Our new red flag competition is now underway and I look forward to receiving some interesting examples of business red flags. So far nobody has provided anything uniquely different which I can share.
Attached is a copy of Barry Urquart's newsletter about the NOW customer. There is also a brief complimentary article by Barry on the impact of the NOW customer in regards to managing business risks in our Special Topics feature of this newsletter.
Attached are brochures from Credit Matters regarding our free feature for Tradies in business and the Red Flag Competition - Challenge. Finally, but not least is Jeff Hurst's brochure about Trade Bureau Australia. If you are not sure how effective a trade bureau can be in helping you manage risk when offering B2B credit, have a read of Jeff's brochure.
“A penny saved is a penny earned” – Benjamin Franklin
Finding the right cost savings creates profits and does not have to negatively affect efficiency or destroy value. Too often however, we see how value is destroyed and profits lost through using the wrong systems and strategies to save on costs.
This occurs because management and owners create and stick to business models which are no longer relevant, or fail to learn and measure the costs of mistakes. They have also not learned the lessons of time which prove that invoices raised incorrectly usually end up as liabilities instead of assets.
As the business environment constantly changes and evolves, we often find that yesterday’s business heroes become today’s failures. Alternatively, those businesses which were thought of being too big to fail, do in fact fail.
One of the many reasons these businesses and business heroes fail is because they forgot the old saying, “A penny saved is a penny earned”. If they do remember this saying and its meaning, they mismanage the process of saving money by cutting costs inappropriately.
The best way to save money is not to spend it in the first place on unnecessary costs. These costs include:
processing credit claims and rectifying mistakes;
measuring the costs of mistakes, inefficiencies and the real cost of bad debts;
not answering customer enquiries promptly;
raising properly processed invoices which do not give customers an excuse to slow pay or avoid paying the invoice altogether;
strictly managing, whilst the business cashflow resources by reconciling accounts payable and receivables, etc.
Operating with a cheaper upfront cost mentality is not always the best solution to cutting costs to save money. Whilst cost minimisation is a worthy pursuit, there is more than one way to save costs rather than just using cheaper business inputs. Operating efficiently is the better policy because you are not wasting time and money fixing mistakes and spending money on unnecessary costs.
Today there is an increasing focus and belief that technology is the saviour of business because it helps saves costs by making your business more efficient. Many businesspeople believe they can also reduce employing expensive employees, and if they must employ somebody, they can get a “cheaper” employee.
We continue to find however, if the technology does not do what is expected, or cannot be customised to our needs at a reasonable cost, then it often causes more problems than it solves. In addition, as technology replaces employees, another set of problems is found.
Whilst employee numbers are reduced and possibly replaced by “cheaper” employees, existing employees become disenfranchised. The remaining employees may also no longer have the skills and knowledge to do the work required to keep the business operating efficiently.
The reason these situations occur, especially in troubled times, are because:
management has focused on operating cheaper rather than efficiently;
the employees which were committed have become disillusioned and stay because there may be few options for other employment;
the real “knowledge workers” of the business, which know how the business really needs to operate, are retrenched or leave for better opportunities, etc.
Technology that works properly combined with professional and committed employees often looks expensive upfront. Cheaper and out-of-date technology combined with “cheaper” employees MAY look inexpensive upfront in the short term. Inevitably however, survival of the best businesses over the long term usually shows that a cheap upfront policy leads to expensive repair costs and lost profits whilst a focus on working efficiently is the more effective way of saving costs.
Preparing a properly prepared credit application to try and ensure your business rights are protected is not cheap. If it is amended by your potential customer without notification and you do not pick up their changes, you may lose your rights.
The issue is not that the customer has amended your credit application; the real issue is that they have not explained what they did or why. By taking such action, your potential customer has indicated they will probably not trade with you in an open and respectful manner.
To some degree, we all depend on one another, whether it be a supplier or a customer, to have a degree of integrity. Without integrity, there can be no trust and without trust, we cannot possibly operate efficiently.
It is at this stage therefore it would be wise to consider whether you should offer this customer credit.
If you consider that you must extend credit, before doing so, you should conduct proper due diligence tests on the customer’s character, trading performance, plus the directors. You can also test their intentions by structuring a sales process with appropriate disciplines to try and minimise any possible loss.
Is the spelling free standing, free-standing, or freestanding?
Looking for kitchen appliances recently, the results returned In Google showed the use of free standing, freestanding, and free-standing, sometimes even in the one result. It is often said if there’s multiple ways to spell a word, you should be consistent with the spelling you choose.
