July 2021
Due to the pandemic and other factors, we were unable to produce the audio versions of newsletters. I am pleased to advise the audio versions of our newsletters will recommence from this newsletter.
On another matter, the AICM has published my article “The Importance of credit management and accounts receivable in your marketing program” in their July magazine, available from today.
In August, there should be a new feature about understanding the positives of RISK.
As always, if you wish to promote your business services at an affordable rate, contact Kim at kim@creditmatters.com.au. You will be surprised at the value we have to offer.
Charles Dickens (A Tale of Two Cities)
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
Currently we are coming to the end of the first phrase of this recession. When you mention the word recession, most people, especially politicians, bureaucrats, legislators, businesspeople and conservative minded citizens, freeze up like an animal on the road in the headlights of a motor vehicle.
As a result, their thoughts gallop to negative outcomes, rather than positive outcomes. The truth is, in recessions, many people will be negatively affected, some to the point of no return to the point of total loss. Other people meanwhile will see limitless opportunities and realise that if they can get their personal and business lives in to order, they might do very well.
So, what causes these two different widely different opinions?
In the case of the negative minded people there will be those:
1 with historical family experiences and opinions;
2 which have lived their lives as though there was no tomorrow and as result, have little savings, or are mired in debt;
3 who are naturally conservative minded and reduce spending in an effort to conserve their finances in case the worst happens;
4 which have ignored the signs of the looming recession and are now caught out in a precarious position financially and emotionally;
5 who decided that insolvency/bankruptcy was unavoidable and kept spending anyway to get what they could before their credit and/or cash ran out;
6 with vested interests in peddling disaster type messages, or creating false images of positivity to try and stop the inevitable announcement of the recession
7 who relied upon the stories in the media and from “trusted” people that all was okay, etc.
The people who will do best however, are those who:
1 understood that recessions are a natural part of the normal business cycle;
2 saw the potential of a recession happening, even if they did not know what would actually cause the recession;
3 changed their private and business philosophies and operations to place them in a better position if the recession did occur;
4 reduced debt as much as possible and increased their cash savings;
5 took actions to protect their reputations;
6 spent conservatively for a time, whilst looking for those extra opportunities which always occur in a recession;
7 did not believe all they saw or read in the media, rather they kept their eyes wide open to see what was actually happening around them, etc.
There will some unfortunate souls who entered the recession already in trouble due to their previous lifestyles, or as a result of unforeseen, or unfortunate circumstances. Others have since been affected through no fault of their own due to lockdowns, business closures, lack of stock etc. For the rest of us, how we will be effected by the recession, largely depends on whether we have kept our eyes and ears open for the changes and the changes we have made to our circumstances.
In the case of those who suspected the worst may happen, and made plans early, may actually do very well. The rest who ignored all the signs of a pending recession, or thought they could live forever unhindered by the world affairs going on around them, may not be so lucky.
As our monthly quote says:
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
The fact is that both bad technology and bad employees can do immense damage to your business. Worse still, when you add bad technology and bad employees together, your problems increase exponentially.
Bad technology comes in many forms, yet it causes problems passively. Our technology tools can only do what they are programmed to do, and/or according to the price which management is prepared to pay. There are situations for instance, when management opts for a cheaper version of the technology, or cobbles together various programs into a system. They believe these are cheaper options as they focus on upfront costs and ignore any downstream costs.
Bad employees on the other hand, do things on purpose. The decisions and actions of inexperienced or disenfranchised employees, or those who do not have the best interests of their employer in mind, will be equally damaging. The acts of inexperienced employees will be due to a lack of training. The disenfranchised employee, or those with malicious intent, make deliberate decisions to suit their own needs.
Therefore, when management deems that bad employees can be replaced at little extra cost by technology, when it is not fit for task, then it just changes the nature of problems. In addition, if good employees, as well as the bad, are replaced by technology, this will add to the ongoing and different problems, at an extra cost. Too late, management often finds out that they are short of the good employees required to fix the problems of bad technology.
As always, when money is spent for the wrong reasons, for instance on bad technology or the wrong employees, it is wasted. In turn, even more money is then usually required to repair the damage caused by bad technology and employees.
One of the great inconvenient truths of business and life today is that we all operate in a 24/7 world, where almost nothing stops. For example, interest on your finance facilities, or the expectations of your investors never sleep. Many businesses however still operate for the minimum number of hours of the week, such as 9 to 5 Monday to Friday. Yes, a few businesses may have slightly extended hours where people are available to work with stakeholders. Meanwhile other businesses have digital facilities which allow them to interact with their suppliers and customers for longer periods of the week.
One of the things we have all learnt from the pandemic, is that the right people with the right technology, can work almost anytime of the week and still be very effective. In some cases, business has found their employees have been even more productive.
Unfortunately, many in management have failed to grasp this opportunity to extend their operating hours with their existing employees. This change usually comes with a minimum of costs. Instead, the favourite option seems to be to outsource functions to other countries, in other time zones. However, this solution, in the long run, is not always as viable or as cost effective as the upfront costs first suggest.
Meanwhile, if your employees are willing to work outside “normal” hours, and they are working more effectively selling and solving problems directly with your suppliers and customers more often, is this not an advantage?
