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.
2 Sep 2019
It might seem that the core purpose of a business is to produce a profit. After all, a business which does not produce a profit cannot survive for long.
A profit is therefore a necessary requirement for all businesses. The questions now being asked relate to how is that profit earned, under what circumstances and who should benefit?
There are no simple answers to these questions in today's environment. There is the added complexity as it appears there is a pending slowdown or recession looming. The earning of profits will be even more critical for your businesses if it is to survive the next downturn or recession.
This article is one of many on the subject which discusses the purpose of a corporation. The information is geared towards larger corporations but applies equally to smaller sized businesses. On that basis, I suggest this article is of value for all business people and their management teams.
10 Jul 2019
Dean Kaplan raises a useful idea to help collect outstanding the funds owed on unpaid invoices which is to charge interest for late payments. Obviously, you will need the customer's authority to charge this interest and you must only use an allowable interest rate.
There are many rights you can include on your credit agreements, like this right to collect interest for late payments. The key point of this article is to have negotiation tools to help you recover the funds owed for late invoice payments.
It is not mentioned in this article, however if the customer refuses to sign your agreements which includes rights to protect your business, this is an indication the customer may be untrustworthy. You can also find more information about the importance of having a properly signed credit agreement in our Members area at www.creditmatters.com.au under our Red Flags feature.
In the meantime, Mr Kaplan's article provides useful information about one of the key rights which may protect your business. The right to charge interest for late payments is a useful tool when collecting monies owed for unpaid invoices.
20 May 2019
Although the author's article is based on US experiences and dictates, there is a lot of value in this article when considering effective compliance programs for your business.
This article provides guideline that all businesses can use to implement an effective compliance program which is effective, and suitable for their business. The people in your who will most benefit from a compliance program, are business owners and managers, directors, risk management professionals and middle management.
If you are unsure how a compliance and compliance program might add value to your business, reading this article may be helpful.
30 Apr 2019
Mr Murray's article is based on a case in The English Court of Appeal which has examined the question of whether the duties of directors include considering the interests of creditors in the face of their company’s insolvency.
In Australia, we are also starting to see discussions on where directors might have a duty of care in relation in how their business deals with climate change issues.
It would seem then, the responsibilities for all directors are being examined in ways not previously anticipated. If you are unsure as to your responsibilities as a director, this article could be of value in helping you understand how protecting your interests needs to be reconsidered.
26 Feb 2019
Rutger’s School of Criminal Justice professors Marcus Felson and Ronald V. Clarke developed "Ten Principles of Opportunity and Crime" which describes how opportunities, or vulnerabilities, are the root cause of crime.
If you take the 10 principles and re-apply them to your business, it is another method to help you reconsider the risks to your business from another perspective.
In order to manage risks to our business, we need to understand these risks from different perspectives and keep reviewing the risks periodically. This article may be of value if you have not thought about the risks to your business lately. When you are managing risk, it also means you are working on your business and not just in it.
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.
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.
30 Sep 2018
Claire Payne's article about contracts appears to be based on those prepared for the banking and finance industries. Notwithstanding this focus, many of the issues raised by the author also apply in the B2C (business to consumer) and B2B (business to business) environments when extending credit or completing customer projects.
There have been many changes to Legislation and a focus on unfair contracts in recent times. The author's article is a timely warning that your business contracts need to be both relevant and ethically fair. To rely on old contracts which contain unrealistic rights and penalties, are poorly constructed, with terms which you don't understand or are basically unfair, is a waste of time and money.
Therefore, reading this article may be of value in helping you understand the importance of having up to date and professionally prepared contracts for your business.
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.
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.
26 Apr 2018
Ask any credit management professional, debt collector or lawyer collecting a debt or trying to manage a dispute, what are the most important aspects of success?
Without doubt, their answer will include a properly prepared and signed credit or trading contract, plus supporting documentation.
Dean Kaplan, an experienced debt collector from the US has written a blog on these aspects.
Another important aspect is that properly prepared contracts and good paper trails also provide excellent evidence for purchase and sales fraud investigations.
If you are starting up a new business, reviewing your credit or trading contracts, or need to be convinced on the importance of good contracts and documentation trails, this blog may be of value.
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.
2 Feb 2017
Lovetts Lawyers from the UK, have prepared a blog about the importance of knowing who you are trading with when extending credit.
Irrespective of the fact that Lovetts are based in the UK, the message of this blog applies across any legal jurisdiction or in any country. Extending credit is not without risk and if you can reduce the risks, then this is a worthwhile objective.
You may be suffering from slow-payers and cannot identify the trading entity, or who had authority to sign the purchase order or trading documentation in order to take legal action to recover your debts. Maybe you suffered bad debts in the past, or alternatively you are setting up a new business.
