A new Members only competition will be starting from 1st of July and will run to June 30th 2020. If you can identify a new business red flag that is not on our list, you have the opportunity to win AUD200.00 for your efforts. Overseas Members are eligible to enter. It is free to join the Credit Matters Members club.
After reviewing our feature on Preferential Payments, we have amended the background information to try and make the concept of preferential payments easier to understand.
Our special topic this month deals with internet and telephone scams with information which can assist people who are potentially at risk.
The brochures attached with this month's newsletter are from Barry Urquart, Trade Bureas Australia, Australian Small Business and Family Enterprise Ombudsman about grants to assist with cyber security, CreditorWatch and Peter Nash - What Is Bugging You.
Don't forget, if you wish to promote your business services at an affordable rate, contact Kim at email@example.com. You will be surprised at what we have to offer.
As the leader Bjorn Eriksson told The Guardian:
‘When you have a fully digital system you have no weapon to defend yourself if someone turns it off.’
There is no doubt that the use of technology will increase in our daily business interactions. However, like everything else, when one thinks in a one-dimensional way, other factors with negative consequences are forgotten.
There are many articles on the benefits of technology which are usually put forward by converts and salespeople. These articles include the benefits of flexible payment options and the removal of cash from the business is very attractive, almost sexy in fact.
When we talk about the negatives of technology, because the topics and the outcomes are less attractive and may cost money, the proposition does not look so sexy. The typical reaction is, “… that will not happen” or “… we will sort it out on the day!” What usually happens in real life however, is that the problem cannot be sorted on the day.
Let us take the case of a bakery for example, which advises they will no longer accept cash. Sounds good until there is no power, or there is a denial of service of digital payment options. When this happens, potentially, that days production of products cannot be sold. After all, the bakery no longer has the means to accept cash and have also encouraged their customers to believe that cash is not required to buy their products.
Advertising is another industry which shows it doesn’t always understand the real world. Recently a bank’s advertising showed a young couple arriving at a farmer’s produce stall wanting to buy fruit. There was only a tin available for people to pay for what they wanted in cash. There was no EFTPOS facility. Whilst looking to pay, one of the people had already started eating the fruit. Their intentions to pay were good, however their ability to pay for the consumed fruit was compromised.
There is also the loss of sales if your customers do not want to pay by credit but only by cash. Surprisingly, even today, many people do not have a credit card or any other digital payment facility. They do have cash. Does a business just ignore these customers in their rush to adopt technology-based only payment systems?
In the US today, some states have banned cashless businesses. The reason is that the poor without digital payment options, are being denied opportunities to buy and therefore are discriminated against as a result.
Charities are another area which only think of payments by technology means. You may visit a charity’s website and find you can pay by phone or digitally via the website. There are no details however on how to donate by cash or cheque. Whilst these two payment methods may be discredited and looked down on by technology zealots, just remember, people may want to donate. By not making provision to accept payments by cash or cheque, the charity may well be doing itself out of much needed funds.
The only way technology works efficiently is when it is used properly for the right reasons and operational. Even then, the business must have the strategies and resources in place when it is not operational to remain functioning.
Payment practices are no different. When your organisation declares it will only deal with certain payment methods, it is in fact saying they don’t want customers who want to pay with cheque or cash.
If we look around the business community today and interact with our supplier and customer stakeholders, the one thing that stands out, is the lack of quality interactions.
It seems as the business community rushes headlong into working “cheaper”, there is some belief it can employ fewer people and those that are employed, do not need to have the skill sets and motivation of professional and well-trained employees.
Most business owners and managers however do not seem to understand how a cheap upfront cost philosophy usually results in expensive downstream costs. The reason for these increased costs is because of an increase in mistakes, lack of quality actions, more frequent enquiries and failing to complete tasks in a timely manner.
Business owners and managers also do not seem to measure the costs of incompetence, or understand the break-even costs of employing additional or more professional employees to stop expensive downstream costs.
Marketing professionals talk about developing a point of difference for your business. It would seem therefore, one clear advantage your business can have over the competition, would be to offer the best quality interactive experience with your stakeholders.
At the end of the day, no supplier will put up with customers which continually do not pay their accounts, make communication difficult, or raise false claims.
Likewise, no customer will continually put up with mistakes, time wasting and increased frustration from incompetent suppliers.
When you remove or try to manage human interaction between your business and its major stakeholders such as suppliers and customers, the outcomes are not always beneficial for anybody.
In accounts payable and receivable interaction for examples, we often find the help desk is anything but beneficial. It is my experience and that of many others, help desks rarely facilitate business transactions. In fact, help desks often lead to frustration, further delays in resolving issues and only seem to provide disenfranchised employees with an opportunity to avoid their responsibilities.
If help desks were meant to help manage costs and help create a more efficient and better service, then these outcomes are rarely achieved. The main reasons why help desks often don’t work is that management:
has installed the help desk as a way of saving costs by reducing employee costs;
is trying to manage the unmanageable true business-life circumstances with an artificial model of operations based on expectations rather than reality;
is rarely willing to admit the real cause of many contacts via the help desk may be caused by their decisions elsewhere within the business;
rarely reviews the information collected by the help desk to improve operations and reduce costs.
