Credit Matters

Invaluable Reading From Australia and Around The World

Contributing 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.

Invaluable Reading From Australia and Around The World

Due Diligence & Compliance

Better A Year Early Than A Day Too Late

Adam Taggart

5 Feb 2019

As the author, David Taggart suggests, trying to predict the timing of disruptive events is a fool's errand. Very few people can predict the exact time of a future disruptive event. We can predict what might happen by looking at the causes of historical events and what is happening around us. In such cases, even if our predications do not eventuate in full, those that acted early can gain an advantage.

Mr Taggart offers the following example of people who paid attention in the years leading up to 2008. These people had arrived at the conclusion that bad policies and overly-loose lending standards had resulted in bad situation which would eventually lead to real problems. Did these people know the date of the tipping point? No. But they knew the probability for a major financial crisis was a certainty.

He goes on to suggest, the people who positioned themselves early avoided the losses that everyone else suffered and a few, even made massive profits.

Today we face a similar situation with an expected business down turn in 2019 and 2020. There may even be a recession. Do we know when this downturn or recession will actually be declared? No, but that does not stop the more prudent of our fellow business and social acquaintances starting to take precautions to protect their business and other assets.

Waiting for the exact date of a disruptive event is never wise. Irrespective of whether you believe we are about to have only a downturn or a full-blown recession, it is better to consider a more cautious approach in the coming year. On that basis, reading Mr Taggert's article may be of benefit in helping you decide whether to start taking action before the effects of any downturn impact negatively on your own situation.

 

Every 3.5 Days a Solar Company Ceases Trading

Greg Ferrett

14 Jan 2019

Greg Ferret has written an article on the demise of solar companies in the current environment. He also has provided tips on how to try and pick the business which is recognised as a quality and reliable supplier and best suited for your needs.

This article demonstrates when a supplier is selling a product or service which is in demand or a "must have", a bit of due diligence and common sense does not go astray in picking the supplier.

In business, when a product or service becomes so popular it becomes "must have" care is required. Fraudsters, dodgy operators and poor business operators will also not be far away. A good example of what may occur can be been with the issues associated with bitcoin. As many people lost money due to the collapse in price, so did the losses accumulate to fraud and dodgy operators. 

Whether you are a consumer or business buyer, it makes sense to choose your supplier wisely. On that basis, I suggest that this article is worth reading as a reminder of the pitfalls of buying the "must have product or service". 

How to identify a bad client: 5 warning signs to look out for

Patrick Coghlan

13 Dec 2018

The author Patrick Coghlan has prepared a brief introduction on five warning signs that indicate you may be dealing with a potential bad debt.

One of the key issues in business is to understand the signs which indicate a potential or existing customer may leave your business with a bad debt.

If you are unfamiliar with the indicators of a bad debt, or just need a refresher on the indicators of the causes of a bad debt, this article may worth reading.

What Do You Want Your Code of Conduct to Do? Three Things to Think About

Jim Walton

5 Dec 2018

The author Jim Walton puts forward the proposition; to create an effective Code of Conduct you need to start with what you want the code to do.

He says when creating a Code of Conduct your aim is to affect behaviour by reinforcing good behaviour and discouraging bad behaviour. But HOW to do that? Mr Walton suggests there are three key words which answer that question – inspire, guide, and enable.

If you do not have a Code of Conduct for your organisation or wish to review your existing Code, this article may be of value.

Why People Engage in White-Collar Crime

Robin Singh

30 Oct 2018

The author Robin Singh has provided useful insights on why people engage in white-collar crimes.

As you read through this article, you will note there are many complex issues which make white-collar crime a fascinating subject in its own right. This is notwithstanding its horrendous cost to the community, organisations and to individuals who might be both victims and perpetrators.

As the article covers a number of topics with appropriate stories, I suggest this may be a valuable read for those interested in the concept of white-collar crime and coming to grips with its complexity.

