All posts by GeorgesVonfelt

Corporate insolvencies how to secure you open debts.

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Corporate insolvencies how to secure you open debts. Year-to-date, corporate insolvencies in France were up 1.5% year-on-year, compared with the same month a year earlier. On Tuesday, September 10, the Banque de France issued a press release stating that between July 2018 and June 2019, corporate insolvencies increased by 1.5% in France compared to the previous 12 months (between July 2017 and June 2018). As of June 2019, the cumulative number of corporate insolvencies over 12 months reached 53,538 units, with strong growth in the transport sectors (+ 12.6% compared with June 2018), advice and services to businesses ( + 12%) and financial and insurance activities (+ 5.1%). Deficits also “appreciably” increased in education, health and household services (+ 2.3%), agriculture (+ 1.4%), as well as accommodation and food services (+1 , 3%). The number of business failures nevertheless remains at a level close to its lows of the last 10 years. Information, real estate and construction in better shape The sectors in a better position are none other than those of information and communication (-5.7%), real estate activities (-3.4%), trade (-1.4%) and construction. (-0.5%). Which have seen the number of business failures receded. According to still provisional figures provided by the Bank of France, corporate insolvencies would have increased by 0.8% over 12 months at the end of July 2019. Finally, the institution has however specified that between April and June In 2019, business failures decreased by 2.9% compared to the previous three months.

Gevo, a French collection company specializing in international B to B collection, can help you avoid the loss of your bill if you entrust your file in time.  To say that it will work out “we will wait because it always ended up paying”, to entrust the recovery to the commercial are errors. Only a professional, recovery will give you every chance to avoid a financial loss.

In the clothing sector the retail trade is in crisis.

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In the clothing sector, the retail trade is in crisis due to the decline in the number of visitors to city centres and their pedestrian zones. Textile distribution is about to undergo a radical transformation that will revolutionize the entire sector. In many cities large clothing stores remain locomotives that attract the public in pedestrian areas. If the clothing sector suffers, all the activity of the city centres suffers. In Europe, clothing and clothing occupy 40% of sales areas in pedestrian areas. Until recently, 2015 studies estimated that the retail apparel business still had a chance to keep up with a multi-channel system that combines physical distribution with online distribution via the Internet. To date some scholars, believe that traditional distribution has lost all foundation and justification.  In all areas online merchants have taken advantage of the choice of products, assortment, stock or logistics. The traditional retailer’s advantage in consulting is melting like snow in the sun due to staff reductions caused by the need to save money. But the fall is more and more brutal. Since 2009 in Europe, a third of sales areas in clothing have gone out of business. It’s not just the small shops that have disappeared from the department stores and the chains are facing the same problems; brands such as C & A or Tom Taylor and brands like Gerry Weber are in the midst of restructuring in search of strategies that would allow them to regain their past splendour. A large survey of the German trade journal “TEXTILWIRTSCHAFT” found that one in eight retailers saw their turnover drop by more than 20% in 2019. The phenomenon is also true for shopping centres in which, among other things, restaurant signs replace clothing stores that are closing. Another indicator of the evolution of society is the establishment in the city centers of an adult playground of the “ESCAPE GAME” type. The consumption of clothing is becoming more and more online the free time being devoted to entertainment. In spite of all the Europeans still spend considerable sums for the clothing only in Germany it is 65 billion euros. But more and more it is the actors of the online distribution who profit from this manna. Sales have become less popular and consumers are turning to events such as Black Friday or Amazon Prime Day. The online fashion store “ZALANDO” has published enlightening figures – 15% increase in turnover – 3 Million new customers for a total of 27 million customers – A turnover of 5.4 billion euros in 2019. Specialists and analysts expect a new redistribution of cards in the next 10 years. The future would belong to the companies that will come to make cohabit the digital world and the purchase in store. The Smartphone will have a role to play replacing the sellers to guide and advise customers and cashiers. Many managers have realized that it is by multiplying experiences of all kinds that we will find a sustainable economic model.

