We are looking forward to our new Competition - Challenge commencing on the first of July. Be sure to visit our website to obtain full details and have a go. We welcome the participation of our overseas acquaintances and those wishing to become a Credit Matters Member.
The Australian Small Business and Family Enterprise Ombudsman has focused on the protection of tradies and subcontractors with their flyer which we have attached to this newsletter. Accordingly, we thought it timely to add details of our own free feature Helping Tradies To Get Paid.
I have added a second attachment from the Australian Small Business and Family Enterprise Ombudsman on Small businesses hurt by financial misconduct encouraged to file legacy complaints. If you know a small business owner who has been disadvantage by another business, this information may of value to them in making a claim.
Other attachments with this newsletter include my own article which appeared in the AICM magazine pointing out the value of employing a professional credit manager or a person well versed in accounts receivable. Finally, there is an introductory brochure from Global Data offering a range of products suitable for small and medium sized businesses.
Don't forget, if you wish to promote your business services at an affordable rate, contact Kim at firstname.lastname@example.org. You will be surprised at the value we have to offer.
A written agreement is better than 10 verbal ones.
CMI Credit Mediators Inc.
TERMS OF TRADE/CREDIT AGREEMENTS MAXIMISE YOUR CHANCES OF BEING PAID.
One of the essential factors in business is an effective trade/credit trading agreement. Of course, just because you have a properly prepared agreement and the customer signs that agreement, there is still no certainty it can protect you from bad debts or slow payers.
A properly prepared agreement signed by the customer however is still one of the most useful tools for any business. Conversely, having an out-of-date trading/credit agreement, or one that has been cobbled together from other agreements, is a financial disaster just waiting to be put in to action.
One of the main benefits of having a signed and properly prepared agreement is that it sets the boundaries of the trading relationship between the supplier and the customer. A good agreement is one that is suitable for your business and customer type(s), is up to date and prepared by a lawyer which is active in debt collection who is prepared to defend their work in court, and helps protect the interests of the business.
Depending on the type of business and range of customers, it may be prudent to have different types of trading/credit agreements. This will help protect your business from the different customer types and marketplaces which may be targeted. There are times when a simple agreement with few terms on it is all that is required. Other situations may call for a more complex agreement.
Trading/credit agreements are also great selling documents when used properly because they also show up the integrity of the customer before any goods and services are supplied.
Some customers refuse point blank to sign agreements and these customers should only be supplied for cash up front with cleared funds. Other customers will sign the document and strike out certain clauses without warning you. Again, these customers should perhaps only be sold on an upfront basis, or at best on restricted terms. They have after all warned you that they are testing the strength of your business practices and are not prepared to be open about their way of doing business.
Other customers will want to negotiate in good faith and there is nothing wrong with that approach because they are upfront about how they like to do business. Perhaps these customers are the best type because you have the best chance of structuring a profitable relationship.
Finally, there are those customers which will sign your agreement with no intention of honouring it. You only damage your business needlessly if you continue to do business with them after finding out about their deception.
Once you have a properly prepared and signed agreement, there are so many potential opportunities to collect the debt if your debt collector or lawyer understands the laws of debt collection. Going through the courts with an aim of just getting a judgement is only one aspect of debt collection. There are many more cost-effective options if you have an open mind and a good debt collector or lawyer. It all begins however with a properly prepared trading/credit agreement suited to your business, customer and marketplace.
When creditors seek payment from their debtors for unpaid invoices, they are finding their ability to be paid within terms is being effectively reduced. The reasons for this change are costs, court processes, legislative escape clauses for debtors and a changing attitude by debtors to paying their debts.
In addition, should the credit provider be paid, an insolvency administrator can still come along six months after the debt has been paid and claim the funds as a preferential payment.
In such an environment, many creditors must wonder if granting B2B credit is still a profitable exercise? That is a fair call because the point of business is to make profit. If your sales process does not allow a profit to be made because the debtor has too many options available to avoid payment, then why offer credit at all?
Business people also forget the principle reason why there is little B2C (business to consumer credit) today. Basically, too many consumer debtors just did not pay their debts and creditors were virtually powerless to effectively collect the debts.
Can this situation be repeated in B2B credit? Well of course it can and we are already seeing this happening because in some industries B2B credit is no longer offered. In these industries there is no hesitation in demanding cash upfront or part payments.
Therefore, is it still practical for your business to extend B2B credit these days? Amongst the benefits of not offering credit is the removal of all the associated costs involved in selling on credit. Remove these costs and you can offer a cheaper price and it becomes a compelling sales tactic if sold properly.
Risk is a normal part of business and you ignore the possibility of risk to the detriment of your emotional wellbeing and bank balance. It is a wise businessperson who understands the risks associated with business in general and within their specific industry.
