December 1999 - Small Business News

INTERNET

 

BT Announce Unlimited Surfing Fees

 

'BT Surftime', subject to satisfactory agreement with Oftel, will be available from Spring next year - and will consist of a range of unlimited usage packages for a single monthly fee. They will be aimed at both heavy and infrequent users of the Internet. Customers of Internet Service Providers (ISPs) offering subscription-based and/or 'pay-as-you-go' free access services will be able to choose the pricing package that best suits their surfing needs. Designed to expand the market overall - now growing at more than 100 per cent a year - the BT Surftime options will be: 

 

Weekend Internet option - a £6.99 per month charge for unlimited access at the weekend plus any applicable ISP subscription charge. On weekdays, customers will be charged at only one penny per minute evening and night-time and two pence per minute during the day. 

 

Evening and night-time Internet option - a £6.99 per month charge for unlimited access during the evening and night-time, Monday to Friday, plus any applicable ISP subscription charge. At weekends, customers will be charged at only one penny per minute and two pence per minute on weekdays. 

 

Daytime Internet option - a £26.99 per month charge for unlimited access during the day, Monday to Friday, plus any applicable ISP subscription charge. Outside this period customers will be charged at only one penny per minute. 

 

Anytime Internet option - a £34.99 per month charge for unlimited access at anytime, day, evening and night-time, and weekends, plus any applicable ISP subscription charge.

 

'Pay-as-you-go' Internet option - Internet calls charge at one penny per minute evening, night-time and weekend as well as two pence per minute during the day, plus any applicable ISP subscription charge. In addition, ISP charging a monthly fee can bill BT customers through their BT account. Source:  BT 

 

CREDIT CARDS

 

Credit Card Rip Off

 

A Sunday Times (ST) survey estimates interest on credit cards to be overcharged by £2.5 billion - "about £80 for each of the 30m cards that are not paid off every month." They say, "this would make credit cards the biggest financial rip-off in the financial services industry." With a possible 18 different rates of interest, problems arise from manual input of credit taken:interest category, that said, the lenders computer systems are also thought to be at fault. 

 

The ST also blew the whistle on an estimated £4 billion erroneous bank charges, and £1 billion of mortgage interest over-charging. The ST are to continue the investigation (which we will report). Source: Sunday Times

 

 (Ed: If the findings of the ST credit card survey are correct, I can see myself affording a 15  

       day luxury holiday in the Bahamas on the refund. What, you too!) 

 

MORTGAGE

 

Unfair Penalties Under Review

 

The Sunday Times also report "at least 14 of the country's biggest banks and building societies charge up to a month's extra interest after a homeowner moves or remortgages." The lenders are charging a full months interest regardless of when the old mortgage is settled. Someone settling a mortgage on the 4th December will be charged interest to the 31st December: being 27 days over the period that the mortgage was repaid. "The practice would cost someone on a £100,000 standard variable rate mortgage about £520. Northern Rock say that prices will go up if they stop the practice and Bradford & Bingley it's an 'historical' system, that's now under review. Source: Sunday Times 

 

SURVEY

 

R.I.P. E-Mail Support

 

A new report from Jupiter Communications finds that despite the critical need for more substantial customer support, the number of email queries being answered is decreasing. The survey sent customer inquiries to the top 125 web sites in the retail, travel, content, financial services and consumer brand sectors and found that customer service failure rates are higher than last year. Only 37 percent of companies surveyed have integrated three or more customer service channels on their web sites.

 

While half of shopping sites responded within a day and 40 percent of travel sites responded in one day shopping sites demonstrated a 40 percent failure rate, up from 28 percent last year while travel sites had a 48 percent failure rate up from 38 percent. Just under half of all web sites tested, 46 percent, either did not respond for five days or more, did not respond at all or did not have contact details on their site for customer queries. In the same survey last year, this figure was 38 percent. According to Jupiter, the most frequently trafficked sites have to process upwards of 50,000 transactions per day and many are finding that fulfillment of these orders is stretching customer service resources. As a result, online marketers need to start implementing multi-channel automated strategies to retain existing customers. 

Source: NUA Ltd

 

FIRST TUESDAY GROUP

 

The Bug Could be a Virus 

 

Two untouched excerpts from users of the First Tuesday Group

First Tuesday North 

 

"We have just received a warning from an anti-virus specialist (poacher turned gamekeeper ?) about some idiots in Holland who have established a competition for the best Y2K virus. The prates involved have set up "game rules" with the only requirement being that each entry has to be a virus/trojan or backdoor, and preferably related to the Millennium Bug or the year 2000. Quoting (after editing) from the (hackers) site : "The viruses that will be sent for the Y2K infection feast [sic] will be sent 4-5 days before the release to AV companies. The one that gets detected last will be the winner. Words fail me. I'm told there are almost 50,000 viruses floating around the world now. It's a real pain that some stupid ***** ***** is going to further waste my time over Y2K, just when I don't need the hassle. I'm sure you don't either. 

 

What to do? We're disconnecting our email servers from the WWW and setting up an email service on a standalone PC. This standalone machine will do ALL email downloads from real soon now until well after New Year. We'll keep that machine loaded to the gunwales with the latest anti-virus software and will endeavor to ensure that any virus outbreaks are thus contained. Remember also that the major anti-virus companies have all agreed to provide FREE 90-day versions of their software to cover this period.