Organisational culture and leadership is at the heart of any defence against corruption

Cheryl Batagol

9 Oct 2018

Cheryl Batgol has written on the value of a positive culture in the public sector and how a positive culture helps in its fight against fraud. The author also believes a positive culture assists to reduce decisions which could reflect badly on the public sector organisation and lead to negative consequences for the organisation in the future.

In addition, the author has put forward the proposition that organisations with positive organisational cultures are more focussed on long term thinking and strategy. In these environments, not only is innovation valued, people and relationships are also seen as vital elements in the success of the organisation.

The issues raised in this article for a positive organisation culture, are focused on the public sector organisation. The fact is, a positive culture also applies for a business. As is well documented, one of the key aspects of why fraud is possible in a business, is because of poor organisational culture.

Therefore, this article may be of value to those business people who wish to work towards creating a positive culture in their business to reduce fraud and poor decision making.

 

This 'old-fashioned' identity theft is just as dangerous as the cyber kind

Kelli B Grant

4 Sep 2018

We are regularly advised to take care of the information we post on the internet or when we deal with others via email as cyber-crime is one of the leading forms of criminal behaviour today. As a result, we can tend to forget the more traditional forms of information where sensitive information can be accessed.

The theme of this article is to remind us that our personal (and business) information can be accessed from many sources and we need to take care of this information.

We can obtain an idea of the information contained in this article from the article's summary points, which also includes the perspective of one victim. 

  • 53 percent of thefts of consumers' identity data are "non-digital," meaning they don't involve — or at least, don't start with — the thief exploiting some cyber vulnerability.
  • That includes physical theft like a stolen laptop or mail, and insider theft, where family members and employees at companies where you do business exploit their access.
  • "Somebody, somewhere, has all this information," says identity theft victim Amy Wang. "We don't know when they're going to pull the trigger and use it."

If you have not thought about the protection of your personal information and business information lately, this article may be of value in helping you review how this information may be protected from being used for fraudulent purposes.

 

 

Compliance Programs vs. Compliance

Roy Snell

26 May 2018

Roy Snell discusses the actions of ethicists who advocate that compliance programs are not worth the effort when it comes to managing bad and unethical behaviour.

He suggests the critics of compliance programs are doing a great deal of damage with their criticism of organisations which are developing a culture of compliance and avoidance of bad behaviour. Roy Snell believes their argument about compliance programs is patently false. Whilst he does understand their thoughts about the importance of ethics, he does not believe their efforts to discredit compliance programs is helpful in the fight against bad behaviour.

It would seem Mr Snell believes that ethicists are putting their vested interests ahead of the common good by advancing the theory that compliance programs are not worth the effort and a focus solely on ethics would be more beneficial.

You may find value in reading this article from several perspectives, one of which is; compliance programs do have a valid place in the fight against bad and unethical behaviour.

ASIC v Godfrey: another cautionary tale about the financial literacy required of directors

Geoff Hoffman and Cecile Bester

17 May 2018

This article focuses on one aspect of being a Director, the need to be financially literate.

As ASIC has reinforced, Directors need to ensure they are financially literate and do not rely solely on management or external auditors to ensure that the company meets its financial reporting requirements.

Another feature of the reported case was, even if you did not intend to act dishonestly, this does not excuse you from being held responsible for any issues which conflict with the duties of a Director.

If you are an inexperienced Director or intending to become a Director of a company, you may find value in reading this article.

 

Easy Techniques to Prevent Being a Victim of Business Fraud

Dean Kaplan

16 Nov 2017

Dean Kaplan's article is a timely reminder that fraud is an ongoing issue for everybody in business. Irrespective of whether we are a business owner, manager, or employee, we must all be vigilant about the possibilities of being ripped off by fraudsters.

I say this article is timely, because although fraud is an ever-present problem throughout the year, it is a major problem at Christmas. Many fraud professionals consider this is the worst time of the year for fraud because people are distracted by an increase in business, the social events associated with Christmas or are tired and looking forward to the year-end holidays.

Dean's article is also accompanied by a second article advising of eight free or low-cost methods for detecting fraud.

Irrespective of whether you are an experienced business person or a business novice looking for insights on how to beat fraudsters, I suggest this article has something of value for everybody.