The category that will suffer the most is small retailers. Those who are not able to invest considerable sums to adapt their businesses to the new demands of consumers. Many downtown managers put their heads in the sand which never solved a problem. Without visitors in pedestrian areas there will be no future for retail. In the retail sector, the clothing sector is in crisis and it suffices to compare the situation of two heavyweights in the Zalando and Hugo Boss sector. At the time of the publication of the 2018 results of the two companies which took place almost simultaneously a gap widened on the stock market. While the course of Boss immediately dropped a real buying madness has concerned the titles of Zalando.

Published figures have confirmed that E-Commerce is still growing, arguments such as the possibility of touching the fabric or trying the garment no longer carry thanks to the facilities for returns. Consultations on the Zalando website have increased by more than 30% to reach a staggering one billion connections per quarter! Zalando’s forecast profit (EBIT) for 2019 will be more than 175 million euros. At Hugo Boss the numbers are not catastrophic, but the indicators are down and only the online sale is up more than 16%. Cost pressure is driving more and more retailers out of business, and the strategy of companies like Boss is increasingly focused on “COST KILLING” to resist the onslaught of Internet portals. Boss has also developed partnerships with retailers on the basis of a concession contract. Interestingly in principle the dealership contract is cumbersome and complex to manage requiring iron discipline in management from the retailers. This rigor in management is not always one of the strengths of the independent retailer. The concession contract also has a negative influence on the cash flow of the companies that offer it.

It is not unrealistic to think that soon structures like Zalando will be the main distributors of Hugo Boss products. Zalando’s objective for 2023 is a turnover of 20 billion euros, this tripling of its activity will be at the expense of independent trade. When finally, we see that Nike is experimenting with the model of the subscription for its young customers the shoes being directly shipped by the manufacturer after return of the old pairs. If the clothing market is becoming more of E-commerce to subscription it is feared that the desertification of city centres will accelerate further. Urban planners, municipalities and property owners will have to consult each other and implement new ideas to stop the desertification of the pedestrian zones that is getting ready. Georges Vonfelt

Internet digital world European retail business facing the Storm.

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Internet digital world European retail business facing the Storm. The European retail business has lived during these 60 past years several revolutions which have had a deep impact on its physiognomy and in our way of life and the society in its whole. The recent revolutions linked to the rise of internet and the digital world seem to take another step, it’s not the physiognomy of the cities which is changing anymore but the society in its whole.

Step 1: the neighbourhood businesses and the factories in Europe

Step 2: the birth of mass distribution and relocation of the production: the rise of the car industry

Step 3: the development of franchises, malls and pedestrianization of cities

Step 4:  Internet and the digital world desertification of the cities

In the 50s, right after World War 2, neighbourhood businesses are rising, the factories located right next to them are running in full swing. The consumers who are low motorized appreciate having nearby shops and so came several types of restaurants and services (Shoemakers, carpenters…) in the streets of the cities. In the 60s Europe knows a new type of business, mass distribution (mostly alimentary). France will be the first country in Europe to develop it, Italy and Germany being far behind. Visionaries buy agricultural land in the periphery of the cities and develop massive shops with massive parking. This type of retail will rise and create hypermarkets of 10 000m² and more with non-alimentary shopping mall around. These giants will have a significant power on the selling price encouraging industries to relocate first in Eastern Europe (Poland, Czechoslovakia…) and then towards Asia (China, India, Vietnam) where the workforce is the cheapest. The auto industry starts on the same time a massive development as the consumers going to these hypermarkets will be in the need of buying a car. From the seventies to the 2000 and despite the oil crises, a global boom of businesses in every distribution channel is rising. Independents shop retailers first partly destroyed by the mass distribution start to join franchises. The pedestrian city centre leads to the gentrification of the independent businesses. Shopping malls with several types of businesses rise. However, the bistros and the small artisans decrease. From 600.000 in the 60s, the number of bistros in France fell to 35.00 in 2018.  Investors buy commercial real estate which leads to expensive rent prices in the business areas of the cities. If in the early 2000 online shopping took its first steps, not every time in a successful way. The new giant is born: Internet and the digital world. The shops in the mid-cities are closing, the small towns are becoming bedroom communities, mass distribution loses its market shares and even the prestigious brands are shaking.  Internet digital world giants such as Amazon or Alibaba are the new nightmare of the traditional businesses. In France the legislator created legal barriers to protect small businesses, stop the development of hypermarkets and reduce their blackmail to have discounts and bigger margins. But at least the legislator is helpless toward the new giants. Amazon is the biggest supermarket in the whole world even if it is fully digitalized. It is also the biggest group purchasing organization (GPO) in the world. What if Orwell’s Big Brother was in fact Jeff Bezos (Amazon’s CEO)?  It is unquestionable that the typical businesses will need to invest in market niches in order to survive. For instance, some textile manufacturers are now aiming new consumers such as seniors or oversized people who are not yet comfortable with online purchases. Others fashion brands based their communication on the “Never out of stock” which means that the general products are always available. It is directly opposed to the fashion shops whose collections change every 6 months.

