CREDIT
CARDS
Illegal
Credit
Card
Penalties
Credit
Card
holders
who have
suffered
financial
penalties
due to
late
payment,
exceeding
their
balance,
or
bouncing
direct
debits may
have a
claim for
significant
part
refunds.
Lawyers
say that
the
penalties
appeared
to breach
the Unfair
Terms in
Consumer
Contracts
Regulations
1999, the
Consumer
Credit Act
1974, and
common law
to boot. A
court case
in 1998
between a
mortgager
and lender
ruled that
the amount
of penalty
was more
than it
was
forfeiting
as a
result of
the
breach. A
Barclaycard
customer
has
already
received a
£250
refund.
Source:
Sunday
Times
(Ed: I
don't know
what you
will do
with your
refunds,
but I'm
looking at
a nice
villa in
....)
UK
BUSINESS
5 Year
High for
UK
Business
A
report
from Euler
Trade
Indemnity,
the French
owned UK
credit
insurer,
says that
UK
business
is growing
at it's
fastest
rate in
five
years. The
index for
Domestic
demand
increased
from 46.7
to 52.9,
and export
from 43.4
to 47.4.
With the
strong
pound (£)
exporters
were
unlikely
to see
much
change.
Small
business's
should
look to
profit
from the
current
boom by
improving
sales
networks
and even
(with some
companies)
take this
opportunity
to employ
dedicated
sales
staff with
targeted
sales and
commission
structures
to help
them ease
into a
more sales
orientated
operation.
INTERNET
Internet
Rides
Radio
Waves
Patricia
Hewitt,
the Small
Business
and
E-commerce
Minister
on the 14
January
2000
announced
that
internet
users at
home and
in the
office
will soon
benefit
from fast
always-on
access to
the
internet
over radio
links. Ms
Hewitt
said the
Government
plans to
make radio
spectrum
licences
available
for the
new
broadband
fixed
wireless
access
services
in two
tranches.
It intends
to make
the 28GHz
licences
available
this
summer and
40GHz
licences
in the
autumn.
This
follows
the
consultation
'Wireless
in the
Information
Age'.
Business
and
domestic
users will
have
access to
broadband
services,
such as:
fast
always-on
Internet
access
over radio
links
without
the need
for cable
or
telephone
connections;
and,
high
capacity
data
transfer
and video
conferencing.
Ms Hewitt
said:
"There is
a high
demand for
interactive
multimedia
services
that is
set to
grow
dramatically
over the
next few
years.
Radio
links can
offer
quick
access to
these
services
and more
choice and
benefits
for
consumers
and the
economy.
"I want to
make sure
that
innovative
services
can be
developed
as quickly
as
possible
and this
will be a
major
consideration
in our
decisions
on how
best to
package
the
spectrum
and award
licences."
The
Government
will put
proposals
to
industry
for
spectrum
packaging
at the
first
meeting of
a
Broadband
Fixed
Wireless
Access
Consultative
Group on
14 January
(today) as
well as
seeking
expert
advice on
financial
and market
issues.
Proposals
for the
number of
licences
to be
awarded
and the
geographical
scope of
licences
are
expected
to be
announced
in March.
In
awarding
licences
the
Government's
overall
aim is to
secure the
timely and
economically
advantageous
development
and
sustained
provision
of
broadband
fixed
wireless
access
services
throughout
the UK,
for the
long term
benefit of
UK
consumers
and the
national
economy.
Subject to
this
overriding
aim the
Government's
objectives
are to:
utilise
the
available
broadband
fixed
wireless
access
spectrum
efficiently;
promote
early and
effective
competition
for the
provision
of
broadband
access
services;
subject to
the above
objectives,
design a
licensing
award
procedure
which is
best
judged to
realise
the full
economic
value to
consumers,
UK
industry
and the
taxpayer
of the
spectrum.
Source:
Creditman
Company
Reports &
Formations
(Ed: Are
you as
confused
as me?
Technology
is moving
so fast,
and wide,
with some
innovations
being
outdated
before
implementation.
My 'Tip of
the Week',
last week,
about not
buying
hardware
for at
least 6 -
12 months
is borne
out by
announcements
such as
this.)
TIP OF THE
WEEK
Free
Password
Software
Get
rid of
bits of
paper and
mind
clutter.
