November 2021
As mentioned previously, we are working on the development of a new business model for Credit Matters, which will take a little time. One of the changes has been to review our telephone contacts. As such, the only valid number is now + 61 411 649 261
In the meantime, we will continue to send our monthly newsletters and if you would like to promote your business services you can still contact Kim at kim@creditmatters.com.au.
As always, Kim is available to help with your questions and concerns if you need any assistance.
Please note it doesn’t hurt to make contact if you have any questions or realise you need help. It will hurt however, if there are actions you could have taken but didn’t because you didn’t ask for help, or ask the questions that are worrying you.
“It's not what you look at that matters, it's what you see.” Henry David Thoreau
One of the main factors seen today is the lack of management foresight which has already cost many businesses a great deal. Alternatively, management has failed to change their operation and business model to acknowledge the current circumstances and prepare for the future.
Change is occurring at an ever-increasing rate, even more so than in the previous “normal” pre COVID-19 world. There are a number of businesses which have adapted magnificently. Others have seen the writing on the wall and are adjusting their business models to account for the current and future business environment.
There are unfortunately, the usual suspects which are the naïve, the arrogant, and the zombie businesses owners, which have failed to change their ways. Alternatively, others simply cannot see any proactive way out of their troubles and so continue to exist in the hope they can somehow survive until better times.
Failing to see the real world as it exists now and failing to understand what the new normal may look like, means unfortunately, you do not control any aspect of your business’s destiny in the future. The consequences of you not seeing and understanding what is happening around and the information provided by your own business affairs, can be fatal. It means for instance, missing opportunities to minimise losses, or to find profitable opportunities.
The ability to see and understand your business’s true state of affairs provides opportunities to take actions early to reduce losses and protect your long-term reputation and assets for the future. On the other hand, you may be able to enhance the survival rate of your business, overtake and take advantage of your competitors, or find new products or services by adapting your current business formats.
A perfect example of not seeing reality, which is often missed by management, is the truth of their financial figures in the debtors ledger and associated reports. It is these areas where the information is readily available to improve the viability and profits of your business. Again, the proviso is that you must truly understand the figures. After all, the information may reveal the potential amount of cash sitting in your customers’ bank account that should be in your bank account, or the problem areas within the business which show a lack of attention to resolve problems.
The lack of attention to this one area cannot be emphasised enough in light of the current business environment and the likely development of negative factors in the immediate future. There are many other areas of the business which can also be reviewed for improvement. One of the key reasons for this lack of attention is, I suggest, because business owners and management see the information in the media and in their financial reports. Regretfully, however, all too often they do not seem to understand what they are seeing.
It is often said a business’s employees are its greatest assets. What is not mentioned is the caveat which points out, employees need to be treated properly, should be experienced and well trained, so they are also committed to the long-term welfare of the business.
If the above conditions are not met, then the opposite is true. In that case, the employees may cause more problems than they are worth. After all, they are only seeking to satisfy their basic needs, or they find ways to benefit themselves against the long-term benefit of the business.
As the old saying goes, “You only get what you pay for.”
Therefore, when your employees are paid less than they are worth, or are deemed to be cheaper to employ than experienced and professional employees, it is unlikely these employees will be committed to the long-term welfare of the business.
In the current business environment, experienced and committed employees are often the difference in the survival of the business or in losing it. From another perspective, experienced employees committed to the business also make less mistakes, understand your customers and these attributes often leads to increase sales.
One final point is worth noting. The expense of seeking and training new employees is well documented and often far more expensive than keeping existing employees. For instance, it is said the average cost of hiring a new employee in Australia in 2021 is about $21,000 and the process takes 8-12 weeks.
The conundrum therefore is to decide whether it is better to employ new and cheaper costing and inexperienced employees, or keep the more expensive employees? The decision you make may be the difference in the survival or loss of your business
We operate in a business world which suggests debt is good and savings is bad. A number of experienced and wise businesspeople would dispute this business ethos. Recent experiences under Covid also suggest that debt has not always been a friend. In fact, debt has caused the demise of many businesses lately.