The Australian spelling dictionary aims to provide the single spelling preferred in Australia, but sometimes, as in this case, it can be quite difficult to identify the single preferred spelling. A search of Google for sites from Australia (sites ending in .au) returns 5.41 million results for free standing and 6.37 million for freestanding. Because of the way search engines work, searching for free-standing with the hyphen, usually doesn’t return something we can have confidence in, as a hyphen is often treated as a word delimiter. Hyphens are also regularly used in the website URL (address) and these results will be returned by Google as well.
The Macquarie dictionary has the entry freestanding, but not free-standing. The Oxford Australian dictionary has free-standing, but not freestanding. Microsoft Word is no help at all as it will suggest freestanding and free-standing with the same meaning, and both free and standing are legitimate words in their own right.
It appears this may be a situation where the spelling is evolving. Often when there’s two words used as an adjective, the words will be hyphenated. However, as time goes on the hyphenated words drop the hyphen and the result is a single word. With freestanding exceeding free standing (and free-standing), this would indicate the preferred Australian spelling may now be freestanding, with the hyphenated version free-standing a secondary variation. The use of free standing as a two word adjective - when used in the sense of self-supporting, unconnected, independent – which is very common, would also not be the preferred spelling.
Updates courtesy of www.asic.gov.au
29 June 2019
ASIC has disqualified Lauren Darwin, Mount Gravatt, QLD from managing companies for the maximum period of five years due to her involvement in two failed companies.
ASIC found that Ms Darwin:
•took no reasonable steps to inform herself of the duties required of a director;
•neglected her responsibilities as a director;
•failed to ensure that the companies paid all relevant taxes;
•failed to ensure that proper financial records were kept;
•failed to act in the best interests of the companies; and
•enabled conduct that showed evidence of illegal phoenix activity.
The two companies were:
•SE QLD Business Services Pty Ltd ACN 611 479 264 (SE QLD), and
•CCW Queensland Pty Limited ACN 607 611 610 (CCW QLD)
04 July 2019
Mr Gilman Edwin Wong, the former Chief Executive Officer and director of Sirtex Medical Limited, has pleaded guilty to one charge of insider trading.
Appearing at the Downing Centre Local Court yesterday, Mr Wong pleaded guilty to one charge of insider trading. He was committed to the Sydney District Court for sentencing on a date to be fixed.
The insider trading prosecution relates to Mr Wong’s sale of Sirtex shares on 26 October 2016 while in possession of inside information.
04 July 2019
ASIC has identified, and removed from its corporate register, four Northern Territory company directors who have been disqualified from managing companies after being convicted of criminal offences involving dishonesty.
Identification was made possible due to the assistance of the Northern Territory Police Force.
The following directors have been disqualified and ceased as office holders:
•Colin Voeuk of Voeuk Investments Pty Ltd and Wyndham Community Store Pty Ltd;
•Aimee Pitman of Food is Life Pty Ltd;
•Christopher Paul Deutrom of HugoJohn Pty Ltd; and
•Walter Wilton of Dynavent Investments Pty Ltd.
ASIC has also banned Anthony John Lyness from managing companies for the maximum period of five years for his involvement in two failed companies (19-169MR).
‘If you are a director of a company and are convicted of a crime that involves dishonesty, you should remove yourself as a director immediately. Where ASIC becomes aware of this, we will remove those persons from the national corporate register. We thank the NT Police for their assistance in identifying individuals who should no longer be directors,’ said ASIC Commissioner John Price.
12 July 2019
ASIC’s review of the sale of consumer credit insurance (CCI) by 11 major banks and other lenders has found that the design and sale of CCI has consistently failed consumers.
ASIC’s report (REP 622) highlights the very low value of CCI products and the unfair way they are promoted and sold to consumers. This work forms part of ASIC’s broader priority to address fairness to consumers and, in particular, harms in insurance.
ASIC’s review found that:
•CCI is extremely poor value for money – for CCI sold with credit cards, consumers received only 11 cents in claims for every dollar paid in premiums. Across all CCI products sold by lenders, only 19 cents was recovered in claims for every premium dollar which consumers paid.
•CCI sales practices caused consumers harm: ◦consumers were sold CCI despite the fact they were ineligible to claim under their policy
◦telephone sales staff used high-pressure selling and other unfair sales practices when selling CCI, and
◦consumers were given non-compliant personal advice to buy unsuitable policies.
•Consumers were incorrectly charged for CCI, including being charged ongoing CCI premiums even though they no longer had a loan.
•Many lenders did not have consumer-focused processes to help consumers in hardship make a claim under their CCI policy.
19 July 2019
ASIC is inviting feedback on its proposal to ban unsolicited telephone sales of direct life insurance and consumer credit insurance (CCI). Such a ban would prevent the sale of complex insurance products which consumers do not need, want or understand.
Before it makes a final decision, ASIC has today issued a consultation paper seeking views on the proposed ban (CP 317).