If this is the case, or just want to take the next step in tightening up your trading documentation, then this blog maybe a good place to start the process.
3 Jan 2017
Fraud is an ongoing problem for all business people and their managers. Whether you like it or not, fraud is a normal part or the business world.
Andrew Tragardh provides a number of factors for your consideration when dealing with a fraud and some lead to a better result than others. There are different solutions available for each type of fraud. It would be wise to think about which is an appropriate strategy for any type of fraud encountered when looking for a positive solution in the recovery of your funds.
I suggest that all business people may find useful information strategy may be of value in the event that they become a victim of fraud. Perhaps you may also want to record the reference to this article for future reference.
26 Oct 2016
It seems nearly every government export department and trade professional are advocating exporting as a way for your business to increase sales and revenue. This may be the case for your business.
One of the core problems you will face if you decide to go down the export path, is risk. Too often the advocates of exporting, highlight the benefits and minimise the risks.
In this brief article by Leslie Stroh, there is a list of 10 risk factors to consider when exporting. You may have to access other sources of information to adequately equip you with an understanding of each factor. However, as a starting point, this article may be worth a read if you are interested in increasing your sales and revenue via exporting.
20 Jun 2016
Chris Hayes writes about one of the forgotten tools of credit management; the personnel guarantee.
His comment on what many people say, “… personal guarantees aren't worth the paper they're written on” is based on a myth from “the good old days". This myth come about because many creditors failed to validate the worth of the security supporting the personal guarantee.
A personal loan is no different to taking any other form of security. If you aren't prepared to do the work to validate the security or to understand the nature of the security, then of course the security may be worthless. Notwithstanding all the work which is required to ensure that it is worthwhile accepting a personal guarantee, the guarantee is still a valuable credit tool.
If you now think is time to revisit the use of a personal guarantee as security, this article may be worth a read as a starting point for your investigations.
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.
7 Oct 2015
Imbedded in Professor Graycar's article is a brief insight in to Australia's history of corruption in Australia. As he mentions, many people do not see any purpose in wasting time talking about corruption "... because it has always been there and always will be."
However, as Professor Graycar points out, the facts demonstrate when corruption is tackled, positive outcomes are possible. The Professor also highlights some of the issues ahead in fighting corruption as a result of today's volatile world.
"While Australia is very highly regarded, it would be foolish indeed to become complacent. In the face of economic turbulence, demographic change, environmental threats, and knowledge and communications revolutions among other things, the public policy challenges will be formidable. Good governance and unimpeachable integrity will have to be the bedrock of our policy and delivery apparatus. We can deal with corruption, maladministration and misconduct at the coal face if we have good principles, good practices and good data."
This statement presents guidelines and principles to help business owners and managers identify and operate their businesses to avoid being caught up in corruption matters.
As a starting point in your own efforts to understand and avoid the pitfalls associated with corruption, this article may be worth reading.
23 Jun 2015
There always seems to be another reason why your account never gets paid. One example, as Dean Kaplan advises, is when your customer decides to sell their business
All too often, when a small business is up for sale, the net result for many of their suppliers is increased costs and a bad debt. If you hear that one of your customers is selling their business, review the situation before doing any further business with that customer.
The four critical questions you need to consider in these situations are:
1 Why are they selling their business?
2 Will the customer have difficulty in selling their business?
3 What will happen to your debt after the business is sold?
4 Have you red-flagged the account and warned all staff to be vigilant in their dealings with this account?
If a customer has never contacted you about selling their business prior to the sale of that business or you have lost funds previously in similar circumstances, Dean Kaplan's article is worth a read. You may still not recover your debt. However you have at least an idea of how to deal with this situation, with the possibility of reducing any loss.
5 May 2015
Directors are not entitled to use the assets of the business as if these assets are their own assets and available for personal use. Directors must remember, they are always to act in the best interests of the company.
This situation was reinforced recently in a Western Australian case of Weaver v Harburn  WASCA 227.
Too often Directors get in to trouble by forgetting the assets of the company are not for their personal use. The causes for Directors overstepping the mark and using the company's assets incorrectly, usually occurs for one of three reasons.
1 The Directors have inflated egos and treat the company's assets as if they own the assets rather than act as the custodian of the assets.
2 The Director(s) are in financial difficulties and believe there is nothing wrong in "borrowing or using" the company's assets to pay their debts.
3 Director(s) often forget their primary duty of care is to the company not to their own well-being.
If you are in any doubt about your duties as a Director, please seek professional assistance. As easy as it is to step over the mark and act illegally, so it is equally easy to be found guilty of acting against the best interests of your company. The risk is just not worth it in the long-run.
Remember, ASIC is always there looking over your shoulder to ensure you are acting properly as a Director and doing the right thing by the company.
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