BUSINESS
FAILURE
Return of
the Bad
Old Days
Business
failures
on the
rise,
reports
Dun &
Bradstreet.
Although
there has
been a
surge in
economic
growth,
business
failures
in the UK
are rising
at their
fastest
rate since
the early
1990s,
reported
Dun &
Bradstreet.
Business
failures
rose by
4,731 in
1999 to a
total of
43,365,
the
largest
annual
percentage
rise since
1992. The
number of
failures
was the
highest
since
1994's
total of
43,688.
Failures
peaked in
1992 at
62,767.
Source:
Accounting.Web
TAX
1 in 3
Paying Too
Much Tax
A report
in the
Sunday
Mail
(source)
says that
as many as
1 in 3 tax
codes
could be
incorrect.
Christopher
Walton, of
Exeter
based
Taxlink,
says, "Our
record for
a single
refund is
£3200,
though
many
clients
have
received
more
modest
amounts."
The main
areas of
concern
are:
'Married
Couples
Allowance'
'Additional
Personal
Allowance'
'Miras'
'Expenses'
Taxlink
charge 25%
of any
refund,
Graham
Lewis (ex
tax
inspector)
of
Cardiff,
who
anchored
the Mail
report
charges
20% of
recovered
amounts. A
call to
you own
accountant
on a
percentage
basis
should be
acceptable.
(Ed: With
the
overcharging
of
mortgages,
credit
cards,
overdrafts
and now
tax, what
is the
government
going to
do to get
the
culprits
to review
all
customer
financials,
refund the
amounts
and stop
the rot.
Answers on
a stamp to
....)
INTERNET
Cybersquatters
Kicked
Out
America is
putting
the boot
into
domain
name
squatters:
they who
register
domain
names in
the hope
of selling
the name
onto the
like named
company
for lots
of money.
Court
injunctions
are now
common
place
amongst
those who
can afford
to sue
'fast-buck'
individuals.
The basis
of the law
suits is
that an
established
company
has the
right to
occupy
their
natural
address ,
with the
law suit
being
further
proved if
the
cybersquatter
has the
domain set
up on the
net to
hoodwink
viewers to
visit the
imitation
site.
Virgin
settled
out of
court in a
similar
situation
a few
months
past.
Visa, the
credit
card
people,
tried to
register
their name
in
Australia
only to
find that
'Vomiting
Infants
Support
Association'
(visa) got
their
first.
Finally,
about 2
months ago
'business.com'
was sold
for
$7.5m.
TIP OF THE
WEEK
Don't Rush
for the
Bargains
PC and
mobile
phone
deals and
prices
look good,
but
technology
due out
this year,
improving
and using
these
products
together,
will
probably
make
current
models
obsolete;
the new
products
and
services
will
not be
backward
compatible.
Wait 12
months, or
at least 6
months to
buy a
cheap PC
or even a
second-hand
model, and
make do
with your
current
mobile or
the
cheapest
offer you
can
find.
SHORT BITS
Hmmm
That's
Interesting
(or
Worrying)
"35-dollar
benefactor rescues
Microsoft
Hotmail "
Microsoft's
52
million-user
Hotmail
system was
down over
Christmas
weekend
because
the
software
manufacturer
forgot to
pay a
35-dollar
invoice.
Accounting
(source)
US site
reported
that a
Linux
programmer
got the
system up
and
running by
paying the
registration
fee with
his own
credit
card.
Windows
2000 will
be
launched
on 17 Feb
00. As
ever, wait
for the
bugless
version
around
Sept 00.
The new
small
business
czar is
David
Irwin, ex
director
of Project
North
East, a
development
agency in
Newcastle.
Some say
he is a
bit of a
'lightweight'
and that
he will
lack the
power to
cause a
real and
immediate
change in
small
business
legislation.
Rumours
are that
small
business
red tape
will
increase
throughout
the year!
Don't
forget,
tax forms
are due by
31 Jan 00,
for the
period up
to 04/99.
You can
send them
late for
£100, with
interest
of 7.5% on
due
amounts
not paid
by 28 Feb
00, and if
you have
not sent
them by
June 00
you can
pay
another
£100 and a
further 5%
surcharge
(seems
reasonable).