On 11 July 2019, ASIC published REP 622 Consumer credit insurance: Poor value products and harmful sales practices which identified unfair sales practices that were consistently failing consumers, and recommended a ban on unsolicited telephone sales of CCI.
theBankDoctor offers free banking and finance advice to help small business owners get the best business banking set-up.
29 May 2019
The continued impressive growth achieved by Prospa post last year’s aborted IPO coinciding with the fall out from the Banking Royal Commission highlights just how important non-bank lenders have become for the future of Australian small businesses.
Prospa is the dominant player in the online small business lending sector and the first to IPO. The reputation of this sector rests heavily on its fortunes. In some circles Prospa has been described as an SME lender of last resort, a modern day equivalent of a finance company that takes on high risks in return for high returns.
Such descriptions do Prospa and its customers a disservice. I see Prospa as a user friendly, small business lender (mainly for sums less than $50,000) that provides quick and easy access to finance to businesses that would otherwise find it difficult or even impossible to get support from traditional lenders. It doesn’t require property as security and is prepared to lend to businesses that have a short trading history as well as those with blemished track records. And for this they charge accordingly.
15 June 2019
AUSTRAC has released new case studies to make you aware of indicators of money laundering, terrorism financing and other serious financial crime.
The case studies include a ‘what to look out for’ section that lists suspicious behaviour and transactions. They also explain how business reporting contributed to the detection and prosecution of offenders.
AUSTRAC values our business and industry partners as critical allies in the fight against domestic and international financial crime.
Read the case studies:
Joint-agency effort disrupts international crime syndicate
AUSTRAC disrupts large-scale international money laundering syndicate
Suspicious deposits lead to arrests and frozen bank accounts
International crime-fighting effort smashes global money laundering network
AUSTRAC links Australian assets to suspects wanted for crimes in China
AUSTRAC reveals overseas investment scam defrauding Australians
Business owner jailed for ‘phoenixing’ to avoid tax
17 July 2019
The Fintel Alliance, an AUSTRAC initiative, recently supported law enforcement in tracking down and arresting a criminal syndicate that preys on Australia’s most vulnerable.
Through working in partnership, Fintel Alliance analysts from government agencies and the Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac provided financial intelligence that allowed police to quickly dismantle the operations of a criminal syndicate in Western Sydney.
The Alliance was able to provide NSW Police with financial intelligence about a 79-year-old customer who had $20,000 stolen from him. The enhanced financial intelligence from the Fintel Alliance enabled detectives to move quickly to arrest the head of the syndicate, a 25-year-old man from South Wentworthville, and dismantle the syndicate’s operations.
26 July 2019
Victoria's Independent Broad-based Anti-corruption Commission is pleased to host the 7th Australian Public Sector Anti-Corruption Conference (APSACC) in Melbourne on 29-31 October 2019. The theme for APSACC 2019 is 'Identifying challenges, finding solutions'.
APSACC is the leading anti-corruption event in Australia, with its focus on preventing, exposing and responding to corrupt conduct and corruption risks in public institutions, including all levels of government, elected bodies, the judiciary and statutory bodies.
APSACC 2019 will provide a further opportunity for anti-corruption and other agencies, academia, the private sector and other practitioners to discuss and share their experience and expertise.
The conference is expected to comprise plenary sessions, discussion panels and workshops that focus on research, trends, case studies and new methods for preventing, investigating and exposing corruption.
•Prof. Robert Klitgaard, Claremont Graduate University (United States of America)
•Ms Sarah Chayes, Author of the prize-winning book, Thieves of State: Why Corruption Threatens Global Security (United States of America)
28 June 2019
A review released today by the state's anti-corruption commission, IBAC, has found Victorian state government agencies are increasingly aware of corruption risks and exploring new ways to detect and prevent corrupt conduct, such as use of data analytics and the appointment of risk champions.
The review of integrity frameworks in 38 Victorian state government agencies also identified a number of ways the broader public sector could better detect and prevent corruption, such as applying robust due diligence processes for suppliers, and developing more interactive training and integrity-related performance measures.
IBAC CEO Alistair Maclean said the review was undertaken to help the broader public sector identify opportunities to improve their systems, processes and controls to prevent corrupt conduct which can undermine trust in government and the delivery of vital services and projects for Victorians.
"We encourage Victorian state government agencies to use the findings of this review to assess their own integrity frameworks and identify where they can improve," Mr Maclean said.
"Developing cultures of integrity and frameworks to prevent corruption must be a continuing focus for every state government agency. This review found some agencies have adopted innovative approaches using data analytics to detect potential corruption. That’s an area other agencies may be able to learn from."
14 June 2019
This information statement provides key information to help you consider the risks and opportunities associated with franchising. Every franchisor is required to provide this to genuine prospective franchisees in English.
