Archive for the ‘Debt News’ Category

Fears Over Europe’s Debt Crisis Causes Stock Markets to Fall

Monday, July 18th, 2011

A healthcheck on banks failed to calm worries over Europe’s debt crisis as stock markets fell on Monday.

The Royal Bank of Scotland was down 3.8% and BNP Paribas 3.1% as financial shares were hit hard. The FTSE 100 saw a drop of 0.9% with France’s CAC 40 and Germany’s Dax down 1.4% and 1.9% respectively.

On Friday the European Banking Authority published results of a stress test on the finances of European banks. Eight of the banks tested failed the stress test on their finances while sixteen others were said to be “near a danger zone.”

The news has seen investors continue to plough money into gold with the price of the metal topping $1,600.00 for the first time recently.

Investors are also concerned with the failure of the Obama administration to agree a debt ceiling deal with the US in danger of defaulting on its debts unless new rules can be agreed by Congress to enable further money to be borrowed by Washington.

Thursdays sees eurozone leaders attending a summit to thrash out a second “bail-out” package for debt riddled Greece.

German Chancellor Angela Merken, said that private investors who would be contributing to the bailout would need to provide clear commitments and went on to describe the summit as “urgently necessary” and that she wanted “a result.”

John-Claude Trichet, head of the European Central Bank called for Governments to stick together and speak as one, saying that the debt crisis can be overcome if they all stick together.

Mr Trichet said:

“It is a question of will and determination. The countries of Europe have always demonstrated that they pull together when the challenges are very high.”

Mr Trichet also repeated that Greek bonds will not be accepted as collateral for loans if the countries debts are defaulted. However, an orderly default is believed to be the only way that the Greek debt crisis can be resolved by some economists.

Lee Hardman, Bank of Tokyo Analyst said:

“On the face of it, the tests highlight that the European banking sector is in better health than expected, although crucially investor concern will remain over the credibility of the tests given that the tests did not include an assessment of the impact of sovereign defaults.”

The euro also fell as dealers bought up Swiss francs and yen. In trading in Asia the euro fell at one point to a record low against the Swiss franc of 1.1365.

Looking For a Debt Collection Agency? Let Us Help …

Wednesday, July 13th, 2011

If you are looking for a debt collection agency then finding the right one can be quite a daunting task. In the UK alone there are hundreds to pick from ranging in size from small one man bands to large corporations with employees in the thousands.

The problem is, which one to choose? You know you need to choose one of them – you have a legitimate debt to be collected and you want to ensure that you find the debt collection agency that is best suited for the task.

Let us help. The following guidelines will help you to find the rightconsumer or commercial debt collection agency for you.

The debt collection agency that you choose should represent you, or your company, in a professional manner and provide a satisfactory rate of recovery while maintaining your public image or brand.  As with anything, you want to get as much back as possible for as little as possible up front but when it comes to a debt collection agency you really do get what you pay for. If you overlook this factor you can end up with a commercial or consumer debt collection agency that not only prejudices your chance of a successful recovery but can also damage your own reputation.

The debt collection agency you choose should be:

  1. Fully licensed members of the Credit Services Association (CSA)
  2. Experienced in the recovery of your specific type of debt or related industry.
  3. Experienced in the type or age of debt you are looking to have recovered. An invoice that is 30 days overdue is a completely different kettle of fish to one that is 2 years overdue.
  4. Is ISO accredited to ensure the level of service provided is optimal.
  5. Provides you with regular updates as to the progress of your account to keep you informed of what is happening.

If the company you choose can tick all of the boxes above then you are well on the way to finding a debt collection agency who is right for you.

London Borough issues bailiff tender

Saturday, July 9th, 2011

The London Borough of Richmond upon Thames is seeking two bailiff companies to assist the recovery of council tax, business rates, and overpaid housing benefits over a three year period.

The contract will begin at the start of November this year and run until the end of October 2014, but the successful firms will have the option to extend for a further two years in 12 month increments.

Tenderers must provide the council with financial statements covering the last three years, during which they must have achieved a minimum annual turnover of £100,000. Tenderers must also have indemnity insurance and be prepared to increase their cover if required.

Improving Your Credit Control

Monday, July 4th, 2011

Give the current state of the market and the difficulties it faces, SME’s are finding late payment becoming a common occurrence from their Clients. Previous sources of cash that SME’s could rely on, such as bank loans, have seemingly dried up as purse strings are tightened by lenders and it is not an uncommon theme for small business owners to use their own credit cards to support their business.

