A new feature is on the way to start to 2020.It was not quite ready for this newsletter unfortunately. All things being equal, we hope it will be available within the next two weeks.
There will be no February newsletter due to a perfect storm of family and other events all happening during February. However, if time permits, there might be a blog or an essential reading article added to the website.
Due to time pressures which we are all under at this time of year, there are no brochures with this newsletter. Nevertheless, there are always opportunities to advertise with Credit Matters at a very affordable rate. You can contact Kim at email@example.com for our interesting options.
All the best for 2020, may it be a profitable year for all
“Facts are stubborn things, but statistics are pliable.”
― Mark Twain
Identifying the difference between facts and statistics is an essential requirement for all business people and managers.
As Mark Twain articulated, facts are stubborn things, statistics are pliable. At the end of the day, facts are irrefutable, for instance the bank balance. Now that’s a fact!
Statistics on the other hand can be manipulated or ignored according to the bias and needs of the creator or viewer. For instance, many business reports can be manipulated to produce a picture that the person preparing the report wants others to see. Usually you will find that the picture is of no value for the well-being of the business or bears little resemblance to reality.
Customer contacts are one report that can be easily manipulated by sales and customer service employees. These reports purport to show a number of different variables such as effective contacts and happy customers verses ineffective contacts and unhappy customers etc. Often, as Australian banks found out, the information in their customer service reports was not only useless, It was also damaging to the bank. Furthermore, the information failed to provide an accurate picture of the Banks success in handling real problems.
In collection or accounts receivable operations, timing of contacts and content of messages with debtors may lead to an expectation that the employees have worked to instructions. On closer inspection however, it is usually found that the employees have worked the system to produce a result that suits the needs of the employee.
In another example, many employees, and managers, now seem afraid to pick up the phone and actually speak with debtors. To avoid any confrontation or uncomfortable discussions, the employee only has to make contact at the wrong time of day or when they suspect their contact is unlikely to be available. Such contacts provide the employee with the numbers they need to meet their KPIs.
If not properly managed, the Debtors Ledger can also provide an incorrect figure. It is not hard to manipulate the figures to produce an image of a well-managed Debtors Ledger that fools management because it produces a picture of well-being. Unfortunately, when the CFO or accountant goes looking for cash to pay creditors, the cash which is actually available is often nothing like what was projected in management reports.
Interestingly enough, a Debtors Ledger where the actual figures are out of balance, is rarely the result of manipulation by a biased employee. An out of balance Debtors Ledger is usually the result of an inexperienced, or unprofessional employee doing what they think is correct when allocating payments. Again, it is not until closer inspection it is found they have actually allocated payments incorrectly.
Amongst the weaknesses in many businesses today, is the reliance on less experienced employees, poor implementation of technology and being less aware of how to operate and manage a business. There is nothing simple in business today and each new customer or supplier interaction has the potential to add another level of complexity not anticipated.
It is wise therefore to understand the difference between facts and statistics, because there is a world of difference.
The fact is that most businesses do not have the time to do everything that is required, or the money to be effective all the time. The cost ramifications when making mistakes or not having enough time to do things correctly the first time, are therefore very expensive.
No more do we see the loss of time and money brought about by inefficiency within the rest of the business than in the credit and accounts receivable management. In fact, we can often see how effective our business is when reviewing the contents of Debtors Ledger.
If the Debtors Ledger is in good shape, then we have an indicator that the business may be operating satisfactorily. I say may be in good shape, because when accounts receivable is being managed by inexperienced and non-professional employees, they have a tendency to allocate payments to the oldest invoices. In addition, if there is no emphasis throughout the business to eliminate mistakes and process customer deductions promptly, the true value of the outstanding invoices will be compromised. In such situations, the Debtors Ledger will not be an effective indicator of the business’s wellness.
When inexperienced employees are allocating payments incorrectly or there is no emphasis on eliminating mistakes, a great deal of time can be spent following up uncollectable invoices. In turn, this means there will be less time to work on the outstanding collectable invoices. In time, particularly in a business downturn, these collectable invoices can become uncollectable.
The first order from a new potential customer which has to be supplied in a hurry is a situation all businesses will encounter from time to time. The issue at stake is; will it lead to a new profitable customer or a nightmare of costly problems?
Being able to supply the first order for a new customer is a wonderful opportunity to showcase the value of your business to a new customer and perhaps lead to a profitable trading relationship.