There are many businesspeople today who operate on the principle that risk will not affect them, the cost to manage the problem if it occurs can be managed, or they can avoid it all together by just closing down their business.
Businesspeople may avoid some of the costs by walking away or ignoring the problems caused by risk to some degree. In the long term however, most will not as they find the costs of risk avoidance continue to haunt them for many years in to the future.
Today there are no secrets; directors and officers of a business are finding they can still be held accountable for avoiding risks, insurance policies no longer protect the guilty as once they might have, and insolvency and bankruptcy laws have changed.
In recent years there has been the involvement of litigation funders which have also changed the landscape when it comes pursuing perceived and actual failings of businesspeople.
There are many different types of risk in the modern business environment as business practices and responsibilities have changed. Therefore, all businesspeople should accept that managing risk is usually a better proposition then trying to avoid risk.
Is the spelling breakeven, break even, or break-even?
It’s very common where a word can be used as a compound word, two separate words, or with the two words hyphenated. Sometimes all three can be correct based on your usage, but at other times one or more may be a secondary spelling, or may be incorrect usage.
If we check breakeven, break even and break-even using Google, and limiting sites to sites ending in .au, the number of results returned are: 67,400, 156,000 and 161,000 respectively. The Australian Oxford Dictionary only lists break even. The Macquarie Dictionary lists both break even and break-even. Neither dictionary lists breakeven which indicates breakeven as a compound word may not be correct. Those using Microsoft Word should take care as Word accepts breakeven as a valid spelling.
The Macquarie Dictionary describes break-even as a noun derived from the phrasal verb break even, thus break even is a phrasal verb. E.g. Usage as a phrasal verb. The company aims to break even by year end. Usage as a noun. The company may never reach break-even. In addition break-even can be used as an adjective. The company needs to know their break-even point.
Whether break-even or break even is used depends on your usage. At least in Australia, breakeven as a compound word, should most likely be considered to be an error.
Updates courtesy of www.asic.gov.au
31 May 2019
ASIC has released new information to help businesses involved with initial coin offerings (ICOs) and crypto-assets to consider their legal obligations and satisfy themselves they are operating lawfully.
ASIC has updated Information Sheet 225 Initial coin offerings and crypto-assets (INFO 225) based on our recent experiences with ICOs and crypto-assets, which indicate that ICOs and crypto-assets will often be financial products or involve financial products that are regulated under the Corporations Act.
INFO 225 provides information on how the Corporations Act may apply to businesses that are considering raising funds through an ICO and to businesses involved with crypto-assets.
01 June 2019
The Federal Court of Australia has today delivered judgment in ASIC’s civil penalty proceedings against Vocation Ltd (In Liquidation) and its officers, Mark Hutchinson (former CEO), John Dawkins (former Chairman), and Manvinder Gréwal (former CFO).
The proceedings relate to various statements made to the Australian Securities Exchange (ASX) and in documents relating to a fully underwritten placement to institutional and sophisticated investors in September 2014 and a review undertaken by the Victorian Department of Education and Early Childhood Development (DEECD) into two of Vocation's main registered training organisations (RTOs).
The Court found Vocation Ltd contravened:
•section 1041H(1) of the Corporations Act by making misleading and deceptive statements to the ASX and UBS AG Australia in a 25 August ASX announcement and in a due diligence questionnaire (DDQ) the latter formed the basis for a placement in September 2014 which raised approximately $74m from investors (the September 2014 Placement), and
•its continuous disclosure obligations under section 674(2) by not disclosing to the market the actions taken by the former DEECD in July and August 2014 when it suspended all payments to Vocation.
Further the Court found that
•Mr Hutchinson and Mr Dawkins contravened section 180 of the Act by causing or permitting Vocation’s contravention of section 674(2) of the Act.
•Mr Hutchinson contravened section 180 of the Act by causing or permitting Vocation’s contravention of section 1041H in relation to the 25 August Announcement and the DDQ.
•Mr Gréwal contravened section 180 of the Act by causing or permitting Vocation’s contravention of section 1041H in relation to the DDQ.
The matter has been stood over to 6 June 2019 for a case management hearing to appoint a date for hearing of all remaining questions, including those arising under sections 1317S and 1318 of the Act (relief from penalty); the form of any declaratory relief; all questions of penalty and all questions of costs.
05 June 2019
Former Chief Financial Officer of Octaviar Limited, Mr David Mark Anderson, of the Gold Coast, Queensland, appeared in Southport Magistrates Court charged with twenty-six counts of fraud under the Criminal Code (Queensland).