 

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"If loss of business results in any way, directly or indirectly, due to Y2K, whether real or not (and don't forget the insurers will claim more is due to Y2K than is not in order to claim the validity of their disclaimers for Y2K) , and thoughts change to claiming damage, then it is important to ensure you, your customers and suppliers do not rush to the courts (that is unless you enjoy throwing loads of money at lawyers). The best way to sleep easy on that is to immediately exchange mutual letters of commitment with suppliers and major customers (and with the public through additions to your on site Terms & Conditions)

 

SHORT BITS

 

Hmmm That's Interesting (or Worrying)

 

A recent survey conducted by Cranfield School of Management in conjunction with Microsoft finds that 73 percent of British executives do not believe technology is strategic to the growth of their business (God help us!).

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 The Chancellor, Gordon Brown, is considering a tax, VAT and National Insurance amnesty for "informal economy" workers (black-economy) who come forward. Those that do not come clean will be positively targeted - for the first time. 

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TOPIC

 

Part 2. An Overview of Credit Control

 

The Topic concentrates on payment and debtors, as opposed to systems and procedures of accounting. Next week’s article will provide an overview to Debt Recovery. If a Credit Policy has at it's heart sound decision making, Credit Control has 'control'. This point is often overlooked by companies  that push every sale and 'wait and hope' for debtors to pay invoices on time.

 

The 'control' does not start with receiving a delivery note, an order, or whatever procedure is used to notify credit control of a customers purchase. The control must start with a level of authorisation/involvement in agreeing real-time credit limits and periods: sales staff, sell and credit control, controls.  The next stage of control is to raise an invoice a.s.a.p. and certainly within 72 hours: the invoice payment is controlled by a visual time limit, say 30 days, and your credit policy (which the customer has a copy of) sets out the conditions and penalties in respect of every invoice raised.

 

Where possible, further control is established by calling the debtor after 48 hours to confirm: goods/service received, no problems exist, and invoice received and set up for payment. Where payment has not been received, to a maximum of 72 hours overdue, a call, a visit or letter (depending on industry and goods/service) is initiated to control and establish a new time-table for payment, say a further 48 hours. 

 

If after the extended period no payment has been received further action needs to be taken immediately: there is little point in saying "let's wait and see what happens", as nothing will happen.  Another visit, a telephone call, or a letter  that escalates your  urgency is required at this stage to show the debtor that you still  control the situation, if not the actual payment. 

 

You may suggest part payment now, the  balance in 7, 10 days or even take some goods back (this option is not used enough in my opinion). If you have still not received the payment after one to one negotiation you have to accept you have a BAD DEBT. 

Next Newsletter: An Overview of Bad Debt 

 

As an extra bonus this week, we have written an article on: 

 

Payment Warning Signs

 

Most companies that fail to pay their creditors usually show one or a number of early warning signs. The following list, by no means complete, will give you a point of reference, but you should not act on any one piece of information. That said, you will  have to do something other  than 'watch the situation'. If the cheque signatory is away for more than a couple of weeks, telephone someone else that knows the signatory (better if this is someone that the  signatory is a friend of) you can then say, "I have not seen Bob (the signatory) for some time", the friend  replies, "he was in the club last Friday"!

 

In a situation where the customer has made you wait for a cheque, and the cheque is from a different bank/new bank, drawn on a personal cheque (etc.), you should consider a stop on further deliveries/services. You should obtain a credit report or/and a new bank reference (you should do this periodically, whatever the situation). 

 

Whatever you choose to do in response to a warning sign be fully satisfied as to the customers ability to pay. If you cannot satisfy yourself ask the business owner outright. Say, "I have noticed 'this and that' and it puts me in a difficult position. I know this could be due to any number of reasons, but if one of the reasons is a lack of cash flow then I need to be aware of the risks involved, and find a way to help you through this period as I want to keep your business." 

 

If you have a business relationship that allows you to ask the owner outright, from the start, ask them! Once you know the reasons you still have to make an impartial decision: this decision may include a degree of known risk, but it will be your decision. 

 

xxxxxxxxxxxx The Warning Signs xxxxxxxxxxxx

1. A new signatory - especially if new signatory not known 

2. Cannot meet 30 day invoices after 50 days: after 60 days you have a bad debt 

3. A change in order patterns 

4. A Change of banker Signatories away for longer than 2 weeks 

5. A change of director/secretary 

6. Customers product constantly changing - out of normal goods/services supplied 

7. A change in payment pattern Customers premises in disarray - stock levels low 

8. Customer pays cash on delivery 

9. Bad rumours in the industry, from customers staff, your sales staff, other creditors 

10. A change of delivery/invoice address 

11. Cannot contact customer by telephone 

12. Customer will not return messages/answer phone 

13. Customer will not accept reasonable resolvement of queries 

 

It is difficult to turn away sales on a hunch, gut feeling or any one of the above warning signs. One way of thinking is to imagine what damage would be caused to your company and cash flow if the creditor was to file for insolvency - if your conclusion is somewhere in the area of having to secure bank funding to meet the shortfall in cash flow, you need to make 'hard and fast' decisions.