Carillion Report Reflects Outrage Towards Bosses

16th May 2018.

Carillion’s board presided over a “rotten corporate culture” and was culpable for its “costly collapse”, two committees of MPs have concluded.

The select committee recently reached a conclusion that an overhaul of the audit industry is required in the wake of the Carillion debacle, and most commentators agreed. The collapse of the construction giant gravely affected small and medium-sized businesses across the UK, and the effects are still felt by suppliers.

In the damning 100-page report, the Work and Pensions and the Business, Energy and Industrial Strategy committees called the Big Four accountancy firms incapable of providing what is needed, and called corporate Britain “toothless”. Ultimately the report warned businesses and regulators that in this current conditions, Carillion could happen again. Carillion’s collapse came about due to the mismanagement of the firm’s finances, and closer scrutiny needs to be paid to blue-chip companies to prevent history from repeating.

At the Credit Protection Association, many of our members were suppliers of Carillion and suffered harshly as a result. Carillion’s collapse highlighted the dangers of supplying goods and services on credit, and the severe consequence when a customer does not pay on time. While our debt recovery services free up cash flow for our members, it is our credit management products that keep them protected. Credit checks and status reports keep late payers at bay, and keep our members well protected against another self-imploding construction giant.

The report called for a potential break-up of the big four audit firms after they “waved through” the indebted construction firm’s accounts.

And they attacked the government for lacking “decisiveness and bravery” to tackle corporate regulation failures.

The MPs said regulators should consider disqualifying the directors.

Carillion collapsed under a £1.5 billion debt pile in January. It employed 43,000 people, about 20,000 of them in the UK, thousands of whom have lost their jobs.

Frank Field, chair of the Work and Pensions Committee, said: “Government urgently needs to come to Parliament with radical reforms to our creaking system of corporate accountability.”

A Cabinet Office spokeswoman said it had recently announced measures to support government suppliers, including strengthening its commitment to “protecting staff, businesses and small suppliers from irresponsible directors”.

It said it would “respond fully” to the committees’ report in due course.

Carillion has been on the tip of everyone’s tongue since its collapse. It raised awareness of the severity of late payment and the vulnerability of the supply chain. When Carillion fell, it left all its suppliers millions of pounds in debt, as a consequence of repeatedly accepting services it knew it couldn’t afford to pay for.

While we would all prefer cash, achieving sales through credit can sometimes be the only option available. When competitors are offering customers the financial flexibility of business credit, businesses can feel pressured to do the same. However, the subsequent upturn in sales will swiftly be contradicted by the damning negative impact on cash flow. Supplying on credit demands a loyalty and assumed trust in the customer, so a scrutinising eye over financials is essential.

Supplying on credit can be positive, as long as the correct checks and precautions are conducted. At the Credit Protection Association, our debt recovery services free up cash flow and leave our members in a stronger financial position to return to trade. In this turbulent climate of late payers and bad payment practices, we encourage our members to utilise our credit checks and status reports to keep a keen eye on every customer and ascertain that there is nothing that could smear reputation and brand.

We fight to the tooth for our members, particularly those who have suffered from late payers such as Carillion. We’ve recently created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commercial Debts (Interest) Act 1998, unlocking hidden cash and potential in our members and their prospects.

The moral of the story is small suppliers should be assertive in handling late payers, and not worry about damaging the business relationship. At the Credit Protection Association, we are dedicated to keeping this important relationship intact and our communication with the debtor is always courteous but always firm.

 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 on Linkedin

CPA on facebook

CPA on twitter

See all our latest news here!

Sign up here to our newsletter to receive periodic links to our best stories and blogs

Keep up to date with the latest news by following us on social media:-

 

Watch the video to find out how CPA can help you!

 

How many excuses are there for non-payment?

Click the image to discover step by step advice on how to deal with them!

 

 

 

 

 

Discover how to improve your cashflow in 3 steps.

Click the image to find our answer to the question “How can you get paid on time?”

 

 

 

 

Read our blog – Debt collection agency

Read our Cash Flow Advice

Read about our overdue account recovery service

Read our blog – What is credit management?

Read our blog -What is a credit management company?

Read our blog -Credit Management that works!

Read our blog – How to select a debt collection agency

click to see read about our successes

P