Growing threat to lenders: Synthetic identities

Hannah Lutz

26 Oct 2017

One of the fastest growing type of identity theft, synthetic identity fraud in the auto finance industry in the US, is on the rise according to Hannah Lutz. In reality, synthetic fraud is occurring in every industry and to some extent, in many professions.

Ms Lutz explains how synthetic identity fraud takes place in the US. However, fraudsters operate similarly in every jurisdiction.

If you wish to know more about synthetic identity in order to improve the identity checks in your industry, Hannah Lutz's article could be worth reading as a starting point.

The Consequences of Inadequate Due Diligence

Austeja Kibildyte

21 Oct 2017

Many business people are encouraged to consider exporting as a way of increasing their sales. This is a fine thought. Unfortunately, whilst being encouraged to consider the positives of exporting, rarely are business people properly cautioned about the associated risks.

Austeja Kibildyte's article introduces a number of risks which a potential exporter would be wise to consider.

If you are interested in exporting, now would be would be a good time to explore both the positive and negative aspects of exporting. It is very easy to spend a lot of time, energy and money and wish you knew what was involved if your exporting ventures turn nasty. This article may be of value to help you come to grips with a number of the issues when exporting and help you minimise any adverse consequences.

 

Compliance Programs and the Butterfly Effect

Alexandre C. Serpa

3 May 2017

Compliance programs are becoming increasingly important these days when issues such as bribery, cartels, the seeking of favours by gift giving and ethical behaviour are at the forefront of good business behaviour. All businesses are affected, and the size of the business being immaterial. It is the behaviour of business woners, managers and employees which is the critical factor.

Creating a program suitable for your business and employees may not be as simple as you imagine. After all, creating a compliance program is one thing. Ensuring your employees understand how the program works in practice, and then adhere to the program, is another issue.

Alexandre Serpa has prepared this article in an effort to explain some of the issues when setting up a compliance program and in overcoming employee concerns.

You may wish to create an effective compliance program, or want to ensure the program you have operates effectively. In either case, this article may be of value in helping you understand the issues involved.

Comply or Explain (to the Judge)

Richard F. Chambers

1 Mar 2017

Richard Chambers discusses a number of factors which should be carefully considered by all directors and senior managers when establishing a compliance program for their business.

Long gone are the days when directors and senior managers could fob off concerns when compliance programs were found wanting. Today, the penalties against directors and senior managers of a business with a failed compliance program are professionally embarrassing, personal and often severe.

As a director or senior manager, if you are unsure of your responsibilities on whether your business's compliance program protects you, reading this article may be of benefit. As always, the material in this article is only a starting point in the evaluation and production of your business's compliance program. If in doubt, it is always wise to use properly qualified professionals when building or evaluating your compliance program.

Millennials and Compliance: Their Perspective

Mark Dorosz

19 Jan 2017

This article focuses on how Millennials may view compliance differently to what we might expect, especially in regards to the use of social media.

It is true they been raised in times different to the older generation and as a result, been exposed to other lifestyles and experiences. As such, they bring another perspective on how and why they use social media.

The issues of compliance in these circumstances, can be challenging. Your business may have to find interventions that can instruct the younger people on what is and what is not acceptable in a manner they can understand.

This article may be useful in helping you begin the journey on how to incorporate their experiences into your compliance training. At the end of the day, you do need your compliance education to be effective.

The Secrets To Building A Strong Business Credit Profile

Ty Kiisel

22 Jan 2016

Ty Kiisel from the US explains the importance of keeping a good business credit rating as well as a personal rating. In Australia, the same situation exists for people who also are in business. Even in this day and age, many people do not understand that when in business, your creditors and potential creditors will seek to have the authority to access your consumer and personal business file, as well as that of your business.

When operating a business that relies on the good will and credit of other organisations, maintaining all your credit related files in good order is of critical importance. With a bad record in one file, this record could easily preclude you from credit facilities on the best terms and interest rate for your consumer and business needs.

Ty's article includes a number of valid reasons on why a good business credit rating is so important. If you were unsure on how to maintain a credit rating in all your accounts, this article may be worth reading.

