|
|
||
 |
 |
 |
|
||
« October 2007 | Main |December 2007 »
So, its all true what people say! I know most companies complain in the UK about slow trade payments, but evidence has emerged in recent days, as published in the Austrian newspaper DER STANDARD, that the UK is the second worst payer in Europe. It's Austria and Switzerland that have the best payment behaviour. Apparently in this research conducted by insurer Atradius, they pay in 38 days on average, compared to Britain's pretty pathetic 64 days! There's little comfort in knowing that the Italians came out bottom of the league table below the UK at 72 days. Even the Spanish came in better than us Brits at 63 days.
My father in law, who is Scottish, once told me that money was made flat so you could pile it up.It looks like most finance departments in the UK think the same, and to some, it doesn't really matter whose money it is that's in the stack.Is anyone embarassed out there by these findings, or has late payment culture become so much part of the British way of life that it is just accepted practice ?
Just heard a story about a due diligence exercise carried out by an accountancy firm that saved its client money! It was an acquisition situation, and the acquiring party wanted to look at the credit risk within the top 20% of the potential acquisition's sales ledger. Lo and behold, 87% of this bunch of customers were rated above normal or high risk on Graydon's database. Negotiations continued afterwards of course with the acquirer duly concerned about the degree of risk within the trade debtor asset. It turns out that the acquirer appears to be going ahead- not only have they got the price down for the purchase of the company, but it sounds like the new owners may have some ideas about how they can improve credit assessment there!
The subject of the HMRC lapse in allowing 25 million records containing peoples NI numbers and bank account details etc to go missing is already getting blanket coverage elsewhere in the press, so i won't repeat what's been written.
This has put a lot of people at risk of having their identities stolen by fraudsters, so let's all hope the missing discs don't end up in the wrong hands. Enough information is contained on those discs for criminals to set up credit accounts in the names of innocent victims with unsuspecting companies.So the advice from Government and elsewhere is absolutely right- keep a close check on your bank account. Watch out too for attempts by pfishers to obtain other personal information from you by e-mail. Pfishers are fraudsters who pretend to be your building society or bank for instance , and using data that they have gleaned about you, try to obtain even more sensitive data from you so that they can sting you.
It's hard enough nowadays to protect yourself against all types of fraud, where criminals use techniques beyond a lot of ordinary people's comprehension. That's why for people like me in the business of protecting customers from fraud, the HMRC news is extremely frustrating and annoying. I'm not surprised heads had to roll for this one.
Some Accountancy Age Awards revellers from last night's bash may still be nursing a hangover, or wanting to fall asleep at their desks, but beware- fraudsters around the country know exactly how you're feeling at this time of year. In fact, in the run up to Christmas, with all the parties, lunches etc, going on, corporate fraud rises. Fraudsters are like most criminals. They are opportunists waiting for potential victims in finance/ credit departments to drop their guard. At Graydon, we have already had reports from credit departments that potential fraudsters are coming in with their christmas wishes :- that credit managers don't spot their credit applications quoting mobile numbers instead of land line numbers, or non business e-mail addresses like fraudsters @yahoo.co.uk, or last minute requests by phone to arrange a pick up of the goods rather than have them delivered to an already validated address.
At this time of year, in between the beers and glasses of bubbly, plenty of water and coffee is also recommended to remain vigilant- especially during those last, dark hours of the afternoon at the office.
It just so happens that I know fraud doesn't come top of the "most popular crime" list as far the police are concerned- under resourced forces are quite rightly focusing on drug related crime, gang warfare on our streets, terrorism etc, but things appear to be getting to a right old silly state nowadays!
A few weeks ago, an experienced credit manager at an electrical goods distributor in London spotted a credit card fraudster in the process of trying to take thousands of pounds worth of goods from his company. He continued to take orders to set up a "sting", and informed the police as to which address the goods would be delivered and at what time so that the men in blue could catch the criminals red handed. To the credit manager's surprise, the Metropolitan Police declined the offer, stating they had to concentrate on other crimes.
Putting aside the fact that a lot of credit card fraud fuels the drugs problem in this country, I believe the police should have been a little more interested in catching this thief in the middle of his crime. One, it sends the right message to the criminal fraternity that you can get caught for fraud, at a time when the message is getting around that the police are turning a blind eye. Second, it sends the right message to a hard working credit manager, and indirectly to all his colleagues and friends and family, that the police do not allow people to get away scot free with thousands of pounds of stolen money. Think of the effect on the morale in society if it was generally known criminals can go about their work without the risk of being caught?
I put the blame for this police attitude on the new Fraud Act which came into effect in April this year. Under the Act, bank fraud victims have to report suspicious activity to their banks rather than engage the police. The bank will then decide to inform the police or not, which means that some cases will never get recorded as crime.
Still, that's one good thing then- government crime statistics will be down and that should reassure the public.
Yeah, right!
SMEs would do well to remember the adage "a sale is only a sale when you get paid".
Recent research carried out by my company has revealed that despite the late payment culture in this country, SMEs largely ignore the statutory interest on late payment legislation (Late Payment of Commercial Debt(Interest)Act 1998) designed to protect them. To compound their cash flow problems, further research from Graydon has highlighted that 66% of SMEs don't use any of the other business weapons in place to fight off bad debt and protracted trade payments. I'm talking about factoring, credit insurance, credit reports, debt collection agencies and invoice discounting.
I find these figures rather staggering. The big unanswered question in my mind is "are advisers to small concerns, like accountants and bank managers, actually giving advice on this subject which is promptly falling on deaf ears, or is the advice not being given at all?"
If any helpful suggestions are being given the cold shoulder by smaller businesses, why? Do SMEs think the available services are too expensive or unsuitable for their needs? Is there a lack of understanding about the products and services or the impact of poor cash flow on the health of their companies?
Whatever, there's no doubt slow payments of trade invoices are not going to disappear in a hurry. Although SMEs are quite right to voice their concerns about slow trade payment practices, particularly if employed by large, cash rich organisations who love to flex their corporate muscle, the evidence seems to point to the fact that they can do an awful lot more to help themselves before blaming others. I know that sounds a bit tough, but it looks like the truth from where I'm standing.
© Incisive Media Ltd. 2008
Incisive Media Limited, Haymarket House, 28-29 Haymarket, London SW1Y 4RX, is a company registered in the United Kingdom with company registration number 04038503
Recent Comments