However, by making some small adjustments to their credit control procedures SME’s can help their own business to deal with these issues. Putting the right systems into place can help to support the cashflow of the company. Simple changes to existing systems such as the length of time credit is available to a customer, everyday credit control, debt collection, dealing with companies and safeguarding against bad debt can all have a positive impact.

Their is a greater need than ever for companies to be ensuring that their debt collection processes are in place and not allowing overdue invoices to build up and accrue while waiting for payment.

One useful method to help protect against bad debt is to make use of company credit checks, from a credit reference agency such as Creditusre, which can show if a company has a poor credit history, judgements and overdue accounts. By checking the company before you do business with them you can make an informed choice about offering credit.

Another common trend that is currently doing the rounds is larger companies demanding extended payment terms from SME’s, in particular in the construction and recruitment sectors. SME’s need to stay strong and not allow companies to dictate to them when they will be paid. The impact that extended terms can have on a business could be detrimental to the business itself.

Ultimately cashflow is as much about making sure a business is paid for the goods or services it has provided than anything else. A strong cashflow is key to ensuring the continued operation of a company

Federal Management Receive Investors in People ‘Certificate of Commitment’

Thursday, June 23rd, 2011

Investors in People Looo 

Article written by Mike Smart – UK Debt Collection News

Federal Management announced today, that they have received a Certificate of Commitment from Investors in People as part of the on going internal development programme in place. Federal Management already have relationships with local education and training establishments and this represents a new landmark and provides some recognition of the efforts being made to significantly improve staff and develop their skills accordingly.

This news came shortly after details were released of Federal’s development of an innovative new modular based Debt Collection training programme and the successful renewal of their ISO9001 Accreditation.

Managing Director Marc Curtis-Smith said:

“2011 has been a largely successful year so far in terms of internal company development. The certificate received from the Investors in People is yet another clear indication of our continued commitment towards to the development of our employees.”

 Marc further adds

“We recently renewed our ISO9001 Accreditation and the fact that we are now working towards the Investors in People Accreditation is a wonderful reflection on our policies, performance management and the best practice that we employ here at Federal Management.”

The simple fact that Federal Management are looking to add the Investors in People accreditation to their existing ISO9001 accreditation, clearly indicates the high levels of service provided and the ambition for future growth. It is expected Federal Management will have achieved the full accreditation by the end of the year . They will join only a small handful of companies from the Credit Management industry who have received such accreditation’s.

Investors in People is a management standard administered by the UK Commission for Employment and Skills and supported by the Department for Business, Innovation and Skills. It was launched in 1991 by Michael Howard who was Secretary of State for Employment at the time.

Keep On Top of Debtor Delays

Tuesday, June 21st, 2011

The natural response from a company during an economic downturn is to tighten the purse strings and focus on recvering their bad debt. However, for a large percentage of the country there is still a lot to be desired in the efforts of companies concerning debt recovery and a great deal of things that could be improved upon to increase cash flow.

Russell Jameson, Collections Manager at Federal Management, said:

“A company who puts in the relevant policies and procedures concerning debt recovery and credit control will find it much easier to stop bad debt from becoming aged and bad debtors that are overdue don’t suddenly become unrecoverable”

Given the state of the economy at the moment, it is indeed practical information as an ongoing debt can rapidly become uncollectable.

As the economic downturn continues to drag out there has been no great increase for the requirements of debt recovery agencies. Mr Jameson says that this is in no small part down to the fact that companies are softening towards their debtors.

“Companies nowadays are looking at the individual circumstances of a customer, at their finances and credit reports when determining if a a debt is worth persuing.”

On the basis of this, commercial debt collection is finding itself as the most popular type of debt being collected as companies are generally assumed to be able to clear their debts unless suffering serious financial hardship thus the debts are more likely to be chased.

Any company facing non payment of a debt should be vigorous and robust in their approach. Ensuring that a sale is not complete until the money is in the bank, that invoices are formatted correctly and sent to the correct person, and outstanding amounts are regularly chased are key to keeping on top of bad debt.

Crackdown on Council Tax Sees Extra £4m in Arrears Collected

Monday, June 20th, 2011

Welsh councils have  increased debt collection rates by 16% as council tax arrears drop by £2.1million from last year.

The good news was slightly tempered by the fact that local authorities still faced arrears owed of £81.2m as of March 31st 2011. Welsh councils brought in the extra £4 million in arrears in 2010-11, with the total amount of previous year’s debt collected rising from £24.8m in 2009/10 to £28.8m.

