Financial risk management is one of the most important skillsets of management.
It is vital to understand the risk which is associated with all business enterprises, particularly your own!
Financial risk management is not just about debt collection, unpaid invoices and fraud.
How well do you manage your financial risk management issues?
If in doubt, Credit Matters is the right starting place for you.
It used to be said that there were businesses which were too big to fail. We have seen in recent times that this old saying is not always true. Today, it is sometimes seen that the bigger the business, the more likely it is to fail.
- Kim Radok
In this podcast, the focus is about what finance professionals need to know about emerging global fraud trends, what they can do to protect themselves and their firms, and what the future of fraud might look like.
Fraud is on the rise across the globe. Criminals are exploiting the convergence of social media, technology, and social engineering to create more potent and widespread scams. No one, and no business, is completely safe from this new wave of fraud.
What you’ll learn from this episode:
Roger Darvall-Stevens, RSM (Melbourne)
A brief introduction to Roger Darvall-Stevens reveals he is the National Head of Fraud & Forensics Services and has over 25 years of experience in forensic investigations and forensic accounting, fraud, bribery & corruption control, related training, forensic IT, compliance (including foreign bribery and corruption risk), and corporate security.
INTRODUCTION TO COUNTRY ECONOMIC UPDATES
Credit Matters has put together a very basic listing of economic updates for the major trading countries and those for which have seen a change in their circumstances. The information provided is not to be relied upon on its own. It is basically a starting point if you currently do, or intend to do business with a company from an overseas country. After all, we make no comment about the influence of customs, business norms or how the legal systems operate in these countries and they may also affect your business relationships.
There is no doubt with the current global business downturn, business is becoming more difficult. This does not mean that all international business opportunities are unprofitable. It simply means you do need to more aware of the risks and the potential for loss with those opportunities which at first glance look profitable. If you identify any risks, where possible, try and calculate their potential cost and effect in case they should eventuate.
Not every country’s economic status is included in the list. The fact is a number of regions can be summed up simply because economic conditions are similar for every country in that region. South America is a good example because of similar experiences within each country with declining economic conditions and societal issues. There may be individual examples of business vibrancy in a small number of these countries, however they are few and far between.
There are other regions in the world which are also declining in value for the global community from a trade perspective because of the issues mentioned above. Typical examples include the Middle East, the Sub Saharan regions and South Africa.
In other regions countries are battling declining markets, high debt levels and there are few signs of economic recovery in the short-term. Such is the case for many Mediterranean, Caribbean and European countries.
The one region which tells us of the potential for a business downturn is the Scandinavian and Baltic region. This region seemingly was once the shining light of stability and steady as you go politics and economic stability. The global economic downturn has now started to impact negatively on the countries in this region. Now there is even talk of a recession for the first time in this region.
Australia is said to be doing OK, albeit there are issues which affect people differently.
There is a push to make people spend more to prop up the consumer market, however Australian households are the most indebted in the world. Obviously, when you need to repay debt, you do not have the funds to spend on non-essentials.
The RBA has recently reduced the interest rate against the wishes of many business people, ordinary Australians and even a number of economists. Despite the best wishes and thinking of the RBA, people are not spending. The effect of reduced interest rates seems to be having the opposite effect to that intended. Many borrowers for instance are reducing debt instead of spending. Other people which are not spending include savers, consumers who are already overcommitted, and many other individuals who are frightened about the future.
The mining community seems to be doing well, however manufacturing is battling survive except for specialist manufacturers. The most serious problems for agriculture are the drought and bushfires. These factors are impacting negatively on income due to reduced production which affects sales both locally and internationally.
The cost of employing people is becoming prohibitively expensive, both from a direct cost and regulatory perspectives. As a result, many businesses are not employing any more people than they have to survive.
As a result, it appears the use of contractors and freelancers will probably increase, much to chagrin of the ATO and other authorities with vested interests. The use of contractors and freelancers must obviously be completed carefully and within the law.
Bank finance is less readily available after the Haynes Royal Banking Commission and many businesses are also restricting credit to only the best paying customers. This situation is further restricting business expansion and investment with the possibility of employing more people. As a result, many business people are looking at other financial options, many of which will cost more and bring further risk and problems not anticipated.
