April 2023
Currently, I am between a number of assignments and have time available to assist if required. Therefore, I am open to additional business, whether that be a review of your credit and accounts receivable operations or picking up the telephone and calling your customers about unpaid invoices.
Tenure and rates are always negotiable.
The attachment with this newsletter is from RSM regarding their workshops on the 2023 CFE Exam Review Courses.
Kim is available to help with your questions and concerns if you need any assistance, and as always, the first chat is always free of charge or obligation.
“Data is the pollution problem of the information age.”
Bruce Scheier
Today, we are swamped by the amount of date which is available. Not all of this data is valuable. We also know that much of this data adds little value to our business operations, and some of it is fundamentally misleading. In addition, due to the accounting and business systems available today, we can also produce an endless number of reports, which further adds to our problems.
Hence the very valid words quoted in our newsletter this month. In trying to work through all the data and reports which assail us these days, the question is: “How do we identify which data and reports are of value and provide accurate representations of our business’s operations?”
Obviously, the answers in this newsletter to the above question are by necessity brief, however they do provide a clear picture of how to start to answer the above question. The information on the following statements and reports are from the perspectives of credit management, risk management, fraud control and customer service.
The bank statement is the first and most important report. After all, it shows the amount of cash which is available to operate the business. It cannot, nor should it, show what further cash may come into the business, or what might need to be paid in future.
The second most important report, is the balance in the Debtors Ledger, providing the value of the uncollectable invoices and invoices with extended payment terms removed. If you don’t understand the reasons for this action, then perhaps we should have a chat.
The third most important report is the Creditors Ledger, with the proviso that all “known dollars” owed are included.
The fourth most important reports, both are extremely important, are the properly structured reconciliation statements of all debtor and creditor accounts. Prepared properly, these reports clearly show the strengths and weaknesses of your business and allows you to focus on any identified problem areas. All other reports such as open item statements, merely show a list of uncharacterised outstanding items, and are fairly useless in identifying problems from a risk management perspective.
Whilst the above statements and reports do not show all aspects of the business, they offer insights into the business’s operations and performance and start to cut through the amount of data pollution we all suffer.
There is no doubt a properly worded and designed contract and terms of trade, that has been signed off properly by the customer, is an asset for your organisation.
Unfortunately, too many businesspeople fail to appreciate its value and use this asset to protect their business’s interests. Often, businesspeople and employees with vested interests within the business fail to enforce the business’s rights keep putting forward the rationale “… that legal action is just throwing good money after bad.”
In reality, this philosophy is the root cause of why so many businesses continue to lose money to fraudulent and non-paying customers. The fact is today, many customers have now realised that the majority of situations that their suppliers will not take legal action. Alternatively, if the customer has developed a non-paying strategy, the supplier will accept a lower payment just to clear the debt from their books.
The argument about throwing good money after bad however, has an element of truth as creditor rights have been gradually stripped away over the years because of mounting costs, some of which have been enforced by the courts, public bureaucrats, and the rise of the entitlement generation.
Off course, inappropriate actions of the creditors themselves have not helped their cause.
At the end of the day, it appears too often creditors have not been prepared to fight for their rights, especially those which have the appropriate contracts and terms of trade signed off by the customer. In such circumstances, creditors cannot therefore blame their customers for taking advantage of them.
If the above situation has occurred over the good times, imagine how effective debtors will be avoiding their responsibilities in the future as economic times become more difficult.
Too often we see reports and news in the media, that business factors are beginning to resemble those of 2019 and pre COVID. What does this information really offer from a sense of reality to our current circumstances? Whist it may give some people a level of comfort, in regards to the economic conditions of each period, it is like comparing apples to onions. It is therefore largely valueless in the scheme of things.
The economic circumstances of that time, debt owed and owing, human perceptions and experiences, plus government and bureaucratic interference were all vastly different. As a result, to expect that because sales figures may be rebounding to the 2019 period, businesses could now believe the worst is over is blatantly false.
It would be wise therefore to take care moving forward in 2023 and beyond, to plan and operate your business based on the current and projected future realities.
Today, with building businesses, large and small becoming insolvent and ending up under insolvency administrators, business and employee tradies will be potentially losing money. One of the factors for this situation is because whilst tradies can be very good at their profession, they may have little knowledge of how to operate a business profitably.
To assist tradies, we are currently offering a special deal on our “A Guide to Help Business Tradies Get Paid (New Edition)” at the special price of $5.50 including GST until 30th of June 2023.
Therefore, if you are a tradie contemplating going out on your own, or currently working in your own business, I suggest it is important to understand the key factors in running a successful business.