If you
have as
many PIN
numbers,
passwords
etc as I
do, a free
download,
called
'Whisper
32, from
Ivory
is worth a
look. It
will
encrypt
all input.
File size:
422kb (not
big).
SHORT
BITS
Hmmm
That's
Interesting
(or
Worrying)
Internet
Traffic:
In 1999
Yahoo came
in second
with 42
million
unique
visitors
while
Microsoft
was third
with 38
million.
AOL and
Lycos
remained
in first
and fourth
place with
54 million
and 29
million
visitors
respectively.
Yahoo's
increased
traffic
can
largely be
attributed
to its
acquisition
of
GeoCities
and
Broadcast.com.
Source:NUA
A new
(well, it
is to me)
search
facility,
Great
Britain
allows you
to search
any four
of the top
engines/directories/megasearch
at once
and then
get result
in four
separate
windows.
You can
then call
up four
different
sites to
view and
compare.
This is
the future
of the
desktop.
The Royal
Bank Of
Scotland
RBS is
offering
free
business
banking
until 2002
by post,
telephone
or
Internet.
The
Co-op's
e-bank at
Smile
is
offering a
£500 fee
free
overdraft
at 9.9%
EAR ('EAR'
?) and
interest
on savings
at 4.33%
AER ('AER'
?). EAR =
Equivalent
Annual
Rates AER
= Annual
Equivalent
Rate
(Ed: What!
are we
expected
to
understand
all this,
I think
not.)
To find
out your
revised
business
rates due
to come
into force
on 1 April
2000 go to
Open Voa,
for the
Valuation
Office
Agency
TOPIC
The
‘Rules’ of
Credit
1. A
Credit
Policy
exists,
and is
known,
understood
and
accepted
by all.
Your
Credit
Policy
should be
an
accessible
document,
resembling
an
induction
manual,
which
gives
‘step by
step’
instruction
for the
processing
of credit
applications.
This need
not be a
large
document
that
details
every
procedure
in minute
detail
(ideal if
you can),
but it
must have
certain
elements:
An
application
form with
full
details of
procedure
Underwriting
authority
levels
Reporting
structure
for
seniority
The
administration
procedure
following
a credit
application
In a
detailed
Credit
Policy you
would
expect to
find the
complete
system and
procedure
from the
credit
application
through to
bad debt
recovery.
2.
Sales on
credit
terms
drive
sales, not
support
sales.
You
should
only
provide
credit to
your
customers
if you:
Can afford
to
You get
extra
sales that
you would
not
otherwise
get
You can
administer
credit
control
and debt
recovery
functions
You
should not
provide
credit if
you:
Cannot
afford to
Get
customers
who want
your
credit
more than
your
product
Have no
experience
or
resource
to
administer
credit
3. Terms
and
Conditions
of
Sale/Service
are
disclosed
to
customers/clients
and
applied.
Terms and
Conditions
say more
about your
credit
function
than any
other
action.
You are
telling
your
credit
customers
that
standards
are
applied
and, that
any credit
period
allowed is
a benefit
you
‘choose’
to give,
and not as
a right of
a trading
relationship
with you.
Always
send a
welcome
letter to
new
accounts
with all
their
account,
payment
and credit
limit
details:
why not
get them
to sign
one copy
to
acknowledge
the
content?
Ensure
your sales
people
never say
when
talking to
a
customer/client
“it’s OK,
I can sort
out a new
credit
limit for
you if you
need more
goods/service”.
4.
Input of
customer
data is of
a high
standard.
The
administration
of credit
accounts,
and your
cash flow,
can be
seriously
damaged if
you cannot
review all
of your
credit
account
details,
such as,
customer/client
account
reference,
name and
address,
contact
details,
balances,
arrears,
current
actions,
new
orders….
You must
have more
than faith
in your
staff and
systems.
Check your
credit
information
regularly
and
improve
constantly.
5.
Credit-check
existing
customers
on a
regular
basis.
Accept at
an early
stage that
customers/clients
will not
be 100%
honest
with their
financial
standing.
It is a
human
trait that
we all
describe
credit as
a useful
tool,
whether
commercial
or
personal,
in truth,
for many
of us it’s
an
absolute
necessity.
One or two
financial
checks per
year are
worth the
time and
effort
only if
you are
prepared
to respond
to the
results of
the
checks.
