Tag Archive: exposure

  1. Boris or Jeremy, choose your client?

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    Regular readers know that we advocate checking and double checking all prospective client and supplier data. The more financial information you hold about a contact, the more informed your decision making will be and the more limited your exposure and risk.

     

    The Challenge

     

    Imagine this, two people come to you, promising the earth. You’ve heard of them before but you need to learn more before you can decide who best to side with.

     

    For the sake of this example, let’s call one

    Alexander Boris de Pfeffel Johnson (or Boris to his friends) and the other

    Jeremy Richard Streynsham Hunt ! !

     

     

     

    Resources used:

    • Companies House – Search for information about the company & people
    • Check financial/liquidity status – see if any financial concerns raised
    • Websites – Check the clients own site, look at reviews etc
    • Account details – Have a pro-forma to collect client details. If you would like a blank template, email us

     

     

    Simple due diligence shows us

    Boris :

    • Was born in June 1964 and has a known address in London N7.
    • Official records show that Boris has only ever been a director of one company, Finland Station Limited.
    • The company was formed in April 2006 and for the first 11 months was actually known as Blackrock Productions.
    • Boris was a director from the inception of the business but resigned his role in May 2008.
    • The business was subsequently closed down in April 2016.
    • From 2010, the business had only ever filed dormant or small business accounts and as a result, the established trade reference agencies last rated the business as high risk.

     

    From this point, Boris does not appear to have a direct responsibility in any limited company business and so one may question both where his income is derived and his financial strength, key questions to ask when offering goods or services on credit.

     

    Jeremy on the other hand :

     

    • Was born in November 1966 and has a known address in Farnham, Surrey.
    • Records show Jeremy has a history of creating and managing businesses as far back as 1990.
    • The majority of said businesses continue to exist to this day.
    • Perhaps most successful was Hotcourses (Hotcourses Foundation) that was rumoured to have been sold in 2017 for around £30M, netting Jeremy a reported £14M.

     

    Jeremy continues to appear to be listed as a director of the business and although it is believed that his focus may be on other matters, there may be a dividend income to be coupled with his recent investment return.

     

    Conclusion

    In short, had our new client conducted the same simple diligence checks that we encourage all of our contacts and readership to complete, they could have avoided the prospect of a long, drawn out battle for money and power…. Unlike Boris and Jeremy J

     

    If you have any questions or would to know more about our services please get in touch – Contact Us

  2. Will regulation force businesses to name & shame themselves for late payments?

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    The Government continue to acknowledge the devastating impact late payments have on SME’s in their Spring Statement:

     

    Philip Hammond said “I announced a year ago that we would take definitive action to tackle the scourge of late payments for our small businesses. A full response to last year’s call for evidence will be published shortly, but I can announce today that as a first step we will require company Audit Committees to review payment practices, and report on them in their Annual Accounts. We will announce further details in due course. “

     

     

    This seems to be the Government’s grand idea to make larger companies more self accounting. By having them publish the typical time taken to pay suppliers. Also requiring them to employ a non-executive director to be responsible for this and to hold them to account.

     

    Is this another government white elephant initiative just in time for the launch of Dumbo in the cinemas or will it really help tackle late payments?

     

    The Facts

    Late payments continue to negatively impact small enterprises in the U.K. The Chancellor of the Exchequer has stated that larger firms should have a director in place to help reduce delays. Elsewhere, late payments impact contractors focused on emergency repairs in the U.S. Virgin Islands after the 2017 hurricanes.

     

    Any company dealing with the larger UK companies know they often dictate their own payment terms. So what’s to stop the firm simply extending the payment terms. As long as they adhere to the extended terms, then will they be deemed as late ?

     

    Also how effective is a non executive director going to want to be in holding the company to account that is paying their wages ?

     

    Another challenge is whether the larger companies will adhere to the request, or will it be another ‘toothless tiger’, akin to the Government’s voluntary Prompt Payment Code?

     

    Recent surveys by the BACS payment scheme showed the direct cost of late payments to small businesses is currently valued at around £2 billion. With the FSB have commenting  that a typical SME is owed on average £6,142. It is estimated that as many as 50,000 firms go out of business each year because of problems related to late payment.

     

    What can you do?

     

    It’s not enough to allow the larger businesses to regulate themselves, it is imperative that all SME’s manage their exposure and risk in a prompt and pro-active manner.

     

    Where possible invoice little and often.

    Not only does this remove the spectre of having your cash flow tied up in one big invoice, should a smaller invoice be paid late, it alerts you to the payment practices of the customer and allows you to react to same for the future.

     

    Be proactive and not reactive.

    Have a set, robust credit control procedure that ensures that you are pursuing invoices as and when they become due (and before if possible). The sooner you are aware of a late payment, the quicker you can resolve same for the sake of your business and your sanity.

    For more ways to manage your exposure to risk take a look at our  or .