As a result of the above encouraged debt ethos, currently there are endless opportunities for businesspeople to access finance. These opportunities are provided by governments, banks finance companies and private investors. In truth, under the right circumstances, taking on debt can be beneficial for the long term success of your business.
The problems with taking on debt however are rarely explained or discussed. In fact, there are many negatives on taking debt, which include but not limited to:
The benefits of savings however include but not limited to:
Despite the current ethos that debt is good and saving is bad, the current business world shows us that perhaps debt is not always good. Yes, at times, additional debt can add value to your business. As the evidence shows since the advent of Covid however, debt has also been the ruination of many businesses, with long-term negative consequences.
On the other hand, savings offer a number of positive financial, time and emotional benefits, and have been found advantageous for many businesspeople since the start of Covid. Unfortunately, many of the benefits of savings have often not been considered or advocated at the same time.
The inconvenient truth is that debt is not always good, and savings has many benefits. Perhaps this should be the real message for these times.
All businesspeople need to be aware of the ramifications of inflation and stagflation on their businesses. These situations are being increasingly discussed in the media and in business these days.
The most important aspects of these factors are in the raising costs to your business and customers. In such situations, every party will need to spend more on the basic needs for their businesses and personal lives.
Raising costs and a lack of product also affect the ability of your business to honour its trading agreements in the supply of products and services as agreed under your signed trading agreements.
Unfortunately, no businessperson can rest on their laurels for too long or fail to be aware of what is happening around them. As a consequence, they need to be aware of the effects of inflation and stagflation on their business.
Updates courtesy of www.asic.gov.au
04 November 2021
Zyra Meka of Shepparton, Victoria has been disqualified from managing companies for four years due to her involvement in the failure of four companies.
Between December 2016 and October 2019, Mrs Meka was a director of four traffic consulting companies:
Global Traffic (Vic) Pty Ltd (A.C.N. 169 936 556) (GTV);
Global Traffic (Qld) Pty Ltd (A.C.N. 169 936 547) (GTQ)
Global Traffic Australia Pty Ltd (A.C.N. 169 938 845) (GTA); and
Global Road Safety Pty Ltd (A.C.N. 614 895 591) (GRS).
ASIC found that Mrs Meka had:
failed to exercise her powers and discharge her duties with the degree of care and diligence required of a reasonable director in respect to each of the companies;
failed to understand her directors’ duties to effectively manage and direct the companies;
engaged in management duties of GRS from April 2019 to October 2019 while she was an undischarged bankrupt;
failed to prevent GRS and GTA from trading while insolvent;
failed to properly account for, provide for and pay the employee entitlements of GRS, totalling $928,893; and,
failed to register GTA for payroll tax.
The total amount owed to creditors by the four companies exceeded $17 million, including more than $8.5 million owed to the Australian Taxation Office (ATO), and over $1 million owed in payroll taxes.
05 November 2021
21-295MR ASIC and ATO engage with directors as part of ASIC’s Phoenix Surveillance Campaign
Between 1 July 2020 to 30 June 2021, ASIC and the ATO conducted 21 joint engagement consultations with directors of selected companies.
These engagements form part of ASIC’s Phoenix Surveillance Campaign, which aims to proactively deter and prevent company directors from engaging in illegal phoenix activity. ASIC, in collaboration with the ATO, engage with company directors to remind them of their director duties, discuss their taxation obligations, and encourage them to seek professional and reputable business advice early if they are experiencing financial distress.
After engaging with the directors, 80% of all outstanding ATO returns were lodged and evidence suggests that the program has had a positive impact on directors behaviour.
08 November 2021
ichard Ludwig, of Broadbeach Waters, Queensland, has pleaded guilty to intentionally dealing with the proceeds of crime and 10 counts of breaching his directors’ duties, after engaging in activity that involved illegally removing company assets to prevent creditor access.
Mr Ludwig was charged on 1 March 2019, following an investigation by ASIC (19-047MR).
Mr Ludwig was a director of Cap Coast Telecoms Pty Ltd, which operated a number of telecommunication stores in Queensland. He sought advice from Stephen O’Neill and John Narramore of pre-insolvency firm SME’s R Us to provide advice and assistance regarding a dispute with a creditor of Cap Coast Telecoms.