The first order needed in a hurry is also one the favourite strategies of a slow paying customer or fraudster. There are two ways these customers get away with this strategy and it usually comes down to a lack of business discipline and due diligence by naïve or desperate business owners, managers and salespeople.
The first strategy is to pay the first, second or next few invoices quickly as a way of establishing the bona fides of a “good customer”. Depending on the rigor of your prior due diligence processes, you will quickly identify any payment or action variance when they start slow paying the following invoices and take suitable action. Hopefully you will be able to stem losses from this point.
If your business processes and disciplines are weak or non-existent however, the order will usually be accepted and supplied. Then you will probably find the slow-paying customer has sucked you in to a long term relationship of slow payments and reduced profits. After all, it is hard to tell a customer to leave if they keep buying, even if they pay slowly.
The fraudster on the other hand, will probably not pay any invoices once they have what they want. In that case, the business is left with a costly bad debt.
Is the spelling barbeque or barbecue?
Australia Day is a day to relax and have friends over for a barbeque, or is that barbecue?
A search using Google for sites ending in .au, returns around 3.7 million results for barbeque and 17.3 million results for barbecue. Microsoft Word allows both barbecue and barbeque as valid spellings
The Oxford and Macquarie dictionaries list barbecue as the primary spelling and barbeque as a secondary spelling. The Macquarie dictionary notes there’s greater use of the secondary spelling barbeque in Australia, than there is in the US or UK.
The preferred spelling in Australia is barbecue. Now there’s something to ponder whilst grilling the snags on Australia Day.
Updates courtesy of www.asic.gov.au
06 January 2020
Following an ASIC investigation, Mr Anthony Keith Silver (also known as Tony Silver) of Tasmania, has today appeared before the Southport Magistrates Court charged with five counts of fraud to the value of $1.815 million.
ASIC alleges that between 2009 and 2010, Mr Silver dishonestly caused a detriment to investors by using investment funds for purposes other than had been anticipated by investors.
Mr Silver was released on conditional bail to appear in the Southport Magistrates Court on 17 February 2020.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions following a referral from ASIC.
07 January 2020
ASIC has disqualified Larry James Matthews, Richard James Matthews and Rowena Ylaya Matthews, of Broadbeach, Queensland, from managing corporations, following the appointment of liquidators to eight companies they managed between them.
Messrs Larry and Richard Matthews have both been disqualified for five years and Ms Rowena Matthews has been disqualified for four years.
The disqualification follows the appointment of liquidators to the following companies:
•Bluestone Project Management Pty Ltd ACN 137 356 659;
•Bluestone Constructions Pty Ltd ACN 137 356 686;
•BluestoneInvest Pty Ltd ACN 146 827 581;
•Bluestone Development Group Pty Ltd ACN 137 356 631;
•Bluestone Administration Pty Ltd ACN 137 356 677;
•Yarrl Property Pty Ltd ACN 150 979 463;
•Daisyfield Securities Pty Ltd ACN 131 212 729; and
•Blackrock Developments Pty Ltd ACN 161 715 162.
ASIC found that:
•Mr Larry Matthews had failed to exercise his duties as a director with due care and diligence, failed to ensure Bluestone Project Management and Bluestone Constructions had paid taxes, failed to prevent Bluestone Project Management and Bluestone Constructions from trading whilst insolvent, improperly used his position to gain an advantage for a related entity and was excluded by the Queensland Building and Construction Commission (QBCC) from being a director or secretary of a QBCC-licensed company;
•Mr Richard Matthews had failed to exercise his duties as a director with due care and diligence, failed to ensure Bluestone Project Management and Bluestone Constructions had paid taxes, failed to prevent Bluestone Constructions from trading whilst insolvent and was excluded by the Queensland Building and Construction Commission from being a director or secretary of a QBCC-licensed company;
•Ms Rowena Matthews had failed to exercise her duties as a director with due care and diligence, failed to ensure Bluestone Project Management and BluestoneInvest had paid taxes, failed to prevent Bluestone Project Management and BluestoneInvest from trading whilst insolvent and improperly used her corporate position to gain an advantage for a related entity.
The total amount of debts owed by the companies to creditors exceeded $26.2 million.
09 January 2020
ASIC is committed to helping Australians affected by the devastating bushfires to rebuild their lives. ASIC Deputy Chair Daniel Crennan QC said that ‘ASIC is working with insurers and other key stakeholders to ensure that claims are handled efficiently and fairly. We expect those involved in handling these insurance claims to act with the utmost good faith’.
