Credit Control Solutions

Ltd Co Debtors in Liquidation - Don't Write them off Just yet!

As per Graydon UK, company liquidations rose by 12% between April and June 2008 and there was little change to this rate in the following months.  With this figure being so high, the chances are that most businesses will be affected by at least one of their debtors going bust in the current economic climate.  If your lucky, the liquidation may result in the creditor receiving a few pennies in the pound This can be very hard to take, especially if the debtor has made countless promises of payment prior to the liquidation.   

However, help is at hand in the form of the little known Company Directors Disqualification Act 1986. This states that if the director knew, or ought to have known, that the company was continuing to trade whilst insolvent the court may (following an application by the liquidator) order them to make a personal contribution to the creditors.  Of course, some firms go bust and it is through no fault of the directors. if, however you feel that they were making promises they knew they couldn't keep then you should take action in an attempt to recover your money and to stop the dishonest director from doing it again.

In the case of Northern Rock, the lawyers and accountants found 'insufficient grounds to proceed with any legal action for negligence' against the directors who had been in charge at the time of the collapse.  However Northern Rock have already paid back 57% of the £26bn owed which is more than can be said for most company's going through liquidation.

If you are concerned about the financial stability of one of your clients due to repeated failed payment promises, get the promise in writing (email is sufficient) and from a director.  If they won't provide it, that's a huge red flag and it may be worth speaking to a debt recovery agent sooner rather than later. 

Jamieo "Making Your Cash Flow" (Article courtesy of Eleanor Bateman of Bateman's) 

Pre-Budget Report 2008

Courtesy of Price Bailey Accountants, please find below a link to The 2008 Pre-Budget Report. To download this report, please click here

All we ask in return is that you visit our website to learn more about our services and maybe recommend us to any of your business colleagues.

Many Thanks,

Jamieo "Making Your Cash Flow"

Changes to VAT Rates

I am sure that you are all aware that the rate of VAT has been reduced to 15% with effect from Monday 1st December 2008.
 
This is just a quick reminder for you all to update your VAT rates in your accounting software! Failure to do this, will result in:

• Customers having a valid excuse for not paying you on time
• Extra work raising credit notes etc

I am certain that all of you have this in hand, but, it doesn't hurt to be reminded just in case!

Jamieo "Making Your Cash Flow"

Credit Crunch: How to Make Money from our Accountant!

Crest Partnership (A partner company) have recently developed a specialism by using depleted asset values caused by the Credit Crunch to generate significant tax deductions that can reduce a company's corporation tax bill.

These schemes include:-

• Sizeable claims for home working
• Asset sales
• Use of FRS accounting standards to claim tax deductions
• Increasing tax losses by changing year end dates 

They are willing to guarantee that their fees for this advice will be covered more than three times by the tax savings you will enjoy in one year alone. It will also resolve any potential section 419 exposure for excessive dividend distribution which is greater than your company's profitability.  Every one of these tax mitigation schemes have been reviewed by a panel of experts that consists of former HMRC inspectors.

If you are interested in talking with Crest about this, please e-mail me and I will put you in contact with them

Jamieo"Making Your Cash Flow"

The ICM works with Government to help small businesses

The government has formally launched a new campaign to help small businesses tackle the issue of cashflow, central to the campaign is a series of self-help guides developed in collaboration with the Institute of Credit Management (ICM).

Grouped under a series entitled Managing Cashflow, each of the guides provides a checklist and tips to give businesses advice at a glance.

According to Philip King, Director General of the ICM: "They cover a diverse range of subjects all with the principal objective of getting paid." He adds, "These include guides on negotiating payment terms, invoicing, chasing payments, factoring, credit insurance and what to do if a customer goes bust."

The guides, which have also received the support of major High Street Banks as part of the government's new Small Business Finance Forum, were developed under the auspices of the Department for Business, Enterprise and Regulatory Reform (BERR) working closely with specialists within the ICM. At their launch, Secretary of State for Business Peter Mandelson described the guides as part of a series of initiatives providing practical support to help businesses help themselves through these difficult times.