If any of the aforementioned circumstances are evident, then it is scarcely surprising to find that help desks cause more problems than they solve. Too often, as I have experienced, better service is rarely experienced because a contact is made via a help desk rather than directly with another supplier’s or customer’s employee.
Is the spelling help desk or helpdesk?
A very common situation is whether or not two words should be separated by a space, or joined together as a compound word. The term help desk/helpdesk is one such situation.
A check on the internet of Australian sites (limiting sites to end in .au using Google) returns 12.6 million results for help desk and 379,000 for helpdesk. However, most people aren’t aware of how to limit results to just include sites ending in .au, so if they did the same test without restricting the results, they would get 66.8 million and 73 million respectively. The reverse of the usage in Australia. This is a perfect example of why it isn’t wise to just accept the information you receive from Google, without understanding more about the results you’re seeing.
Microsoft Word accepts both helpdesk and help desk equally, meaning writers using Microsoft Word are often unaware they’re using a secondary spelling variation.
If you check the Macquarie and the Australian Oxford dictionaries, both list help desk as the primary entry and helpdesk as an also entry.
The primary spelling in Australia is therefore help desk with a space between the two words.
Updates courtesy of www.asic.gov.au
29 April 2019
Former company director, Christopher Edward Eric Skelly, of Lark Hill, Queensland, has been sentenced to imprisonment on one charge of fraud after an investigation by ASIC.
Mr Skelly was sentenced to three years and six months imprisonment, to be eligible for parole after 21 months.
Mr Skelly, a former director of C & G Group Industries Pty Ltd ACN 168 873 578 (C&G) was earlier found guilty by a jury of gaining a benefit, namely $529,380.72 for C&G, with intent to defraud by deceit.
Between 11 December 2014 and 12 January 2015, Mr Skelly deceived a factoring agency by emailing them an invoice and other documents that created the false impression that monies were owed to C&G by debtors, when in fact they were not. Relying on those documents, the factoring agency paid C&G a total of $529,380.72.
03 May 2019
Mr David John Leigh, of Sherwood, Queensland, has today been sentenced before the Brisbane District Court to seven years imprisonment, and will be eligible for parole after serving 22 months in custody, after earlier pleading guilty to three counts of fraud under the Queensland Criminal Code.
ASIC commenced an investigation in February 2018 after Mr Leigh’s then firm self-reported misconduct. ASIC’s investigation revealed that between 25 July 2017 and 9 November 2017, Mr Leigh, as the co-liquidator of Neolido Holdings Pty Ltd (Neolido), dishonestly redirected $800,000 from the Neolido external administration bank account into a bank account that he controlled. He went on to use the funds for his own purposes (18-339MR).
09 May 2019
HostPlus Pty Ltd (HostPlus) has paid a $12,600 Infringement Notice penalty issued by ASIC. The Infringement Notice related to alleged misleading claims about offering 'independent advice' in a recorded telephone message on HostPlus’ main consumer telephone number.
HostPlus is based in Melbourne and is licensed to provide financial services and act as trustee of specified superannuation funds.
From at least July 2016 to late March 2018, the recorded telephone message referred to a free consultation available to members with an Industry Fund Services Limited (IFS) licensed financial planner. It then referred to the advice as ‘independent’.
14 May 2019
ASIC has disqualified Mr Abdoul Rahim Fatrouni of Meadow Heights, Victoria, from managing corporations for 3 years and 6 months following his involvement in the failure of three companies.
The disqualification follows the appointment of liquidators to the following companies:
•ARP Plumbing Pty Ltd ACN 147 799 531 (ARP Plumbing);
•ARP Roofing Pty Ltd ACN 161 329 086 (ARP Roofing); and
•DIY Roofing Australia Pty Ltd ACN 610 479 082 (DIY Roofing).
After review of the liquidator reports, ASIC found that Mr Fatrouni:
•misused the corporate form by transferring the business of one indebted company, leaving insufficient assets to pay creditors, whilst continuing what was essentially the same business;
•in regard of ARP Roofing and DIY Roofing, failed to exercise his powers and discharge his duties as director with the degree of due care and diligence required by a director in that he failed to ensure statutory lodgements for ARP Roofing and DIY Roofing for more than five years;
•failed to maintain adequate records for ARP Roofing, with more than three years’ worth of transactions totalling more than $2,500,000 unable to be substantiated;
•in regard to ARP Roofing and DIY Roofing, failed to maintain adequate financial records.
Liquidators of the companies reported that the combined total amount owed to creditors exceeded $1.2 million.
The liquidators for ARP Roofing and DIY Roofing received funding from the Assetless Administration Fund to prepare and report their findings to ASIC.
Mr Fatrouni’s disqualification commenced on 8 May 2019 and will cease on 8 November 2022.