For consumers and businesses adversely impacted by the bushfires, ASIC Commissioner Sean Hughes said, ‘If you're affected by the bushfires, ASIC suggests you deal directly with your insurer or an authorised, trusted insurance broker or financial adviser. Your insurer may be able to provide emergency accommodation and financial support as part of your claim.’
Information on what to do after a natural disaster is available on ASIC’s MoneySmart website. This includes information about contacting your insurer, assessing the damage when it is safe to do so, and where to find additional help if you need it.
ASIC is also warning consumers and small business owners to watch out for fictitious or unscrupulous tradespeople, repairers or firms offering to assist them with their insurance claim. Mr Hughes added ‘These unscrupulous operators typically target homeowners, farmers and small businesses in the aftermath of natural disasters. They may claim to be able to identify damage to your property, sometimes by way of a free inspection. Be wary of anyone who asks for payment up front and who asks you to sign a contract immediately. Don’t agree to sign anything which prevents you from dealing directly with your insurer, broker, financial adviser or lawyer. Anybody who is concerned about the conduct of such a person or firm should contact ASIC.’
16 January 2020
ASIC has released a consultation paper on a proposal to formalise its policy on share transfers made under s444GA of the Corporations Act. ASIC will seek public input on the proposal until Tuesday 28 February 2020.
Section 444GA permits a court to grant leave to allow an Administrator to transfer shares as a part of a Deed of Company Arrangement (DOCA), where it will not 'unfairly prejudice' the interests of shareholders. The Courts will generally allow the transfer if evidence shows that the shares have no value.
Where a transfer under a DOCA results in a shareholder's voting power in the company increasing above 20%, ASIC relief from Section 606 is required.
ASIC is proposing to formalise its policy on giving relief from s606 in these circumstances.
Consultation Paper 326 Chapter 6 relief for share transfers using s444GA of the Act (CP 326) seeks views on ASIC providing relief where:
•shareholders are provided with explanatory materials prior to the s444GA hearing, including an Independent Expert Report ('IER') prepared under RG 111: Content of Expert Reports;
•the IER is prepared by an independent expert (not the administrator); and
•the IER is prepared on a liquidation basis.
ASIC Commissioner John Price said, 'The aim of these proposals is to provide certainty for all stakeholders and ensure that shareholders receive information equivalent to a standard control transaction. We encourage submissions on how we can achieve these goals'.
Submissions should be sent to 444GA.Submissions@asic.gov.au by Tuesday 28 February 2020.
09 January 2020
Meeting AUSTRAC obligations
If your business has been affected by bushfires, and you are concerned about meeting your AUSTRAC obligations, such as reporting transactions or completing your 2019 compliance report, please contact us to discuss ways we may be able to assist.
You can call us on 1300 021 037, 8:30am to 5:00pm (AEDT) Monday-Friday, or email firstname.lastname@example.org.
Identifying customers who have lost identification in bushfires
Customers who have been affected by bushfires may have lost some of their identification documents.
There are several options for businesses to identify and verify their customers in these circumstances. For example, you might use several types of secondary documents to establish a customer’s identity instead of a primary identification document.
For more information, see our advice on how to identify customers who do not have conventional forms of identification, including examples of alternative documentation.
16 January 2020
AUSTRAC wraps up campaign targeting illegal money transfer dealers
16 January 2020
In December, we wrapped up our community campaign targeting illegal money transfer dealers, or unregistered remittance dealers. The campaign ran from August to November and focused on raising public awareness and educating communities about the risks they pose.
Unregistered money transfer dealers represent a real threat to Australian communities as they are at high risk of being targeted by criminals to launder money to fund their activities. They also negatively impact the reputation of registered money transfer providers who are trying to do the right thing.
During the campaign, AUSTRAC staff visited communities and registered businesses across Australia. We spoke about the threat that unregistered money transfer dealers pose and how people can anonymously report suspected unregistered dealers.
Key highlights from the campaign
Between August and November, more than 130 AUSTRAC staff visited over 400 registered money transfer businesses in Perth, Adelaide, Sydney, Melbourne, Canberra and Brisbane. These visits gave businesses the opportunity to provide feedback and ask AUSTRAC staff questions about their obligations.
Over 240 people attended town hall meetings, including local community leaders and multicultural organisations, registered money transfer providers, partner agencies and journalists.
Throughout the campaign the main things we heard were that:
•For some, access to the banking system is difficult
•For others, regular proactive engagement with banking partners has worked well in retaining bank accounts
•Remittance businesses are adapting and changing the channels they use to attract customers and provide remittance services (including the use of online platforms), and
•AUSTRAC guidance material, workshops and other support is appreciated.