It is also available in:
•Chinese simplified | 简体中文
•Chinese traditional | 繁體中文
•Hindi | हिन्दी
Franchising information statement - Chinese simplified 简体中文 ( PDF 244.15 KB )
Franchising information statement - Chinese traditional 繁體中文 ( PDF 254.04 KB )
Franchising information statement - HIndi हिन्दी ( PDF 111.85 KB )
25 June 2019
The ACCC has released its ninth annual report under the Water Act 2007 (Cth). The report provides information on the state of the rural water sector in the Murray–Darling Basin (MDB) for the 2017–18 financial year. It covers:
•an overview of climatic conditions, water allocations and other industry matters such as the expansion of perennial crops and energy input costs
•a summary of significant developments in MDB policy, legislation and governance over 2017 to 2019
•tradeable water rights activity for off-river infrastructure operator networks, and the associated charges applied
•transformation and termination activity reported by irrigation infrastructure operators
•changes in regulated water charges and trends across time, location, network type and Basin state for both on and off-river infrastructure operators
•spending on water planning and management (WPM) activities and the revenue from WPM charges reported by Basin states
•compliance with the water charge and water market rules enforced by the ACCC.
The ACCC invites stakeholders to submit any comments, feedback or questions on the report to the Water inbox: firstname.lastname@example.org
02 July 2019
The ACCC will be enforcing new rules that will benefit most electricity consumers by both limiting standing offer electricity prices and imposing new advertising rules on electricity providers under the new Electricity Retail Code. This code comes into force today in South East Queensland, New South Wales and South Australia.
From today, electricity retailers have various obligations under the code including:
•Capping their standing offers in line with the AER’s independently set default price and moving clients on current standing offers onto the lower price
•Advertising the prices and conditions on their market offers by reference to the default price so retail offers can be clearly compared.
From 1 July 2019, prices will decrease for many customers who have been paying excessively high standing offer prices. The Australian Energy Regulator (AER) has set maximum allowable prices for these standing offers and the ACCC will ensure that retailers are not charging more than they are allowed.
05 July 2019
The ACCC has instituted proceedings in the Federal Court against Samsung Electronics Australia Pty Ltd (Samsung) alleging it made false, misleading and deceptive representations in advertising the water resistance of various ‘Galaxy’ branded mobile phones.
Since around February 2016, Samsung has widely advertised on social media, online, TV, billboards, brochures and other media that the Galaxy phones are water resistant and depicted them being used in, or exposed to, oceans and swimming pools.
Samsung also advertised the Galaxy phones as being water resistant up to 1.5 metres deep for 30 minutes. The ACCC’s case involves over 300 advertisements.
“The ACCC alleges Samsung’s advertisements falsely and misleadingly represented Galaxy phones would be suitable for use in, or for exposure to, all types of water, including in ocean water and swimming pools, and would not be affected by such exposure to water for the life of the phone, when this was not the case,” ACCC Chair Rod Sims said.
24 July 2019
Scams reported to the ACCC involving identity theft or the loss of personal/banking information have cost Australians at least $16 million this year, and this figure is likely to be just the tip of the iceberg.
Four in 10 Scamwatch reports in 2019 involve attempts to gain information or the actual loss of victims’ information.
“If you think scammers might have gained access to your personal information, even in a scam completely unrelated to your finances, immediately contact your bank,” ACCC Deputy Chair Delia Rickard said.
“Timeliness in alerting your financial institution is absolutely crucial, and will give you the best possible chance at recovering your funds.”
Some of the ways scammers obtain personal or banking information are:
•phishing emails and text messages which impersonate banks or utility providers seeking your login details
•fake online quizzes and surveys
•fake job advertisements
•remote access scams in which the scammer has direct access to everything on your computer
•sourcing information about you from social media platforms
•direct requests for scans of your driver’s license or passport, often in the course of a dating and romance scam.
“No one is really selling an iPhone for $1, or rewarding the completion of a survey with expensive electronic goods or large gift vouchers. They’re scams to get your valuable personal information,” Ms Rickard said.
The NOW generation in business
By Barry Urquhart
A significant consequence of the migration of business to online, social and digital media is the transition of many interactions to be “transactional” in nature.
It is consistent with the desire for instant gratification, and integrated with the short-term characteristic of a majority of contemporary commercial relationships.
Loyalty, referrals and assured repeat business have been casualties in these phenomena. So too have been the practises of prompt payments and punctual responses.
Follow-up and follow through have become the mantra for astute credit managers and customer service specialists. Consistency, continuity and the dimensions of time and timing are key addictives to positive packages.
Most NOW consumers and clients assess opportunities in real-time (that is, NOW).
Past experiences, service practices and future expectations are marginalised. This is best addressed by investments in time, on-going two-way communication and relationships.
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.