But what about payments? How to deal with unpaid invoices? Are the overdues also evolving with Internet  digital world? Even if strong habits are still here in countries like France, we still observe a massive change of the way consumers pay. During the 50s and the 60s bill of exchanges and checks were the most used way of payment. When, Mr. Moreno invented the smart card in France everything changed. Way before its neighbours’ countries, French people will start using credit cards to the great pleasure of mass distribution discovering a new and simpler method of payment avoiding the insecurity of checks and the complicated manipulation of cash. Furthermore, it is still evolving with the evolution of our phones with which we can now pay with. Debt collection firms have also professionalized their approach, for example, the procedure by a collector in the context of home visits disappeared. Courts have gone digital, it is now possible to proceed to an online payment of your court fees with your credit card. Commercial information has gone digital as well, offering business information at extremely low prices causing the end of several investigator’s jobs. What hasn’t changed is the weight and cost of legal action in southern Europe (Spain, Italy, France, Greece, Portugal…). Lawless zones emerged concerning low-amount debts. Debt collection firms will have to adapt to this new environment. It is likely that the dematerialisation of payments will deeply change the structure of the payments especially the supplier debit which may disappear. Businesses will have no choice but search for new ways of funding. In the first days of 2019 we face a dramatic situation mainly in France for the specialized retails like fashion or shoes. There is a massive disappearing of shops due of the fact that for many different reasons the consumers change their habits. For the mid-sized producers and the small shops there is only a future if they intensify their cooperation inventing new retail ways of selling.

In an Internet digital world retail cannot act as in the sixties or seventies, the actors must invest in perspective and prospective.

 

Georges Vonfelt

Payment delays : How to find 20 Billions € in France?

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Payment delays : The most recent figures and surveys in France shows that if the legal payment delays are respected the small and medium French companies (with less than 50 Million € turnover) would improve their cash flow situation with 20 Billions € a year.
The unpaid invoices and payment delays generate a lot of costs inside and outside of the Company:
Internal Management of the payment delays, costs related to the financing of the outstanding sales, debt collection costs, litigation costs.
In France the companies which are far away from the consumer are those with the most of the problems concerning the payment delays from their clients (forwarder, logistic, storage, business services)
In the Business to Business filed the costs per Invoice for the management of the payments are around 609 €!
In the Business to Consumer field the costs for the management of the payments are more or less equal to 6 % of the company turnover. The reason is that the French law exonerate the private customer from every kind of liability in relation with the non-payment of their invoices.
Georges Vonfelt
www.gevo.fr

90 % of the French B to B debtors with unpaid bills are solvent!