The stock sand housing markets seem to be overly expensive because many people see no other safe haven for investing. It makes sense why some people would want to repay debt or “blow” their money seeking their life’s dreams and desires at the moment. Alternatively, other people may lose all their savings as they chase more risky investment opportunities for a better return.
There are a number of mixed messages coming out of China and not all are positive. The trade war is hurting both China and the US. The long term ramifications for China could be negative if suppliers from other countries build their factories outside of China or buy from other countries such as Vietnam.
In addition, China’s issues with Hong Kong are equally troubling and affecting Hong Kong’s reputation as a world class financial centre. Currently businesses are reviewing their position in Hong Kong and it appears a number are locating out of Hong Kong and headed towards Singapore. Tourist numbers are down and overseas students are fleeing Hong Kong. These factors are dramatically affecting the local business community negatively. Again, these factors do not bold well in the global scheme of things.
There are other negative issues in China as defaults are said to be on the rise as the number of orders from Western countries, the US in particular, are declining. The lack of business is starting to affect the viability of China’s manufacturing industries and employment numbers.
The situation within Hong Kong and China are not China’s only cashflow and image problem. The spending internationally as it seeks favours from smaller countries in the Pacific, Africa, and the Belt and Road Initiative, are also of concern.
Many governments in the Pacific were keen to take China’s money at first. The citizens in these countries however are not always so enthusiastic at the price they have to pay due to the influx of Chinese products which has decreased access to product diversity.
Finally, but not least, of equal concern is financial viability within China itself. There is much discussion on the status and worthiness of debt held by the major banks. This discussion includes the quality of the debt held within the shadow bank system and other finance providers which are less well regulated.
India seems to be having a number of issues locally and globally at the moment as it seeks to protect its industries from a current downturn. The major concern for India is in the downturn within its construction industry and the ripple effect this has over its banks.
Notwithstanding these issues, India also has a large entrepreneurial population of business people willing to try and improve themselves.
Another advantage India has over many other countries is that many of its citizens and workers speak English, the global language of business. It also has workers which are not afraid to go to other countries because they are prepared to do the work the locals do not want to do and often fit in well with other cultures. These workers then send funds home to India which is another small but valuable income stream for the Indian community.
Japan continues to struggle along under the burden of its Government and Central bank policies which are still not working. Nothing they seem to do is encouraging a growth in business and consumer confidence.
As the global economy slows down, the negative knock on affect is seen in the lack of business growth. The country has other issues dealing with an ageing population and less young women which are willing to give up their lifestyles and jobs to start a family. As a consequence, they are now allowing workers from other Asian countries into the country to do the work the Japanese don’t want to or cannot do.
Singapore has not fully escaped the effects of the global business downturn.
It looks to be ideally placed however to take advantage of the problems currently occurring in Hong Kong. As a country which has a history of providing corporate and financial services, it has the most to gain from the problems in Hong Kong. In addition, as a stable environment, its tourist industries are likely to benefit from Hong Kong’s troubles.
All in all, these factors may help Singapore mitigate some of the its other issues which are causing concern as a result in the global downturn.
The effect of Brexit on the United Kingdom's economy is obviously negative at the moment. Nobody quite knows what the end result will be and so businesses are reluctant to invest. With Brexit now a certainty sooner rather than later, it will be interesting to see what happens.
It may be the increase of spending to facilitate the move away from Europe, may boost economic and consumer confidence in the short term. Once Brexit happens, the business community will probably initiate more business investment because it is their nature to keep business operating properly. Business fully realises that you cannot succeed by doing nothing. Not all efforts will be rewarded positively however, but that is the price of being in business in any country.
In addition, one of the key factors which is causing concern is the effect Brexit will have on supply chains. It appears whilst British businesses are working to overcome the issues associated with supply chains, there is less effort in many European countries.
In the short term, the consumer environment will still be fragile at best. Business failures will continue to increase because many will be unable to survive until the benefits of Brexit filter through. No even the biggest firms will be exempt if their past bad business practices catch up with them.
GERMANY
Germany has looked to be the dominant business environment throughout Europe in the past. It now appears that it too has been negatively affected by the slowing global market as its customers in other countries gradually feel the effect of a downturn in their own countries.
Payment terms in Germany has stretched out which is unusual and a lack of trust in the commercial environment is increasing as a result.