"Cashflow is critical to business survival," he says, "but all too often the day-to-day challenge of running a business, particularly a smaller business, can mean losing sight of some of the skills for successful cashflow management. These guides are designed to provide straightforward and speedy advice with simple checklists and top tips. We want to help smaller businesses plan for the difficult times ahead. We want to ensure that they are healthy enough to survive and come out strongly at the other side."

Philip King, Director General of the ICM, believes that the Institute is ideally placed to provide the support the government needs for small businesses: "For some 70 years now the ICM has been promoting the need for excellence in credit management and raising the awareness of its vital role in helping businesses to grow.

"We are today the established thought-leader in these matters, with a comprehensive programme of training, publications, and services that credit managers need to survive and indeed prosper in what are increasingly difficult times. Our online learning tools (icmOS), accredited qualifications, and specialist recruitment division are all examples of why the government continues to recognise our work in supporting credit managers, and the importance of good credit management per se for businesses across the UK."

The 10 guides in the series are:

1. Knowing your customer
2. Payment Terms
3. Invoicing
4. Treating suppliers fairly
5. Credit Insurance
6. Factoring and finance options
7. Chasing payment
8. When cash runs short
9. When all else fails
10. When your customer goes bust.

As well as the banks, the guides are supported by major industry bodies including the ACCA, BBA, CBI, FPB, FSB, the ICAEW, IoD and the British Chambers of Commerce.

The Managing Cashflow guides follow soon after an earlier collaboration between BERR and the ICM that saw more than 100,000 Combating the Crunch leaflets distributed to small businesses across the UK.

The guides are available online at: www.creditmanagement.org.uk/berrguides.htm

Jamieo"Making Your Cash Flow"
 

“Talk to your creditors”, urges The Debt Advisor

Figures published today by the Council of Mortgage Lenders (CML) show that the number of repossessions in the third quarter of the year was 11,300, up 12% on the previous quarter. CML continue to expect the number of repossessions in 2008 to be around 45,000.

Bev Budsworth, managing director of The Debt Advisor, commented: “We are seeing an increase in people that simply can no longer afford their mortgage payments and are just handing back their keys to solve the problem. I am urging homeowners to talk to their creditors as there are plenty of things that can be done to ease the pressure and keep the roof over your head.”

“The increase in figures doesn’t surprise me. The demand for mortgage products is as high as ever but, with the increasingly-prudent nature of lenders, supply is at an all time low. I believe this trend will continue throughout the inevitable recession. As people’s fixed, sub-prime mortgages come to the end of their term, they could see their monthly payments rise by as much as £300. This squeeze on their disposable income is compounded by high utility prices and the rising threat of redundancy which is forcing some debtors into repossession as their only way out.

“At the first sign of trouble, people should talk to their creditors and open the dialogue as soon as possible. There are things that can be done to relieve the pressure of spiralling costs, including payment holidays and spreading the mortgage arrears over a period of time. People shouldn’t bury their head in the sand as the problem will not simply go away if it’s ignored. Homeowners shouldn’t hand the keys back to the lenders without talking and negotiating with them first – repossession should only be a last resort!”

Bev’s comments come at a time when stronger legal support is being put in place for homeowners facing repossession. The Civil Justice Council has drawn up a protocol encouraging homeowners and lenders to settle problems before it reaches court. The guidelines echo Bev’s advice and urges borrowers and lenders to communicate at an early stage to discuss repayment procedures, avoiding unnecessary litigation and possible repossession.

Bev concludes: “If borrowers are struggling with other outstanding debts in addition to their mortgage, they should seriously consider an Individual Voluntary Arrangement (IVA). An IVA gives you a level of protection on unsecured debts that debt management plans do not. IVAs allow the individual to freeze any unsecured debt, halt any potential legal action from creditors and allow them to repay what they can afford. This, in turn, allows them to budget effectively and pay off their mortgage arrears – hopefully freeing them from the stress of chronic debt.”

Bev Budsworth is an insolvency practitioner with more than 20 years’ experience in dealing with debt issues.

A regular media commentator, Bev has spoken on a wide-range of issues including divorce, self-certificated mortgages, DIY, mature debt and online gambling. She has been regularly quoted in The Guardian, Daily Telegraph, The Observer, Daily and Sunday Express and the Sunday Telegraph as well as women’s magazines including Woman and Red. In recent months she has offered advice on regional television news programmes and BBC local radio phone-ins.