ASIC alleges that between 18 June 2012 and 21 September 2015, Mr Anderson, while a director of Octaviar Investment Holdings No 3 Pty Ltd (OIH3), dishonestly applied $4,611,571.86 of OIH3 money for his own use.
At the time of the alleged conduct, Mr Anderson was the sole director of OIH3.
The charges were brought against Mr Anderson following an ASIC investigation into his conduct as the director of OIH3 and other companies in the Octaviar Group.
Mr Anderson was released on bail on condition and the matter adjourned to 2 September 2019 before the Southport Magistrates court for further mention.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.
06 June 2019
Ms Soutsakhorn Chanthabouly (known as Nicole Khammenathy) of Carnes Hill, NSW has been convicted and sentenced after pleading guilty to charges related to illegal phoenix activity.
Ms Chanthabouly was charged with one count of breaching her director duties and another count of destroying company records, following an investigation by ASIC. She was sentenced to a one-year, $500 good behavior bond and ordered to pay $22,000.00 in reparation.
Ms Chanthabouly, a shadow director of MK Asbestos Removal Pty Ltd ACN 142 918 590 (the Company) operated a business of asbestos removal services in New South Wales.
12 June 2019
The Federal Court of Australia found, on 7 June 2019, that Whitebox Trading Pty Ltd and its sole director and principal, Johannes Boshoff, did not engage in market manipulation in contravention of section 1041A, and contraventions of 1041B, of the Corporations Act in connection with orders they placed on ASX Limited for securities comprised in the S&P ASX 200 Index (Index Securities), on 18 October 2012, as well as on four earlier dates in 2012. Accordingly, the Court also found that Mr Boshoff did not fail in the discharge of his duties as a director of Whitebox.
ASIC is considering the judgment.
On 23 December 2013, ASIC accepted an enforceable undertaking (EU) from NAB in relation to its responsibility for the alleged market misconduct of Whitebox's trading personnel. Read about the EU and further details about the 18 October 2012 orders in 13-365MR.
13 June 2019
ASIC has received enquiries from overseas-based investors about an entity named My Group Fintech Co Pty Ltd (MGF). There appears to be an Australian registered company, as well as a Saint Vincent and The Grenadines-based company with the same name. These entities may be related. Reports made to ASIC indicated that clients who invested through another overseas-based entity Managed In Assets (MIA), recently discovered zero balances in their foreign exchange trading investment accounts, held with MGF.
My Group Fintech Co Pty Ltd with ACN 615 855 840 is an Australian financial services licensee headquartered in Sydney. This company holds Australian Financial Services Licence (AFSL) 493603.
My Group Fintech Co Pty Ltd with registration number 24375 IBC 2017, appears to be incorporated in Saint Vincent and The Grenadines
18 June 2019
On 1 November 2018, the Federal Court of Australia made asset preservation orders against Chris Marco, trading as Coastline Group, and a related entity, AMS Holdings (WA) Pty Ltd as part of an ongoing ASIC investigation. A copy of the orders can be found here.
The effect of these Orders is to:
•secure property (including cash in bank accounts, real estate and vehicles), while ASIC conducts its investigation; and
•preserve those assets, and prevent unauthorised disposal of those assets, which might in due course, be required to pay debts, compensation or damages to any persons who may have suffered loss as a result of the conduct that ASIC is investigating.
ASIC is aware of a number of investors who have investments with Mr Marco and his associated entities.
ASIC has to date approached a number of investors to seek information from them for the purposes of its investigation.
Further information can be found in:
•ASIC’s Media Release 18-354MR which can be found here or at www.asic.gov.au. This media release relates to the court proceedings commenced by ASIC on 1 November 2018 and is updated from time to time with editor’s notes;
•The Federal Court website at www.fedcourt.gov.au which contains information about any orders made and a list of documents filed in the court proceedings, including affidavits filed by ASIC in support of its proceedings. To find this information:
◦Select [Find a Case];
◦Type in “WAD481/2018” in [Search by File Number];
◦Click on the red coloured and underlined words, “WAD481/2018” that is underneath the heading, “File No”;
◦Click on the cross next to the word, “CORPORATIONS” to expand the list;
◦Click on the cross next to the word, “COURT EVENTS AND ORDERS” to see a list of the Orders made by the Court;
◦Click on the cross next to the word, “DOCUMENTS FILED” to see a list of the documents that have been filed in these proceedings.
Investors wanting information about the ongoing court proceedings in relation to Mr Marco and his associated entities can complete a form and apply for access to some of the court documents. Information about how to apply for access is at https://www.fedcourt.gov.au/services/access-to-files-and-transcripts/court-documents/non-party-access.