6.
Debtors
are
monitored
to
identify
sales,
creditor
status and
payment
risk.
A credit
function
will
provide
you with
useful
statistics
that can
be used as
a sales
tool as
much as
for risk
analysis.
When we
talk of
credit we
talk in
the
negative,
‘make sure
the limit
is not
exceeded’,
‘no more
until they
pay’ etc.
But there
is another
way by
positive
credit
vetting.
If you
allow a
customer,
say,
£5,000
credit
limit, and
they
usually
only take
£2,500,
you are
loosing
out on a
possible
12 x
£2,500
(£30k per
annum):
simple but
true. If
you can
afford to
provide
credit to
capture
increased
sales from
a current
customer
who under
uses a
credit
facility,
go for it.
The credit
status of
your
customer/client
should
have a
procedure
where the
level of
their
ability to
pay is
reflected
in an
updateable
rating. If
your
customers
are rated
as A, B
and C
grades (A
= low
Risk, C =
High Risk)
you need a
system to
move their
level up
or down.
The effect
of this is
to gear
your
business
to satisfy
grade ‘A’
customers/clients,
where and
when
possible,
ahead of
other
groups.
Finally,
the
statistics
over a
period of
time
should
provide
you with
payment
trends
that will
reflect
your
customer/client
yearly
financial
ups and
downs. An
obvious
example
being
seasonal
trade:
almost
every
company
has highs
and lows.
7.
Payment
terms are
enforced
and cash
targets
are set.
Late
payment by
sixty days
can wipe
out the
profit of
a sale. A
further
sixty days
can, with
administration
and
finance
costs,
cost you 5
– 10% of
the amount
outstanding.
Your
payment
terms
should not
be
negotiable.
If your
customer/client
does not
have real
funds to
pay you,
get THEM
to
overdraw
or obtain
funding
from their
bank. Your
business
is about
your
product or
service,
it is not
your
business
to finance
your
customers/clients,
without
your
agreement
and/or
having the
cost of
any such
agreement
fixed into
the
outstanding
balance as
compensation.
A cash
target is
the
catalyst
of
profitable
trading,
anything
less is an
unacceptable
burden.
Your cash
target
should
reflect
your
planning
and
budgeting
needs.
Targets
have
always
been the
focus on
which
credit
controllers
operate.
8.
Pro-active
credit
control
and timely
debt
recovery
Building
relationships
with
customers/clients
will allow
you to get
close to
the
operating
principles
they
adopt. For
example:
if you
know your
customer/client
is about
to put in
a large
order and
you do not
think it
prudent to
allow that
much
credit,
you could
visit
(best),
telephone
(will do)
or write
(if you
have to)
to the
customer/client
saying
that you
have heard
rumours
about….
And that
some
caution is
required.
With debt
recovery
you need
to act
immediately
you know
something.
If the
customer/client
is one day
late with
their
payment
and you
know of
other
suppliers
who are
having
problems,
there is
little
point in
waiting
for ‘a
respectable
period’
before
getting
serious
with the
debtor.
9. All
service,
query
control
and
complaints
are a high
priority.
These
three
areas’ can
sink any
organisation
that lacks
proper and
measurable
control. A
£5k
payment
can be
held up
for a £1
query, a
simple
complaint,
or for
less than
great
customer
service.
Some
companies
have as
much as
half of
their
debtor
balance
tied up in
situations
that are
avoidable,
simple to
rectify
(at
first),
and
destructive
to ongoing
sales.
10.
Your
company
must
control
your own
cash flow
and cost
of money.
With a
debtor
balance
being one
of the, if
not ‘the’
biggest
asset of a
company,
the need
to
understand
and make
your cash
flow
throughout
your
operation
is
paramount.
A lack of
financial
knowledge
and
experience
is
arguably a
company
‘Achilles
heel’. A
bookkeeper
is not a
luxury,
they are
an
insurance
policy if
used
correctly:
with the
gains far
exceeding
the cost.
Money, as
with any
other
commodity,
costs
money. If
your
customer/client
pays late,
it is your
customer
that
dictates
the cost
of money
to you.
Maintain
complete
control at
the start
of a
credit
relationship,
continue
to monitor
that
relationship
and reap
the
benefits
of your
work.