With many costs being still incurred when the business is “closed” for business, it would seem that any extra hours which can be worked, offer another opportunity to reduce unproductive costs. Furthermore, the more hours in the week your people answer the phones or emails, means your operations are more cost effective. In addition, you have a sales and marketing advantage over your competitors, and that is not to be sneezed at either.
Helping your tradie friends in these times is really important. One aspect in particular is now evident, a shortage of product. Furthermore, when the product is in short supply, the price can be expected to increase.
It is important therefore, that your tradie friends have a clause inserted in their quotes, which are to be signed by the customer, includes a clause allowing for delays in supply of stock and/or price changes.
Further information can be obtained by visiting our website at www.creditmatters.com.au and where they will find a simple guide as a reference tradies in business. This guide can be downloaded to their phones or tablets free of charge for ready reference in case of need.
Updates courtesy of www.asic.gov.au
06 July 2021
21-162MR Debt management licensing regime has commenced
From 1 July 2021, providers of debt management services (including firms offering ‘debt negotiation’ or ‘credit repair’ services) are regulated under the National Consumer Credit Protection Act 2009 (National Credit Act).
This means providers of these services must:
hold a credit licence with an authorisation that covers those services (or act as a representative of such an authorised licensee); or
be operating in accordance with the transitional arrangements, specifically that by 30 June 2021 they:
applied to ASIC for a credit licence or variation that covers this activity (or have arrangements to act as a representative of a provider that has applied for a licence to cover this activity); and
are a member of the Australian Financial Complaints Authority (AFCA).
If providers of debt management services have not met these requirements, they must cease engaging in these activities.
19 July 2021
21-174MR MyBudget applies for AFS licence following ASIC investigation
Following ASIC’s recent investigation into MyBudget Pty Ltd’s (MyBudget) operating model, MyBudget has applied for an Australian financial services (AFS) licence.
MyBudget, a company providing personal budgeting services, has never held an AFS licence and was not authorised to provide financial services. MyBudget holds an Australian credit licence and is a member of AFCA.
20 July 2021
ASIC has made the ASIC reference checking and information sharing protocol (ASIC Protocol) that will give effect to the Financial Services Royal Commission’s recommendations to improve reference checking in the financial advice and mortgage broking industries. ASIC has also released guidance documents that will help Australian financial services (AFS) and credit licensees comply with their new reference checking obligations.
The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (the Act) introduces obligations on AFS licensees and Credit licensees to comply with an ASIC Protocol in relation to reference checking. The Act, and the ASIC Protocol, commence on 1 October 2021.
The ASIC Protocol sets out obligations for licensees to undertake a reference check and share information on an individual seeking to be employed or authorised as a financial adviser or mortgage broker.
28 June 2021
Digital currencies: Managing risk in a dynamic and innovative sector
Digital currencies, also known as virtual assets, are dynamic and rapidly evolving. In 2018, AUSTRAC began regulating digital currency exchanges, also known as virtual asset providers, for anti-money laundering and counter-terrorism financing (AML/CTF) purposes. Since then, there’s been significant growth in digital currencies and investment in meeting AML/CTF regulation.
To help you to detect and prevent financial crime, Australia and other members of the international Financial Action Task Force (FATF) developed the Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing which were published in September 2020.
28 June 2021
Customer due diligence: Source of wealth and source of funds considerations
Know your customer (KYC) procedures, including where appropriate, taking reasonable measures to identify the source of a customer’s wealth and the source of a customer’s funds are an important part of your AML/CTF program.
When undertaken effectively and appropriately this enhanced customer due diligence (ECDD) measure helps to harden the financial system against criminal abuse, and helps you manage your money laundering and terrorism financing (ML/TF) risks.
28 June 2021
New financial crime guide explains cuckoo smurfing
USTRAC’s Fintel Alliance has released a financial crime guide to help remittance service providers, banking and financial services businesses detect and report cuckoo smurfing.
Organised criminals use ‘cuckoo smurfing’ as a method of laundering money to disguise and integrate their funds across borders to profit from and further enable their illegal activities.
Generally this method of money laundering relies on exploiting the accounts of customers expecting to receive legitimate funds. These customers are often unaware that the funds transferred into their accounts are the proceeds of crime.
05 July 2021
Brownes Dairy pays penalties for alleged breaches of Dairy Code
Brownes Foods Operations Pty Ltd (Brownes Dairy) has paid penalties totalling $22,200 after the ACCC issued it with two infringement notices for allegedly failing to comply with the Dairy Code of Conduct last year.
The Dairy Code requires most dairy processors to publish on their websites, on 1 June each year, standard form milk supply agreements to cover all the circumstances in which they intend to purchase milk in the coming financial year on their websites. This allows farmers to compare processors’ minimum prices and contract terms.
19 July 2021
ACCC seeks feedback on safety of potentially deadly inclined sleeping products for infants
After a review into the safety of inclined infant sleeping products, the ACCC is now seeking views on how best to respond to these potentially deadly products.
Infants can suffocate when sleeping in so-called ‘infant inclined products’, such as bouncers, rockers, swings, loungers, bassinet-type products, wedges, recliners and sleep accessories due to the incline, curvature of the backrest and soft sleeping surface.
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 info@creditmatters.com.au.
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 info@creditmatters.com.au for options.