In June 2000, she established The Debt Advisor, one of the first firms to offer comprehensive advice on all debt issues. She had previously spent 17 years with an international firm of chartered accountants where she specialised in personal and business insolvency.

Her experience of dealing with personal debt issues led, in 2005, to her being asked to join a government-led working party to look at ways of simplifying the formal procedures of helping people out of debt.

Since then, she has further shaped the debt industry and led the way in calling for a professional personal debt/insolvency study course to be set up for all people involved in debt advice to individuals.

As a busy mother of three teenage children, she understands the pressures that families face. She believes that with a positive outlook there is always a sensible way to deal with financial difficulties and turn lives around.

Bev recently launched a campaign to bring about a greater understanding of debt and its links to depression giving debtors in the UK access to a two-pronged approach to relieve the misery caused by debt. Teaming up with a psychologist, she is the first in the UK to offer debt advice and personal counselling under one roof. The campaign is geared to help those who are seriously struggling with the wider effects including depression, relationship breakdown, poor work performance and associated health problems.

In May 2008, Bev’s hard work was finally recognised by the industry when she was awarded the prestigious title of national ‘Debt Counsellor of the Year’ by Credit Today. The award, which seeks to recognise top performers in the credit industry, was presented to Bev for her overwhelming achievements in the sector. She won the award despite heavyweight competition and it being her first nomination - she was highly praised by the judges.

Jamieo "Making Your Cash Flow"

Credit Crunch: 10 practical tips to help prepare yourself for the credit crunch

1. Don’t even think about moving house unless you really have to. If you must move house, don’t exchange contracts to buy until you have exchanged contracts to sell your existing property AND you have a confirmed mortgage offer in your hands. If you need a mortgage, this is the time to get the very best quality advice. Try this multi-award winning one here.

2. Credit card limits may well be reduced to help bank liquidity. It’s already happening in the US. If you have dormant cards, start using them occasionally as these are the easy targets for card companies. If you have only a few credit cards, get another now, as a contingency. Find the best one for you here.

3. If you’re lucky enough to have more than £35,000 in savings, make sure you split your savings between banks – each block of up to £35,000 will be covered by the government scheme that reimburses you if the bank fails. Make sure you check ownership of the bank carefully though, to ensure you get two institutions that are owned separately. It has been announced that the government will increase the scheme cover to £50,000 on Tuesday 7th October.

4. Consider moving your savings to government backed ‘state secure’ funds such as a Post Office Instant Saver account. This is run by the Bank of Ireland, and is backed by the Irish government which guarantees full protection.

5. If you have a mortgage with Bradford and Bingley, HBOS or Northern Rock, don’t panic – you won’t be tarred as a customer of the ‘Bank of Manure’ – but you do need to watch the interest rate you are being charged. It’s very possible you’ll be paying more than market rates. After checking for nasty penalties that might stop you doing so, remortgage when the time is right, but always get first class advice.

6. Make all purchases by credit card and not by debit card, so that any purchase over £100 will be covered by the Consumer Credit Act 1974 in the event that the seller goes down prior to delivering the goods. Particularly important for holidays, flights or anything ordered that you have to wait for.

7. Tighten up your finances generally. Work through our free advice for short term problems.

8. Check your credit report to make sure your file is error-free and that you are in the best possible place to apply for credit.

9. Use our free credit matching servicesto typically save £400 per year by switching to cheaper credit cards.

10. Look carefully at relatively expensive services you may not be getting full value from. For example, cancelling Sky+ and moving to a freeview PVR is a short term pain for a reasonably long term gain.

Article Courtesy of Richard Catlin of www.checkmyfile.com

Jamieo "Making Your Cash Flow"

Credit Crunch: Major Credit Card Lenders to Visit Number 10!

Gordon Brown is set to invite the UK’s biggest credit card providers to Downing Street in a bid to encourage more responsible lending and establish better protection for borrowers through the personal banking code of practice.