Mr Narramore and Mr O’Neill devised an asset protection strategy which involved issuing fictitious invoices by companies under their control to Cap Coast Telecoms for services that were never provided.
18 November 2021
Former financial adviser, Mr Ezzat-Daniel Nesseim, of Gordon NSW, has pleaded guilty to five criminal offences at the Downing Centre Local Court.
Mr Nesseim previously ran the financial services business, Smart Financial Strategies and has pleaded guilty to:
dishonestly providing three backdated wholesale client certificates to ASIC in an attempt to persuade ASIC to cease or modify its inquiries;
giving false answers and information to ASIC, both under oath and in response to statutory notices, after questions were raised about these certificates;
making use of evidence he knew was fabricated, including doctored emails attached to his written statement and purported witness statements from individuals, in a hearing before an ASIC delegate; and
giving false testimony in a hearing before an ASIC delegate.
Mr Nessiem has been granted conditional bail and has been committed to the Sydney District Court for sentence.
28 October 2021
IBAC corruption prevention work reaches more Victorians with transition to online forums and events
Victoria's independent anti-corruption agency, IBAC, continued to prevent and expose public sector corruption and police misconduct this year with a shift to online forums and events, making them more accessible to all Victorians.
Tabled to Parliament today, IBAC's annual report outlines the agency’s performance for 2020/21 which included hosting and presenting at over 60 forums or speaking engagements, many of them online.
IBAC Commissioner, The Honourable Robert Redlich AM, QC said that IBAC's corruption prevention work is critical to bringing together key community and public sector stakeholders to raise awareness of public sector corruption and police misconduct issues.
"While COVID-19 impacted many parts of our organisation, one positive change was the use, and broad community and stakeholder acceptance, of online events and forums. This shift enabled us to reach more people and strengthened our ability to raise awareness of public sector corruption and misconduct, and ways to prevent it."
01 November 2021
Warning on cartel conduct risk in public sector tenders
The ACCC is warning public sector agencies to be alert to the potential for collusion between bidders during procurement processes, following a recent ACCC investigation where departmental processes contemplated cooperation by competing businesses on government tenders.
Public sector procurement is a multi-billion-dollar sector which makes a vital contribution to the Australian economy and the welfare of Australian citizens and residents.
However, based on recent experiences, the ACCC is concerned that some public servants and businesses may not be sufficiently aware of the risk of breaching cartel laws during the procurement process.
“Cartel conduct by businesses tendering in a public sector procurement process is illegal, just as such conduct is illegal in the context of a private sector tender,” ACCC Chair Rod Sims said.
04 November 2021
Global container trade disruptions leave Australian businesses vulnerable
he COVID-19 pandemic has destabilised the global container freight supply chain, and delayed shipments and rapidly rising freight rates are putting intense pressure on Australian exporters and importers, a new report from the ACCC reveals.
The ACCC’s Container Stevedoring Monitoring Report 2020-21, released today, looks at the impact of the current global logistics crisis on Australia’s container trade, as well as the prices, costs, and profits of stevedores at Australia’s international container ports.
It finds that a surge in demand for containerised cargo and extreme congestion across the global supply chain have caused major disruptions and delays.
A number of Australian exporters are struggling to meet their contractual obligations, and some large retailers are so concerned that their cargo will not arrive before Christmas that they are buying their own shipping containers and chartering their own vessels.
16 November 2021
Pharmaceutical ingredient company pleads guilty to criminal cartel charges
Alkaloids of Australia Pty Ltd, a company which produces a pharmaceutical ingredient used in anti-spasmodic medication, has today pleaded guilty to criminal cartel conduct in Sydney’s Downing Centre Local Court.
Alkaloids of Australia pleaded guilty to three charges and admitted a further seven offences involving price fixing, bid rigging and market allocation cartel arrangements with other overseas pharmaceutical ingredient suppliers.
This comes only weeks after its former export manager, Christopher Kenneth Joyce, pleaded guilty to criminal cartel charges relating to the same conduct.
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.