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90 % of the French B to B debtors with unpaid bills are solvent but the success rate of the debt collection agencies and organizations in charge of the receivable collection are largely lower.
What are the reasons?
First of all it’s the way the debt collection industry is organized. The no cure, no pay policy largely practiced brings a focusing from the collector on the larger files. To collect 100 € or to collect 1.000 € it’s the same job, the same time investment but not the same earning. The market (the companies’ client of the debt collection agencies) would never accept to pay a 10 time higher fee to collect a small invoice. The bigger the file the more the debt collection specialist invest time and costs on it.
Other reasons in France are the difficulties to get legal decisions with acceptable fees for the benefit of the creditor. The French government is actually thinking about new dispositions in favour of the reduction of the payment terms. To apply the existing laws would be very helpful and sufficient. For some mysterious reasons some courts are very sensitive for the matter of the recovery costs. We don’t need new laws we need first the application of the old ones.
How to reduce the gap between the 90 % solvent debtors and the percentage of collected files is the goal of the debt collection industry in the near future. It’s difficult to accept that billions of overdue disappear every year because we are missing adapted tools and services.
Georges Vonfelt
www.gevo.fr

Debt Collection in France: what is the most efficient litigation process?

anglais, Blog

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If, in the Business to Business area, you have unpaid invoices in France the first step is to try an amicable approach of the debtor. It’s the first action step for a French debt collection company.
The figures of the collection Industry are telling us that more than 90 % of the files received from a debt collection Company concern firms which are able to pay the open invoice.
Despite of those figures, the success rate of a debt collection agency for the amicable process is usually lower than the half of the received files. It’s often necessary in France to start a litigation procedure to increase the chances to collect the overdue receivables.
In the most of the cases we recommend the so called “injonction de payer” ( injunction).
How has this litigation procedure to be managed?
– The concerned Court is the “Tribunal de Commerce” located at the head office of your customer.
– The demand has to be introduced with all the documents proving the reality of the debt
o Signed order
o Signed Delivery note
o Invoice
o Reminders
o Formal Notice Sent by registered letter with acknowledgement of receipt
o Without the acknowledgement of receipt the procedure will be cancelled
– The judges are not professionals they are elected and their main business is to manage a business in the same city.
– When the “ injonction de payer” is issued you have maximum 6 months to inform the debtor through a local Bailiff
– The debtor has than one month to contest the decision, he can contest without giving any reason
– If the debtor contests it’s necessary to start a traditional legal procedure
– If the debtor doesn’t contest you have 2 months to ask for the enforceable verdict
– The court will deliver this enforceable verdict within one month.
– To seize the goods and assets of the debtor you need the help of a local Bailiff.
We recommend the cooperation with a French professional (lawyer, bailiff, debt collection agency) for the management of the “injonction de payer” procedure.
Georges Vonfelt
www.gevo.fr

Beware Of The Payment Terms Mousetrap

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Andriy Sichka
Payment terms are a benefit to the customer, and it is important to find the right balance for your company.
By Andriy Sichka, originally published in Credit, Collections and Risk Magazine, www.CCRMagazine.co.uk.
Every financier knows that, if we set credit risk aside, deferred payment term is a technical equivalent of a discount. As such, payment terms are to be negotiated and fixed in the contract together with the price. Quite often, however, parties fix a price and then start to negotiate on the payment terms. This really is a mousetrap for a seller, as, in essence, he is invited to discuss the price when it is already fixed!
Very often, suppliers leave the setting of payment terms to local customs, market practice, or – even worse – the buyers’ wishes. Retailers are very famous for using positions like: “We ask for 90 days payment term as this is our standard for all suppliers.” Very often sales teams bring the deal with fixed payment terms already agreed, but without any explanation for them. They will simply say “customer expects X days” and many companies agree to accept this for fear of losing a customer. While customers are very important, they are not always right. Payment terms could, and should, be mutually acceptable for both the buyer and the seller.
But how can fair terms be found? In many cases, knowledge of customers’ cash cycles would help. Try to find or estimate a customer’s days of inventory outstanding and add it to their days of sales outstanding. A precise result would require a delivery period as well. Then compare the total with the proposed payment term. There are three possible results:
1. The cash cycle is equal to the term – this is very unusual but possible. You give as much credit as your customer needs to trade. Provided you can afford to finance such a term, it would be good to maintain it.
2. The cash cycle is longer than the term – this is negative for your customer. Very likely they would be looking for external finance to trade your products. Sooner or later they will knock on your door, especially if access to external finance became hard.
3. The cash cycle is shorter than the term – you would be giving more credit than necessary. If the figure is substantial (say above five days) then you are financing somebody else’s business and very likely for free! In this case, the seller should clearly understand the benefits they are receiving from the customer. It may be time to re-negotiate terms.
Fear of losing a customer is normally bigger than the actual risk. Companies normally respect those trade partners who stand for their rights soundly and constructively. It is obviously easier to negotiate if the above exercise is done before the contract is signed. CCR