Investors can also contact the ASIC investigation team by email at CMarcoinvestorliaison@asic.gov.au.
As the investigation is ongoing, ASIC is limited in the public commentary it can make about the matter at this time.
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.
04 June 2019
New IBAC campaign promotes reporting of public sector corruption
IBAC is calling on all Victorians to realise the pivotal role they can play in preventing public sector corruption in a new campaign launched today.
The Yes, it’s corruption. Yes, I can do something about it campaign encourages Victorians to recognise and report public sector corruption to IBAC, the state’s independent anti-corruption agency.
The campaign is in response to IBAC research that found most Victorians don’t know what to do about corruption if they encounter it, even when they know what corruption is. The research also found that Victorians feared victimisation if they did make a report.
“IBAC understands that it can be hard to speak up and report wrongdoing. There are a number of options available when reporting corruption such as whether to make your complaint anonymous,” IBAC CEO Alistair Maclean said.
"Public sector corruption it is not a victimless crime. It wastes taxes and rates that should be used to operate and maintain Victoria's schools, hospitals, roads and other vital public services and projects. And it damages the reputation of organisations and undermines community's confidence in the public sector," Mr Maclean said.
“IBAC is reliant on information from the community to help stop corruption. Corruption is by its nature secretive and often difficult to detect, and most of our investigations started as a result of well-informed tip-offs.”
04 June 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)
Find out more about the keynote speakers.
The conference will also provide opportunities for developing professional networks across areas of expertise and jurisdiction.
IBAC looks forward to welcoming delegates and others to Melbourne for APSACC 2019.
The formal call for abstracts has now closed. However, if you have a presentation idea that you would like to propose, please email email@example.com.
25 May 2019
The Full Court of the Federal Court has dismissed the ACCC’s appeal against a ruling that there was insufficient evidence to find that PZ Cussons Australia (Cussons) engaged in cartel behaviour in the laundry detergent market.
“We took this action because the alleged conduct related to an essential household product that is frequently purchased and used by Australian consumers,” ACCC Chair Rod Sims said.
“The ACCC takes cartel conduct extremely seriously, due to its impact on consumers and the wider economy.”
"Cartel conduct is an enduring enforcement and compliance priority for the ACCC,” Mr Sims said.
Today’s decision follows admissions by Colgate and Woolworths in 2016 that they engaged in anti-competitive conduct in the laundry detergent market, conduct for which they paid penalties of $18 million and $9 million respectively.
30 May 2019
The ACCC has instituted proceedings in the Federal Court against Sony Interactive Entertainment Network Europe Limited (Sony Europe) for making false or misleading representations to Australian consumers on its website and in dealings with Australian customers of its PlayStation online store.
The ACCC alleges that from around September 2017, Sony Europe told consumers seeking a refund for faulty games that it did not have to provide refunds for games that had been downloaded, or if 14 days had passed since purchase.
Sony Europe also allegedly told consumers it did not have to provide refunds unless the game developer told the consumer the game was irreparably faulty or otherwise authorised a refund. It also told consumers that it could provide refunds using virtual PlayStation currency instead of money.
The ACCC’s case is that these representations are false or misleading, and do not reflect the consumer guarantee rights afforded to all Australian consumers under the Australian Consumer Law.
06 June 2019
The ACCC is calling for feedback on a proposal to reauthorise the Australasian Performing Right Association’s (APRA) musical works licensing arrangements for a further five years with additional conditions.
APRA and its members, including composers, songwriters and publishers, hold performing rights for virtually all music played or performed in Australia, and earn royalties from those rights. In most cases, members assign these rights on an exclusive basis to APRA, which collects royalties by imposing licence fees on users of that music.
Many businesses that play music, such as retailers, cafes, bars and broadcasters, need to obtain and pay for a licence from APRA. The fees from these licences are distributed by APRA to its members.
APRA is seeking reauthorisation from the ACCC for its licensing arrangements, to remove any risk that they may breach competition provisions of the Competition and Consumer Act.
15 June 2019
The ACCC has issued a final notice revoking a resale price maintenance (RPM) notification lodged by Meredith Dairy, which would have prevented retailers selling its goat cheese products below a price set by Meredith Dairy.
Meredith Dairy had raised concerns that smaller retailers promoting its products at low prices to compete with major supermarket chains had led to demands from other retailers for lower wholesale prices.
The ACCC considered Meredith Dairy’s position, but decided that the reduction in retail competition resulting from the proposal would not be outweighed by any public benefit.
“In our view, the proposed conduct would have led to consumers paying higher prices for Meredith Dairy’s goat cheeses, and would have limited the ability of delicatessens and other small retailers to compete with big chains,” ACCC Deputy Chair Mick Keogh said.
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