Red Flags Of Potential Collection Problems

Dean Kaplan

11 Jan 2016

Dean Kaplan is an experienced business professional and debt collector from the US. In this article, Dean provides a number of red flag indicators which may indicate future cashflow problems for your customer.

These same indicators are observed and applicable within the business environment of any country. For instance, I suggest other experienced credit professionals, debt collectors and insolvency practitioners from all countries would have seen similar red flag indicators during their careers.

Dean points out there are other indicators which may be useful in specific situations which he has not detailed. Educating yourself to be on the alert for any unique red flag indicators which are applicable for your industry, is just as important.

A useful aspect of this article are the explanations which are included to illustrate the problems behind the red flag indicators.

In the turbulent business world of today, being aware of the indicators of customer cashflow problems is an essential component of business survival and to reduce unnecessary costs and bad debts.

If you are unaware or would like to refresh your knowledge of the red flag indicators of cashflow problems, this article may be of value to you.

Four Important Questions To Ask When Choosing A Recruitment Consultant

Vic Careedy

10 Nov 2015

The task of taking on a new employee is no longer as simple as it once was. Today and into the future, undertaking due diligence on all prospective employees, will be the new norm. One of the parties best placed to assist you in this process will be recruitment agencies or consultants. Again however, you must choose your recruitment agency or consultant with care.

Vic Careedy puts forward a number of issues to be considered when choosing an employment agency or consultant based on his experiences and perspectives.

"Having been a client, a candidate and, for several years now, a consultant in the recruitment industry, I've learned there are some starting issues you need to be clear on."

The four areas worthy of investigation and questions in Vic's opinion are:

1  Who will doing my work?

2  What background experience does my consultant bring?

3  What is the process?

4  What will I pay?

If you have never used a recruitment agency or consultant before, or a dissatisfied with your current service provider, reading Vic Careedy's article may be of assistance. As is always the case, care is required when employing anybody these days and having a professional service provider who understands the issues may well be your best assistant in this process.

 

2015: The rise of impersonators

Debbie Fletcher

4 Sep 2015

Debbie Fletcher presents a number of key issues relating to the bots which are visiting your website. Not all of these bots will be visiting with the right intentions. Unfortunately we live in age when the internet is both our window to the world and a wonderful research facility. However the internet also allows unwelcome visitors to visit our site.

These unwelcome visitors are designed to seek advantages for their own business enterprises. The advantages which are sought include, finding out the weaknesses in your security systems, website designs, seeking to over-ride human operating disciplines and stealing your IP and other work.

Any business which is deemed to be profitable, or rich in ideas and IP, will be targeted. It is not about if, it is about when. It would seem therefore to be sensible to build a website which has been designed by professional website designers who understand and use appropriate security measures. Any alternative over the long-term is a recipe for disaster.

In today's world, if you have a website, it would be wise to understand these issues. If you are interested in knowing more about the visitors to your website, this article may be a good place to start.

 

Why ROI is a Bogus Number

Vincent W. Mayfield

9 Jul 2015

As Vincent Mayfield writes:

"No other term is more overused in the business world than Return on Investment (ROI), except perhaps “The Bottom Line.”  Armies of well-meaning managers throw out superfluous business jargon like ROI to demonstrate they are good stewards of corporate finances. ROI was originally used to evaluate financial transactions by calculating the return of profit versus the capital investment. Over time, ROI has become the de facto measure used to evaluate one-time capital projects."

Whist Mr Mayfield is writing about the use of ROI within software operations, the issues raised in his article, apply across many other different business operations.

The use of ROI as a measurement term is used as much to confuse people as it is used properly and within the context originally conceived. Too often ROI is used to shut down conversations by those people with a hidden agenda, those who do not understand your concepts or because your concepts threaten their own position within the proposal.

When the term ROI is used, many business people do not fully understanding its concepts or do not believe the outcomes presented by the ROI exercise. Irrespective of your current understanding of ROI, I suggest this article is worth reading if you are interesting in learning more about the ROI concept.

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