Are we witnessing the demise of the secure blue chip debtor?
David Hawkins, 28th May 2019.
Are we witnessing the demise of the secure blue chip debtor? Recent events, notably the liquidation of British Steel, the problems experienced by Thomas Cook and those of Sir Phillip Green’s Arcadia Group, have thrown into stark relief the credit assessment and collection problems faced by suppliers in dealing with larger customers and groups. In two of these cases, their problems relate clearly to Brexit.
Whatever your view of Brexit, there is no doubt that it, and the consequences of it, will not go away. Exporters and importers, many of whom are larger companies, will find it hard to quote competitive prices and a will suffer higher import costs.
Already retailers are suffering declining demand at least partly because of consumer uncertainty caused by the Government’s inability to deliver Brexit. Businesses large and small are craving for certainty which will not be achieved for some time. It may take years.
All of this will affect dramatically the credit management process, especially in SMEs.
There was a time, not so long ago, when the credit manager could rest easy in dealing with the relatively few, but bigger than average, credit exposures on major “blue chip” accounts. The main problem lay in getting them to pay according to agreed terms. With their power in the market place, bigger companies could (and still do!) force smaller suppliers to accept outrageously long payment terms so that the SME is effectively acting as an unpaid banker to the larger customer.
But at least you knew that you were likely to be paid at some point and could adjust your own payments to suppliers accordingly. In recent years, these certainties have been blown sky high. We have pretty much reached the stage, where the undoubted “blue chip” is a thing of the past and credit control resource and skill has to be directed as much towards blue chips as to smaller customers.
After all, the scale of the risk involved in selling to smaller accounts is dwarfed by that posed by sales to blue chips.
Obviously, so far as effective credit management is concerned, information is king, The more you know and find out about a company, the easier it is to control exposures and enhance cash flow. At CPA, we find that often, suppliers know very little about the overall financial and market condition of a major debtor, concentrating exclusively upon that part of the organisation with whom they deal day by day and not making efficient use of the information sources that are easily available.
Fortunately, alongside the growth of problems with the blue chips, these sources have evolved in recent years, On- line credit information is now available at an affordable price. It is now far easier to monitor the main developments within a company literally at the flick of a switch. The media is much better informed and more inclined to publish controversial but highly valuable, material than in days gone by. The Internet and social media have had an enormous impact upon information flows Much of this available data relates to larger companies which are experiencing trading difficulties – the media love to write about and broadcast bad news!
But many SMEs in particular, find it difficult to use such data, in considering the extent to which credit should be granted, either initially or with existing accounts.
Of course, on – line credit information can provide the means for granting initial credit, For smaller amounts, it is usually sufficient to quickly review the on line credit report and base a decision primarily on the recommended credit limit. For larger exposures this does not apply. Larger business that fail do not do so overnight – the causes of their problems are often deep rooted and can be identified by intelligent analysis of all of the information available.
So the information in the credit report should be scrutinised with care. Obvious features such as profitability, return on capital and net worth can be quickly checked out. But the trends within the business, which an on – line credit report can clearly identify, are even more important. In particular, trends in profitability and above all, cash flow, are vital. Secured borrowings should be reviewed with care, equally movements in the asset base. Fortunately, all of this and more is available on line and at very low cost.
Review of this data should be backed up by knowledge gleaned from all sources about the market sectors that the subject company addresses. British Steel, Arcadia, and Thomas Cook are all in difficulty because their markets have declined dramatically. Such decline will usually result in the slowing of payment to suppliers well before a final crises erupts. Late payment heightens risk for unwary suppliers – the slowing of payment, late or otherwise, is an even more accurate predictor of risk and damage.
Happily, help is at hand. CPA’s battery of credit assessment, cash generation, collection and credit protection products are designed to meet the needs of suppliers dealing with the spectrum of customers, large and small. Given the current uncertain future of the British economy, your may need this kind of assistance. To find out more …….
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
Do you have a problem with late payments?
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply to businesses on credit help us help you identify the risks. Spot those companies ignoring rules on payment and treat them appropriately.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cash-flow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cashflow.
Don’t let your bankers control you, contact CPA today.
CPA practices what it preaches
The Credit Protection Association has a policy of turning round invoices as quickly as possible and paying our suppliers as soon as the invoice is authorised. Many invoices are paid in the same week they are received. A large number the same day.
This is true, even if the supplier offers 30 days credit terms.
And we switched from paying most suppliers by cheque, to paying by bank transfer because we want our payment to arrive quickly and for it not to be unexpectedly delayed nor be a hassle to bank.
Why?
Because we are passionate about late payment and want to lead by example.
But what to do?
Do you realise you may have hidden capital tied up in your business?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you need extra capital, rather than shutting down or jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden stash of cash within your business, sitting there, just waiting to be uncovered and released?
We can help you uncover a hidden goldmine, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could be the cash rescue your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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