This guide is NOT a manual on how to run your business on a day-to-day basis, or how to achieve your goals. It has been prepared with the intention of introducing you to the key factors required in running a successful business.
You can download the feature to your phone or tablet and can carry it with you on the job for easy reference if needed.
Updates courtesy of www.asic.gov.au
31 March 2023
23-085MR ASIC and IOSCO report on combatting retail market misconduct
The International Organization of Securities Commissions (IOSCO) has today published a report calling for greater international collaboration and cooperation to combat cross-border scams, greenwashing, misconduct, and fraud.
ASIC Chair Joe Longo said, ‘Scams, misconduct, and harmful practices targeting retail investors do not respect borders. ASIC co-chaired the task force that wrote the report and supports recommendations to strengthen international cooperation to mitigate cross-border misconduct and share surveillance data and intelligence.’
‘In our own domestic experience, we see persistent challenges around the supervision and enforcement of cross-border regulatory issues that cannot be tackled by domestic regulatory bodies alone.’
‘Regulators need effective resources, practices, tools, and techniques to promote consumer protection and market integrity, which is supported through participation in critical multilateral forums such as IOSCO.’
04 April 2023
23-088MR ASIC sues Auto & General Insurance Company for alleged unfair contract terms in insurance
ASIC has commenced the first proceedings alleging unfair contract terms in an insurance contract. The case involves standard form home and contents insurance contracts issued by Auto & General Insurance Company Limited (Auto & General).
ASIC alleges that since 5 April 2021, a contract term requiring customers of Auto & General to notify it ‘if anything changes about your home or contents’ is unfair because the term:
- imposes an obligation on customers to notify Auto & General if ‘anything’ changes about their home or contents, which customers cannot practically meet.
- imposes an unclear obligation on the customer regarding what they need to disclose to Auto & General.
- suggests that Auto & General has a broader right to refuse claims or reduce the amount payable under claims if the customer does not meet the notification obligation than is available under the Insurance Contracts Act.
- could mislead or confuse the customer as to their true obligations and rights under the contract.
20 April 2023
ASIC is calling for all financial institutions to improve their approaches to handling scams after new ASIC analysis revealed that scam losses for major bank customers exceeded $550m last financial year and impacted more than 31,700 customers.
The figures come from ASIC’s new Report 761 Scam prevention, detection and response by the four major banks, which examined the approaches taken by the major banks to prevent, detect and respond to scams. The report focussed on Australia's four major banks as they are at the forefront of scam prevention, detection and response in Australia.
ASIC Deputy Chair Sarah Court said, ‘combatting scams is a critical task for all of corporate Australia—financial institutions, telecommunication providers, digital platforms and other organisations need to work cohesively to stop scams at the source.’
06 April 2023
A recent ASIC review has identified good practices for overseeing whistleblower programs, which all directors are encouraged to consider, writes Commissioner Danielle Press.
As a director, you know whistleblowers can come to you with their concerns. But what other responsibilities do you have for your company’s whistleblower program?
In 2022, ASIC conducted a review of whistleblower programs from a sample of seven large firms. In particular, we targeted the firms’ arrangements to handle and respond to whistleblower disclosures, and the level of executive and board oversight of the arrangements. Our report, Good practices for handling whistleblower disclosures, identifies seven features of a strong whistleblower program, and summarises the good practices we observed. For directors the message is clear: your responsibilities go beyond handling the whistleblower disclosures you receive, to overseeing your firm’s whistleblower program.
Boards are ultimately responsible for their firm’s governance and risk management arrangements, including whistleblower policies and programs. Directors have a key role to ensure their firm’s program is useful and effective.
20 April 2023
Consultation commences on AML/CTF reforms
Today the Attorney-General announced public consultation on proposed reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
The proposed reforms include extending the existing AML/CTF legislation to capture additional ‘tranche-two’ high risk entities including lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones.
The reforms also aim to:
modernise and clarify the regime in line with international standards and best practice
reduce complexity and regulatory burden on industry
ensure the regime remains fit for purpose, and
harden Australian businesses and sectors against exploitation by serious organised criminals.
It is important that any reforms be informed by valuable insights provided by you into the operation and application of the regime. Your insights will be critical in helping to shape these reforms, and ensuring our AML/CTF regime continues to protect Australia’s financial system. The reforms will also consider the findings of the Financial Action Task Force’s mutual evaluation of Australia, and the Statutory Review of the AML/CTF Framework.
20 April 2023
AUSTRAC, AFP, ACCCE and industry partners team up to fight child exploitation
A coordinated effort to stop the sextortion of Australian children has led to the closure of more than 500 Australian bank accounts that were linked to international organised crime syndicates. As part of Operation Huntsman, AUSTRAC, the Australian Federal Police (AFP)and the Australian Centre to Counter Child Exploitation (ACCCE) partnered together to stop criminal networks by targeting Australian-based money mule accounts sending money from distressed victims to international syndicates.