The move comes in the wake of many lenders actually increasing the APR on their loans and cards, despite the current financial turmoil.

The PM and the Department for Business have said that they will be working closely with lenders to try and establish tougher guidelines on how banks should help consumers who are experiencing difficulty with existing debts.

The ‘voluntary’ Banking Code was revised earlier this year - before the true extent of the banking crisis became apparent - aimed at making the obligations of lenders clearer. This revision stated that lenders should act “sympathetically and responsibly”, and also work closer with organisations such as the Citizens Advice Bureau.

This new proposal will seek to develop voluntary codes further and restore some faith in the UK lending system.

Typical APR’s on credit cards have jumped almost half a percentage point in the last six months, despite cuts to the Bank of England base rate. Despite this, the signs are promising that credit card providers are working hard to improve their customer service levels.

In our 2008 Banking and Credit Card survey, American Express were voted top of the pile, with Tesco and Virgin not far behind. With Amex currently offering by far the best cashback deal – 5% for the first 3 months - and Virgin a generous 0% on balance transfers for 16 months, these cards help demonstrate that there are still great deals to be found.

Even credit cards aimed at people with adverse credit ratings such as Vanquis and Capital One Classic – which have a higher than average APR - fared quite well in terms of customer service.

Whether getting credit card providers to visit ‘No. 10’ will help to promote even better lending policies remains to be seen, but our friends at www.checkmyfile.com will be monitoring the situation closely, and will announce any news as soon as they hear about it.

Article Courtesy of Richard Catlin of Checkmyfile.com

A Credit Controllers' Point of View

Over the past couple of weeks we have had an increasing amount of debt collection work and I assume this is down to the credit crunch, which is either making debtors more reluctant to pay or creditors more anxious to collect the monies owed to them.

I just wanted to outline the do's and don'ts when you are being chased for a debt. I've had a chat with my colleagues in the office to compile this list of "DO's" & "DONT's".

DON'TS

1.The worst thing you can do when speaking to someone like me is to swear and be rude, as there is no need for this. Any sympathy I had in relation to your issues goes out the window and makes me more determined to collect the debt from you. You must remember, irrespective of what one does, be it a traffic warden a tax inspector, or indeed a credit controller, we all have a job to do! 

I understand that being chased for money is not a very nice experience, but being rude or threatening wont exactly make your debt disappear. In reality it means that we will resort to legal action sooner rather than later. This is not in your interersts and will simply mean that the unpaid debt becomes public knowledge and will more than likely cause you problems with any other creditors you have.

2. Burying your head in the sand and simply ignoring your debts is also a big no no. The problem will not go away. You need to talk to your creditors and explain why you cannot pay. In most cases your creditor will be more than willing to help out in some way. Failure to communicate with your creditors will result in legal action being taken against you. This will affect your credit rating, meaning that any future credit will be difficult, if not impossible to obtain. 

3. The most annoying thing someone can do is to deny they owe the money, especially when we can prove that the monies are legally and legitimately owed i.e copy delivery notes or signed contract. All this will serve to do is to increase the amount you owe through the addition of legal and recovery costs. It is far simpler for you to admit that you owe the monies and pay them.

DO's

1. The best thing you can do if you receive a letter from a collections agency is to get in contact sooner rather than later. It shows that you are not ignoring the debt and are making efforts to pay.

2. If you are having financial difficulties, then tell us and through negotiation with our client, we may be able to arrange a payment plan for you. We are not evil monsters, we can be sympathetic and understanding. We appreciate that you cannot get blood form a stone and we will work with you to help you pay back the debt.

3. Be courteous at all times. Human nature dictates that people respond better to people that are courteous and polite. If you are having difficulties paying you debts you are hardly going to get help and support form the person chasing you for money if you abuse them. Being nice will help your cause and make me more inclined to help you.

4. Perhaps the most important thing is to always tell the truth. Honesty, is always the best policy. Credit Controllers are by their very nature "Sceptical" We are almost "psychic" when it comes to detecting those "porkie pies"

Well I hope the next time someone is chasing you for money you will remember a couple of these points!

Kieran Making Your Cash Flow

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Thanks for your time,

Jamieo "Making Your Cash Flow"