The situation currently in the US resembles a normal downturn where parts of the country are doing OK and the others less well. Business confidence however is not as strong as it might be if all was well.
The stock market is booming, however it appears to be unsustainable as it reaches new highs. Their Central Bank is also reducing rates again which is another sign the economy may be not as strong as it was earlier in the year. Again, as for central bank strategies in other parts of the world, the outcomes are not as positive as anticipated.
There are mixed messages regarding the US-China trade war. It appears there is some flow on negative effects for the US, despite small pockets of success and no positive outcomes appear likely in the short term.
Of all the south east Asian countries, Vietnam seems to be doing the best of all.
Companies are taking their business out of China for a number of reasons and rebuilding their factories in Vietnam.
The main problem for Vietnam may be the conflict between its style of government versus that of Western countries. If it gets this process right, the outcome could be positive for Vietnam and those businesses which invest in Vietnam.
Beyond Blue has developed a free online guide that provides business advisers, such as accountants, bookkeepers and industry association representatives, with practical tips about how to support their clients and members.
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Up to Twelve Chances to WIN AUD $200
This challenge is for Members Only - Starts 1st July 2019 and Closes 30th June 2020.
The Red Flag Competition-Challenge is for you to find any business red flags that are not already listed in the Members Area of Credit Matters website. You will need to be a member to access the list and to enter this competition.
Well, it could be anything, but with a recession looming, I thought it worth putting forward my thoughts. This is my attempt to provide a possible scenario from the perspective of a credit and fraud risk professional, front-line global business operator, entrepreneur and business owner.
- Kim Radok
on key terms and insights is both
informative & helpfulfor all tradespeople.
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This is certainly needed and valuable advice, so well done!
Having reviewed “A Guide to Help Business Tradies Get Paid”, I believe this could be a useful tool to consider for any tradie wanting to start a business.
It is easy to understand and user friendly. It provides a good guide to jump start your business and relevant topics to consider before and after starting your business.
Having this document in your phone would be a good quick reference guide.
I have been in the building industry for over 40 years and would recommend this guide.
The information included in setting up a company is really accurate. The more planning and consultation you can do before starting up the better.
Having been in business for over 40 years, I certainly agree with all the set up advice.
This is such a valuable document for any tradesperson contemplating starting a business.
It is full of information vital to establishing a business from scratch including one of the most vital aspects of business, getting paid.
I wish I had access to this information at the start of my career.
By Kim Radok, May 2018
My perspective on the “how and why” recessions occur, the preceding indicators and suggested action to survive them. The purpose of this article is to share experience, knowledge and insight for the many business professionals that have either forgotten the pain of the previous recessions, not experienced one in their working life and/or believe the “modern world is recession proof”. As a result, many of these individuals may consider themselves to be immune to the catastrophic ramifications.
Understanding and acting on the following information may help you protect your financial and emotional well-being........
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Click here to learn about Fraudsters and Technology
Click here to view a list offor businesses who specialise in Risk and Fraud
If a business has debt and doesn’t pay, a debt collection agency will be on the hunt to track the money down. That’s where Dean Kaplan comes in. As CEO of The Kaplan Group, a commercial collections agency that deals with business debt, his company has collected tens of millions of dollars to return to their clients.
“We’re very motivated to collect the money” Kaplan says. “If somebody’s business got into so much debt that they have to go out of business, then I want that to happen, because otherwise they’re going to take advantage of more people who keep doing business with them.”
Read the Full ArticleThe free Members Area includes special features which may not be available to the general public.
The fundamental purpose of our Members Area is to build an environment where business people and students can learn and understand the issues associated with financial risk management in the business environment.
Red flags are warning signs that here may be problems with a potential or existing business customer relationships.
Typical customer red flag indicators can be seen when reviewing applications for credit, an increase in credit limits, periodical trading reviews, reputational stability and in day to day business activities.
Free online calculators to help you analysie your business.
Memos are an ideal way of keeping track of actions and conversations between you and your customers. Memos are also valuable evidence in case debt collection or legal action is required to recover an outstanding debt. However, writing out words and terms in full, can be time consuming and often are not required.
Having a structured set of words and abbreviated terms available within your business, allows for a disciplined approach to writing your memos. This aspect is important for effective communication between different groups of employees within the business. It is also extremely important if your memos end up being exposed in a Court case.