15 May 2019
Today ASIC initiated public consultation on new standards about how financial firms handle consumer and small business complaints. The proposed standards, which include new mandatory data reporting, will improve the way that consumer complaints are dealt with across the financial system and make firms’ complaints handling performance transparent.
Financial firms will be required by ASIC to meet the new standards when they deal with consumer complaints through their Internal Dispute Resolution (IDR) arrangements.
theBankDoctor offers free banking and finance advice to help small business owners get the best business banking set-up.
16 April 2019
We are pleased to publish this easy to understand and independent guide to what SMEs need to know when considering whether to borrow from a fintech lender.
Fintechs are playing an increasingly important role in enabling SMEs to access funds to maintain and grow their businesses but borrowing from a fintech is different to borrowing from a bank.
This 11 page guide produced jointly by theBankDoctor and the Australian Small Business & Family Enterprise Ombudsman answers these and many of the other questions SMEs may have about fintechs.
You can read the guide here Borrowing from a fintech lender.
If you have other questions, please feel free to reach out.
29 April 2019
Australians lost almost half a billion dollars to scammers in 2018 according to the latest figures in the ACCC’s Targeting Scams report released today.
“Total combined losses reported to Scamwatch and other government agencies exceeded $489 million – $149 million more than 2017,” ACCC Deputy Chair Delia Rickard said.
“And these record losses are likely just the tip of the iceberg. We know that not everyone who suffers a loss to a scammer reports it to a government agency.”
Targeting scams report 2018 infographic
Targeting scams report 2018 infographic
Investment scams are the most financially devastating scams at $86 million, an increase of more than 34 per cent compared with 2017.
Dating and romance scams also represent significant losses increasing from $42 million in 2017 to $60.5 million in 2018.
“These extraordinary losses show that scammers are causing significant financial and emotional harm to many Australians,” Ms Rickard added.
“Scammers are adapting old scams to new technology, seeking payment through unusual methods and automating scam calls to increase their reach to potential victims.”
01 May 2019
Australian businesses reported more than 5800 scams with losses exceeding $7.2 million in 2018, a 53 per cent increase compared to 2017, according to the ACCC’s Targeting scams report.
Much of this increase is due to the $3.8 million reported lost to sophisticated ‘business email compromise’ scams. When combined with losses reported to the Australian Cybercrime Online Reporting Network, these scams cost Australian businesses over $60 million.
“Scammers are hacking business email systems and impersonating the intended payment recipient. The scammers request changes to bank account details so that the business makes the payment to the scammer instead of the legitimate business,” ACCC Deputy Chair Mick Keogh said.
03 May 2019
Australians who are older, Indigenous or have disability reported record losses in 2018 according to the ACCC’s annual Targeting Scams report released this week.
Australians aged over 65 submitted over 26,400 reports to Scamwatch in 2018, with losses of over $21.4 million. This represents an increase of five per cent in reports but 22 per cent in losses.
“Scammers will scour dating sites and social media for older Australians who have recently divorced or lost a long term partner, taking advantage of those who are inexperienced with these sites and may be in a vulnerable emotional state,” ACCC Deputy Chair Delia Rickard said.
“Investment scams are the most financially harmful because the scammers invest time and money into convincing sales pitches, flashy websites and even glossy brochures.”
Older Australians looking to grow their nest eggs but who instead get caught up in investment scams reported losses of $7.6 million, and those misled through fake relationships reported losses of $5.8 million to dating and romance scams.
17 May 2019
The Federal Court has accepted admissions by GlaxoSmithKline Consumer Healthcare Australia Pty Ltd (GSK) and Novartis Consumer Health Australasia Pty Ltd (Novartis) that they breached the Australian Consumer Law by making false or misleading representations in the marketing of Voltaren Osteo Gel and Voltaren Emulgel pain relief products.
GSK and Novartis admitted that from January 2012 to March 2017, they marketed Osteo Gel as being specifically formulated and more effective than Emulgel in treating osteoarthritis related pain and inflammation.
In fact, Osteo Gel and Emulgel products are essentially the same.
An ACCC investigation found that despite having the same active ingredients, Osteo Gel was often sold at a significantly higher retail price than Emulgel. For example, Osteo Gel 150g cost 33 per cent more than Emulgel 150g in some stores.
Cybercrime and scams are increasing exponentially and with increasing sophistication.
It is an issue which the ACCC has emphasised this month with three media release, details are below.
Scams cost Australians half a billion dollars - https://www.accc.gov.au/media-release/scams-cost-australians-half-a-billion-dollars
Australian businesses hit hard by email scams - https://www.accc.gov.au/media-release/australian-businesses-hit-hard-by-email-scams
Vulnerable consumers lose record amount to scammers - https://www.accc.gov.au/media-release/vulnerable-consumers-lose-record-amount-to-scammers
There are many naive, inexperienced and older people which are battling to understand how serious these issues are today. Many of these people lack even basic knowledge on where to go for help or on how to identify approaches made by fraudsters.
If you aware of people who are having issues in understanding cybercrime and scams and may therefore be potential victims, you may be able to assist them by providing the above ACCC media releases.
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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