18 April 2023
Operation Daintree special report
Operation Daintree was an investigation by the Independent Broad-based Anti-corruption Commission (IBAC) highlighting how improper influence compromised the procurement process for a $1.2m contract awarded to a union-established training group, and compromised the management of the contract.
On 30 May 2019, IBAC received a complaint from an anonymous source alleging that the procurement process and awarding of a contract by the then Department of Health and Human Services (DHHS) to the Health Education Federation (HEF) for the provision of training to health workers in November 2018 constituted serious corrupt conduct. It was alleged that:
Although the contract value was more than $1 million, a competitive procurement process had not been followed.
The project was awarded to a single provider, HEF, which:
was newly formed and had no relevant experience
at the time of engagement was not a registered training organisation
was not financially established and thereby posed a risk of non-delivery
did not have sound governance arrangements - had directors who held executive positions at the Health Workers Union (HWU).
HEF was not on the approved training register and would have been unlikely to qualify for inclusion.
A partial upfront payment was approved prior to delivery of any training despite the finance division of DHHS advising against this.
05 April 2023
Data Quality in the Consumer Data Right: Findings from Stakeholder Consultation
This paper outlines the findings from a stakeholder consultation conducted by the ACCC about CDR data quality.
On 28 October 2022, the ACCC released a discussion paper to inform the consultation. The paper – Data Quality Compliance in the Consumer Data Right – discussion paper – sought views on the prevalence and harm caused by data quality issues.
30 March 2023
Cooperation proposed to continue on soft plastics recycling after REDcycle liquidation
The ACCC proposes to grant authorisation with conditions for 12 months to allow the major supermarkets to continue collaborating on a short-term solution to manage the soft plastics stockpile and to facilitate the resumption of in-store collections for recycling.
A public consultation process on the draft determination will begin shortly.
The ACCC granted conditional interim authorisation to Coles, Woolworths and ALDI in November 2022, following REDcycle’s announcement it was suspending its return-to-store soft plastics recycling. The supermarkets, via the Soft Plastics Taskforce, released a Roadmap to Restart plan which outlines its work to date and its roadmap over the next 12 months to manage the stockpile and resume collections.
05 April 2023
Most gamers enjoy fast connections as online gaming experience measured for first time
Consumers typically have fast connections to online gaming servers over home broadband connections, with NSW and ACT gamers enjoying the best experience, according to the ACCC’s latest Measuring Broadband Australia report which for the first time measured Australians’ online experience for gaming services.
The report found that latency to Australian servers for popular online games like Fortnite and League of Legends averaged 15 to 30 milliseconds per test on different NBN fixed-line technologies. This means users generally have a good gaming experience, with minimal stuttering or lag.
Latency refers to the time it takes to send data from a user’s device to a server and back. Higher latency means there are delays in sending and receiving data, which can be disruptive to a consumers gaming experience.
The report found that a key influence on gaming experience is the distance to gaming servers, with latency increasing when the server is further away. Australians playing online games where the server is located overseas may notice a lag or have a poor gaming experience.
13 April 2023
ARM Architecture and its former MD to pay penalties for attempted rigging of university tender
The Federal Court today found architecture firm Ashton Raggatt McDougall Pty Ltd (ARM Architecture) and its former managing director, Anthony (Tony) John Allen had attempted to rig bids for a tender relating to a $250 million building project at Darwin’s Charles Darwin University.
The Court ordered ARM Architecture to pay a penalty of $900,000 and Mr Allen to pay a penalty of $75,000.
ARM Architecture admitted it had attempted to engage in cartel conduct when Mr Allen sent emails to eight other architecture firms in September 2020 asking the firms not to bid for the second phase of the university project.
Mr Allen admitted that he had attempted to induce the other architecture firms to make an arrangement or arrive at an understanding with ARM containing a cartel provision.
After the conduct was brought to its attention, Charles Darwin University excluded ARM Architecture from tendering for the project. Mr Allen left ARM in March 2022.
“This judgment should serve as a strong reminder for everyone, including professionals and professional services firms, that bid rigging is against the law, no matter what industry you are in,” ACCC Chair Gina Cass-Gottlieb said.
Credit Matters is a financial risk management resource centre for the Australian business community. If you are in business, Credit Matters is your ideal source of financial risk management solutions.
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Futhermore, we invite marketing and knowledge ideas from our readers and contributors on how we can assist our respective firms grow. If you have any ideas, please contact me at info@creditmatters.com.au.
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