As a result collection rates across Wales saw an increase from an average of 96.3% in 2010-11 to 96.6% for this year.

Steve Thomas, Welsh Local Government Association chief executive, was extremely upbeat about the figures claiming it was a “remarkable achievement” during a time of downturn in the economy and added pressure on family budgets. Mr Thomas went on to say:

“Councils recognise that they have a duty to all taxpayers in their area to ensure that those who should pay taxes do, so that this money can be reinvested into vital council services, however at the same time it is a balance between collecting and helping people who are in financial difficulty. Today’s figures show that council workers have got that balance right.”

“Councils have been working closely with the WLGA, Welsh Government and the Citizens Advice Bureau to offer people practical support to help them make their payments; from practical suggestions to providing people with access to the financial support they need. They have also been proactive in making people aware of the council tax benefit which they may be entitled to and helping them in making their application.”

“Councils’ main aim is to help people address their difficult financial situation before they get to an unmanageable level of arrears and today’s figures show that their approach is working. Every council in Wales continues to urge any citizen who is experiencing financial difficulty to contact them for advice and information.”

Flintshire council saw the largest decrease in percentage of arrears owed as it reduced it’s debt by 22% from £1.9 million to $1.5 million.

Kerry Feather, head of finance said:

“We are very pleased that despite the difficulties being faced by people as a result of the economic downturn that we have been able to increase the amount of council tax collected in the year and have worked positively with those who have experienced difficulties to reduce the level of arrears.”

However, the percentage of tax councils were able to collect varied from 98.2% in Denbighshire to 94.5% in Cardiff.

The Welsh Conservatives suggested Welsh councils would be almost £18m better off if all local authorities reached a 98.2% collection rate.

William Graham AM, Shadow Minister for Local Government, said:

 “While it may be somewhat unrealistic to expect councils to collect 100% council tax, they do have a responsibility to raise collection rates to maximise the resources available to invest in local public services. If too many council tax payments are left uncollected, this forces up bills for the vast majority of hardworking law-abiding taxpayers.”

Distressed Companies Received £1bn Lifeline

Friday, June 17th, 2011

Since the start of the latest recession a unique group of UK turnaround investors have found cause to invest almost £1bn in distressed companies over the last 12 months, according to research undertaken by KPMG.

KPMG Restructuring Director, Will Wright said:

“We have seen a new breed of investor come to the distressed acquisition market since the beginning of the downturn. Historically, distressed investors acquired companies out of administration to salvage what remained. While the traditional model still exists, we have seen small investors in the UK looking to step into businesses while they are still solvent. This change in approach is driven by a need to step into a distressed situation before it unravels into insolvency and precious value is destroyed.”

“The UK turnaround investor community, which has emerged in the past few years, differentiates itself from the traditional distressed investor model by rescuing companies earlier; 76% of firms surveyed have completed a solvent acquisition in the last year. There are also key differences with the typical private equity investment model where – rather than suffer possible delays created by due diligence and committee decision-making which could prevent a solvent business rescue – many UK distressed investors can write a cheque on the spot.”

Several key findings from the research are:

  • There are around 60 specialist turnaround investors in the UK
  • The group has completed 73 deals in the past 12 months
  • Over £940m has been invested in UK headquartered businesses in the past 12 months
  • 76% of turnaround investors have completed a solvent acquisition in the last 12 months
  • 80% of turnaround investors are seeing more opportunities than a year ago

When asked more about he individuals in the UK turnaround investors, Mr Wright continued:

“The funds themselves are typically set up by small groups of high net worth individuals, often with a background in restructuring, who understand that timing is crucial in business rescue. There will always be an inherent block in identifying acquisitions targets, in that directors find it difficult to admit to the severity of their problems until it is too late but 80% of the investors we surveyed said they were seeing more opportunities in the next year.”

“Deals such as Gardner Aerospace, acquired last year by Jon Moulton’s Better Capital, and structural steelworkers Robinsons, acquired by Jamie Constable’s RCapital (both rescue transactions avoiding insolvency) show that the community is prepared to put its cash to work. It is difficult to estimate the total fire power of the UK distressed investor community as their style is to tap into their network of contacts when the right deal comes along. However, with nearly a billion spent in the last year and the community seeing more opportunities in the year ahead, we’re certainly looking above the billion mark.”

“With such a large pool of cash to invest, this emerging breed of specialist investor is good news for business rescue in the UK.”