TOPIC
Part 3.
Overview
of
Profitable
Debt
Recovery
In earlier
newsletters
we gave an
'Overview
of Credit
Policy'
and an
'Overview
of Credit
Control':
this
article is
as
important
as the
other two,
and
probably
more so as
all debts
at this
stage come
from, and
can add
to, the
‘bottom
line’.
Timely and
effective
debt
recovery
is
profitable.
How can
this be I
hear you
say!
It is a
fact that
most small
businesses
base the
recoverability
of a debt
against
the amount
outstanding
and the
perceived
cost of
action: I
even know
of one
company
boss who
set aside
a fixed
amount of
money for
all debt
recovery
action,
internal
and
external
in a one
year
period.
This type
of
thinking
almost
ensures
the write
off of the
majority
of bad
debts. To
remind
you, a
write off
of £500 at
10% net
profit is
equal to
£5000 of
sales.
If you are
willing to
‘do what
it takes’
to resolve
the debt,
you will
usually be
successful.
Only a
very small
percentage
of debts
that are
sent to
solicitors
or debt
recovery
agents
actually
end up in
court.
What they
do
‘quickly’
is find
the
debtor,
make
contact
with the
debtor,
and agree
an
arrangement
to pay the
debt. When
dealing
with the
debtor
they are
‘usually’
calm,
professional
and to a
degree
understanding:
empathy is
a very
strong
tool. They
can only
do what
you could
do
yourself.
If a bad
debt is
recognised
early, say
60days
overdue
(60 days
allow for
two month
ends,
cheque
runs,
debtor
admin
errors or
goods/service
queries)
the
factors
that allow
successful
recovery
are very
much
present,
being:
customer
contact,
freshness
of bad
debt,
mediation
action,
payment
arrangement
possibilities
and many
more.
Trying to
resolve a
debt at
this time
is a
window of
opportunity
if you are
willing to
negotiate
one or
more of
the
following
options:
Agree
installment
payments,
If the
customer
is using a
quality of
goods/service
type of
excuse for
non-payment
etc, agree
a
reduction
in the
amount
payable
and then
if
necessary
payment
arrangements,
Supply
more
goods/services
for cash
and some
payment
each month
to reduce
the bad
debt,
Put the
complete
debt on
hold until
the
customer
can
reduce/settle
the debt,
and
continue
to supply
goods/services
on a cash
or strict
credit
basis,
Take/use/sell
some of
the
customer’s
goods/services:
make sure
the
customer
owns the
goods
involved,
Whatever
you can
think of
that
ensures a
trading
relationship
continues,
without
increased
bad debt.
If you are
the
debtor,
you should
offer the
above
options to
your
creditor
as a
solution –
you may be
surprised
how easy
it is to
get one of
them
accepted.
So, as you
can see,
there are
many ways
to resolve
debts,
profitably,
if you act
early with
a
reasonable
solution.
But you
have to be
willing to
‘do what
it takes’
to get
over the
present
debt
situation
into an
ongoing
customer/supplier
relationship:
which you
should
want.
The
opportunity
to resolve
any debt
diminishes
by time
and a lack
of contact
to a
degree
where the
customer
is only
reminded
of the
debt when
the
supplier
sends an
arrears
letter,
or someone
rings the
customer
once a
month to
find out
if they
can now
pay. You
must get
‘up close
and
personal’.
You have
to pry
into the
debtor’s
financial
situation
to fully
understand
what is a
realistic
settlement
of your
debt. The
cases that
do end up
in court,
with the
creditor
and debtor
both
appearing
usually
agree on a
reduced
amount or,
more
likely,
payment
arrangements
once the
debtor has
laid out
their
personal/company
income and
expenditure:
of course
a legal
bill has
to be
paid.
When you
do have to
use an
outside
service:
solicitor
or debt
agency, be
sure to
have used
one of the
above
options –
even if
only as a
final
gesture so
that you
can tell
the court
that you
were
willing to
compromise
with the
amount and
timing of
the debt.
If you do
not want
to, or
cannot,
contact
the
debtor,
send a
letter
with your
offer to
the last
address
you have.
By doing
all you
can before
using
outside
services
you will
ensure
that the
services
you employ
will have
to earn
their
