increasingly negative reputation. Yes there have always been dubious funders and fraud in the conventional market (First Capital spring to mind) but they key there is that PTP lenders rely on investors rather than institutions. Institutions are likely to walk away and write off as a bad mistake but investors are more likely to walk away from the sector and find other safer outlets

If guilt is proved, then the deterrent needs to be powerful with long sentences handed down