My perspective on the “how and why” recessions occur, the preceding indicators and suggested action to survive them. The purpose of this article is to share experience, knowledge and insight for the many business professionals that have either forgotten the pain of the previous recessions, not experienced one in their working life and/or believe the “modern world is recession proof”. As a result, many of these individuals may consider themselves to be immune to the catastrophic ramifications.
Understanding and acting on the following information may help you protect your financial and emotional well-being........
It can be daunting to make contact with your customers for the unpaid invoice(s), especially when you are not used to such contacts. Too many people have an image of the debt collector demanding payments against defenceless debtors.
Identify the warning signs that your Customers are going in to trouble or are in trouble already. Learn what you can do to protect yourself.
In this feature area you find items, which if not exclusively available elsewhere, are hard to come by in normal circumstances.
You are free to peruse or download them for your use.
We hope they will be of value to you.
An Inconvenient truth was a movie about global warming. The business environment also contains a number of inconvenient truths. As is the case for global warming, many people would like to ignore the inconvenient truths of business.
To be the best business person you can be, it is to learn the terminology of words commonly used in business. Different business environments may have specific words which are common to their industry and setting. However, there are certain words which have universal meaning.
Discover how despite the good intentions behind some of the Australian Government's initiatives to support people in their consumer and business endeavours, they are being manipulated by the unscrupulous.
The Experts Exchange – are articles which blend the thoughts of two professional people through collaboration on a particular topic/subject. The object of these articles is to illustrate the how and why the knowledge of two professions interact in a manner that makes the article of more valuable to the reader. Instead of only one view on the article subject, the reader is introduced to a broader perspective of the subject.
In this forum we give you the opportunity to ask a question and have it answered In this resource section the articles on financial risk management help you understand, learn and use in your business.
Joining a professional body shows you are interested in the development of your career. There will be many professionals which will not show a similar initiative. Today, you need every advantage in this very competitive business environment.
Professional bodies provide the following opportunities and advantages and an acceptance of your professional qualifications by your peers.
If you are not yet a member of a professional body, review the professional bodies listed with Credit Matters to add value to your career.
Government agencies are a source of helpful and valuable information to mitigate some of the risks of operating and managing a business. The information is designed to help you operate within Government guidelines and Legislation. In addition, you will also find information to help you understand your rights in business.
In today's world, ignorance is no excuse.
Credit Matters has provided these access details to Government Agencies to keep yourself better informed and help you to better navigate the world of business.
The following conferences or expos offer a great chance to connect with other professionals and keep up with the latest trends in credit, finance and risk management.
The following providers offer ongoing Conferences, Workshops and/or Seminars. Click their logo below for their current calendar of events.
These blogs are designed to motivate business people and other professionals to improve their business operations to better understand financial risk management issues.
Improving the way you manage your financial risk management obligations, will assist to improve sales, cashflow and profits, whilst enhancing stakeholder relationships.
I have encountered many negative factors over the years when working in credit management and account receivable roles. Furthermore, I suspect your own employees have seen many of the same factors which have also affected your business negatively. These factors are expected to become increasingly prevalent this year as the business downturn gets worse.
This blog will briefly present a list of factors which I expect to see and which I expect your own employees will see in 2020 as we work in our respective roles.
Read MoreContributing to our position as Australia’s premium Financial Risk Management resource, our management globally explores and surveys relevant and valuable articles published by respected professionals, academics and organisation. The articles offered here are suggested reading for any Business Owner and Financial Risk Management professional.
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Credit Matters is an essential MUST DO tool for all potential and existing businesses to ensure all threats of diminishing the financial viability are identified and treated. The fields of fraud, theft and deception are complex and often flourish when persons and businesses will inadequate preventative tools are purposely targeted by the fraudster. Credit Matters provides colleagues with ‘criterions to think with’ in relation to preventing crime for colleagues and their businesses. Credit Matters is a proactive source in all categories of business loss management promulgating best practice based on experience and quantified financial preventative achievements. Credit Matters is a free service and has made great contributions to the industry. Credit Matters Founder Kim Radok is one of the most respected practitioners in the field of financial management. It is recommended for all colleagues to visit Credit Matters Website.