What’s next for AUSTRAC and the remittance sector?
While the campaign has now finished, our work continues. Over the coming months, we will:
•Consolidate feedback and findings so we can determine the appropriate next steps
•Continue to assess reports of suspected unregistered remittance dealers submitted to AUSTRAC and take any action required
•Continue to support registered remittance providers through guidance resources and workshops throughout 2020 (details coming soon).
10 January 2020
AUSTRAC and Great Britain Gambling Commission have today strengthened their cooperation in the fight against serious financial crime and terrorism financing through the signing of a regulatory Memorandum of Understanding (MOU) in London.
The MOU between AUSTRAC and the Gambling Commission will enable both agencies to share regulatory and compliance information to strengthen the international financial system against transnational crime, including money laundering, terrorism financing, corruption and other serious crimes.
AUSTRAC has regulatory MOUs with other partners in the United States, Canada, New Zealand and China.
Gambling Commission Executive Director, Mr Richard Watson, welcomed the enhanced cooperation and information sharing this MOU will provide between the two agencies.
AUSTRAC CEO, Ms Nicole Rose PSM said the MOU is an important step in the fight against financial and serious crimes, and confirms the commitment by both agencies to the exchange of financial intelligence information.
“Financial crime is a global issue,” Ms Rose said, “It is critical we work together with our international partners to tackle this issue”.
“The signing of this MOU brings the number of jurisdictions AUSTRAC shares regulatory intelligence with to five. This is in addition to its MOUs with 93 financial intelligence units in the global network – further strengthening AUSTRAC’s international network to track illicit funds across the globe”.
AUSTRAC intends to sign MOUs with other regulators in the United Kingdom in early 2020, including the Financial Conduct Authority and Her Majesty’s Revenue and Customs.
14 January 2020
This is a joint media release between AUSTRAC and WA Police Force.
Several people have been charged by WA Police Force as part of an investigation into a suspected Vietnamese Established Criminal Network involved in money laundering activity.
The investigation, which commenced in February 2019, was undertaken by WA Police Force’s Proceeds of Crime Squad - Meth Money Team. It was conducted in conjunction with AUSTRAC (the Australian Transaction Reports and Analysis Centre), with support from major banks ANZ, NAB, Westpac and Commonwealth Bank.
The investigation involved AUSTRAC’s Fintel Alliance – a public-private partnership that brings together government and industry partners to harness a collaborative approach to combat and disrupt serious and organised crime.
It is estimated the Established Criminal Network was involved in laundering over $5 million since February 2019.
14 January 2020
Outdoor Supacentre Pty Ltd, trading as 4WD Supacentre, has paid $63,000 in penalties after the ACCC issued it with five infringement notices for allegedly misleading consumers about ‘was/now’ price comparisons advertised on its website.
The ACCC has also accepted a court-enforceable undertaking in which 4WD Supacentre has committed to not engage in similar conduct.
Between December 2018 and January 2019, 4WD Supacentre advertised some of its highest selling products with a high ‘was’ price and a low ‘now’ price. This was despite the products not being advertised or sold by 4WD Supacentre at the ‘was’ price at any time during the previous three months.
For example, 4WD Supacentre advertised a camp oven with a ‘was’ price of $279 and a ‘now’ price of $84, representing an apparent saving of $195. In fact, the camp oven had not been advertised at a price higher than $104 for the three month period beforehand.
“We were very concerned that this was misleading consumers into thinking they could achieve significant savings with 4WD Supacentre, when this was not necessarily the case,” ACCC Acting Chair Mick Keogh said.
“Businesses must tell the truth when advertising “discounted” prices, and must not fabricate increased savings.”
“All businesses should ensure they provide consumers with accurate price information, enabling informed choices by consumers based on potential savings and an even playing field for competing businesses which are doing the right thing,” Mr Keogh said.
Under the terms of the court-enforceable undertaking, 4WD Supacentre will also publish corrective advertising and receive training in the Australian Consumer Law.
4WD Supacentre’s undertaking can be found on the ACCC’s website: Outdoor Supacentre Pty Ltd.
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.
Credit Matters is continuing to grow and provide marketing and knowledge about financial risks to the Australia business community.
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 email@example.com.
If you are interested in finding new ways to reach your marketplace, why not try Credit Matters. Our prices for advertising are very reasonable and advertising packages are on offer to make any cost, even more affordable. So if you are interested in reaching your customers at the right price, please contact Kim at firstname.lastname@example.org for options.