CSA to be Consulted in OFT Guidance for Debt Collectors

Wednesday, May 11th, 2011

In the forthcoming update to the Office of Fair Trading (OFT) Guidance for Debt Collectors, which is expected in the latter part of the year, it has been announced that the Credit Services Association (CSA), who are the voice of the Debt Collection industry in the UK, will be consulted as a key stakeholder.

The CSA’s Code of practice, which was originally published in 2003, has had large parts of it’s content used as the basis for the new Guidance. It is expected that the new Guidance will have clearer instructions around data accuracy and a specific section dedicated to debt purchase according to CSA’s Head of Membership, Compliance and Educational Services, Claire Aynsley:

“It is vital that the consultation has insight from those in the collections and debt purchase sectors who have front line knowledge of collecting debts in often challenging conditions,” she says.

“Members of the CSA, and colleagues within the Debt Sale & Sellers Group (DBSG) will help ensure that any future Guidance is properly informed, so that best practice can be highlighted to the ultimate benefit of all parties.”

No win – No fee Debt Collection…. too good to be true??

Tuesday, April 12th, 2011

A recent e-news article from the UK Debt Collection Bureau explores the myth behind no win – no fee Debt Collection.

Whilst British Business remains in the grip of tight economic conditions, over the past couple of years, there has been a rise in the demand for Debt Collection Companies advertising themselves as operating a ‘No win – No fee’ policy when this clearly is not the case. As this practice continues to grow, so does the misinformation surrounding this ‘no win – no fee’ culture within the Debt Collection Industry.

The position of some is that as they seemingly pay nothing initially, the Debt Collection firm in question will work harder to recover the money and that there is nothing to be lost, only gained. The simple truth of the matter is very different and should be taken very seriously.

The ‘No win – no fee’ term is simply being used as a marketing slogan in the Debt Collection Industry to mask over a hidden ‘drip pricing’ structure and quite often companies that advertise themselves as ‘no win – no fee’, require a membership of joining fee which straightaway, is an immediate contradiction of their key selling point which should give a clear indication of what is to follow.

Often these companies will charge exorbitant commission rates, quite often as high as 50% (even higher in some instances) and will have hidden costs contained within their services. It is also common that these type of companies are fronts for firms of fee earning solicitors who will simply wish to matter to proceed to litigation so they can begin to apply their hourly fees (Average £250 per hour) as well as any other costs incurred therein. There have been instances where a debt has been collected and the actual amount that was owing in recovery fees was nearly 3 times what the actual debt was in the first place

Other ‘No win – no fee’ companies have ties with Debt Management and Insolvency firms looking for free, direct and easy lead generation as once details of a debtor are supplied, they will bombard them with details of ‘how to clear their debts with one easy payment’ which  involves the usual bankruptcy, liquidation or IVA/CVA option. This a far more financially lucrative option than actually attempting to collect the debt and will severely prejudice any of your attempts to recover what is owing to you.

With most ‘no win – no fee’ Debt Collection companies, it is simply a numbers game. It is a simple economic fact that a company cannot operate without cash flow so how can a Debt Collection firm work for ‘free’ or deliver the service they promise for ‘free’ without some sort of guarantee. Some Debt Collection firms actually have it written in their Terms & conditions that if they fail to collect then you will be liable for their costs.

No company can operate without cash flow so the question is, what will they actually do to recover your money? They cannot offer you any form of service by means of updating you etc and they will try to charge you where possible. More often than not, it is simply a numbers game. If you have a case with no merit then maybe this is a valid option for you but once again, you may be liable for an invoice in the event that they cannot collect it.

5 Facts to consider

Fact 1: Many Debt Collection Companies that advertise as ‘No Win – No fee’ will still require a joining fee or membership fee as they like to call it. 

Fact 2: No Bona fide Debt Collection Company operates any form of ‘Money Back guarantee’ scheme

Fact 3: Some ‘No win – No fee firms’ allegedly have ties to Debt Management & Insolvency Firms which will seriously prejudice the potential of successfully recovering your debt.

Fact 4: The commission rates charged by ‘No win – No fee’ firms will be far higher than other means.

Fact 5: Most ‘No win – No fee’ operate excessive drip pricing structures and minimal transparency in relation to what is actually being done.

As the old saying goes ”if something is too good to be true then it probably is”. You may think you have nothing to lose by using a ‘No win – No fee’ debt collection company, you will probably lose more than you thought!

Federation of European National Collection Associations Office of Fair Trading Website Information Commissioner's Office Website International Accreditation Board Website Credit Services Association Website