Debt collection for unpaid invoices at the digital era

Unpaid debt

The debt collection for the unpaid invoices will evolve with the accession of the digital era.
Either we call it numerical or digital, the actual world is confronted with a brand new Industrial Revolution. The payment’s management won’t escape the considerable changes occurring during the commercial exchanges.
The dematerialized sending of the invoices, the advent of new payments means, the end of the old system (checks, bank drafts, promissory notes) the arrival of the biometric credit card are innovations with which the firms will have to get used to.
The internal and external services of the collection of unpaid invoices will have to resolve new challenges.
The repressive and threatening era is over.
The financial and solvency information are more difficult to obtain, some anticipate their complete disappearance and the information’s opacity becomes the rule.
The debt collection of invoices at the digital era will go through more prevention: studies about the behaviours of the invoice’s payment and the litigation anticipation.
New communication tools towards debtors (clients) will be applied: social networks, smartphones, mails, text messages, this is the future for the debt collection for unpaid invoices at the digital era by GEVO.

Georges Vonfelt
www.gevo.fr

France Business is facing the lowest payment terms figures since 20 years

anglais, News

The latest statistics are describing good news for those making business in France.
There is a massive decrease of the payment delays. The real payment terms are now around 60 days after the invoice, in place of 65 days two years ago. And ten years ago there were, in the average, more than 90 days between invoice and payment.
The reason are new laws and new controls coming from the Civil Service. The fines are extremely high and the big Companies had to face controls and big fines and also the publication of the procedure in the Newspapers. The targets of the Civil Servants were very high level Companies in the Insurance Business, train producers, Hotel Chains and Pharmaceutical Conglomerates.
The real news is that the big Companies are no more safe from controls and they had to pay each a 375.000 € fine for having not respected the legal terms of payment.
But the figures are not the same in all the areas of activity.
The situation is more problematic in the Transport, Logistic, Information and Communication Business.
Georges Vonfelt
www.gevo.fr

Business to Business Debt Collection in France: The Judge

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At the French commercial courts the judges are not professionals but volunteers.

They are traders, storekeepers and manager of companies and they are elected from their local peers. To have a chance to be elected the candidate has to fulfil the following requirements

Age = 30 years old

French citizen

Having never faced a bankruptcy procedure

Registered during the 5 last years at the Chamber of Commerce

Having during 5 years be running a store or company as a general manager or chairman or owner.

Very surprisingly they are 3 categories of persons which are also able to be elected as commercial court judges

The spouses of the shop owners having been supporting their husband in the business with no other Job

The ship and airplane captains (and this is not a joke).

The elections are hold one time a year in October.

The voting persons are the elected and retired commercial judges.

During his first election the judge is elected for 2 years, during the second for 4 years and he can be re-elected 2 more times so that in the end he will be Judge for 14 years.

The first year the commercial judge is obliged to follow a 5 months training at the National School for Judges were the professional judges are trained during 31 one months.

All over France they are 3200 commercial judges.

When you start a litigation procedure before a French commercial court you should be aware of this specificity.

There is an exception in a geographical area called Alsace Moselle the commercial court judges are professionals and not volunteers.

On the second level (appeal) the judges are all professionals.

Georges Vonfelt

www.gevo.fr