Covid 19 the Big One and good Cash management

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Covid 19 the Big One and good Cash management. The Big One is the name given to the earthquake which should one day engulf California if the forecasts of the seismologists are realized. In economic matters, the first half of 2020 probably has the status of Big One. An unprecedented global economic crisis that will take a significant toll financially. The slow emergence of containment that is emerging will put Cash at the center of business concerns. Neither profitability, nor productivity, nor the development of turnover will save companies, it will be Cash.

Approaching this subject with tools before the Covid 19 crisis is a mistake.

All indicators are broken and inaccurate; payment incidents are no longer recorded by the Banque de France, balance sheets are not closed, tax deadlines are postponed, social charges are not paid and payment behaviour is modified due to cash loans guaranteed by the State. However, all analyses, databases and decision-making tools are based on these indicators which will be at least inaccurate for several months.

For everyone, suppliers, customers and consumers, it is essential that economic activity restart. Questions will then arise relating to late payments and supplier credit limits to be set up for new deliveries. It is customer supplier relationships that will have to be reinvented to ensure that all economic players have a sufficient mattress of Cash to overcome this crisis, and those that should follow, according to some experts.

After the end of the lockdown the solution will not be to jump to the throat of customers who are late in their payments. We must invent a new partnership based on new deadlines and means of payment. Suppliers will have to support their customers by delivering goods on credit, customers will have to agree to pay on a regular basis even if they spread their payments differently. To date, the regulatory deadline for paying invoices is 60 days with a large due date. At the end of the lockdown it would be useful to extend the time allowed from 30 to 60 days but by establishing, for example, partial regulations every 2 weeks. It would be a “win / win” solution where the supplier anticipates part of their cash flow and the customer finances their purchases in a smooth and spread out manner. A real dialogue will have to be engaged between supplier and customer to weave a regular and trusting relationship.

Companies after the lockdown will have to focus on their core business, the production or purchase of products as well as their marketing. It has never been so useful to outsource Cash Management which consumes time and resources when done in-house. And this is one of the reasons why some companies are abandoning this approach, which is essential if they want to survive the troubled times ahead.

Judgment debt collection costs, compensation of collection fees.

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Judgment debt collection costs

Judgment debt collection costs

The Court of Appeal of Aix-en-Provence has just lifted a first-instance decision rejecting the claim of the creditor under Article L.441-10 II of the French Commercial Code. Once again, Inkasso costs decided to grant the creditor compensation equal to his adviser’s fees, which was justified by the notification of the fee agreement.

Our readers know our litigation in favour of professional creditors, so they will be fully reimbursed for the costs of recovering their debts.

We demand nothing more than the application of the provisions of Article L.441-10 II of the Commercial Code (formerly L 441-6, paragraph 8), which some judges – now a minority – do not take into account. The commented judgment debt collection costs confirmed that this resistance is unjustified.

A professional creditor has instituted proceedings against his debtor at the TGI of Aix-en-Provence in order to obtain payment for his unpaid bills and compensation for the legal fees (fixed and performance fees) incurred in this case.

Although the Tribunal granted the creditor the main claim, it granted him only a small amount of compensation under Article 700 of the Code of Civil Procedure.

Since the debtor lodged an appeal against this decision, the creditor partly intervened in order to obtain the compensation due to him under Article L.441-10 II of the Commercial Code. He wanted to enforce a judgment debt collection costs.

The Court of Appeal of Aix-en-Provence (September 26, 2019, No. 16/19309) upheld the applicant’s claim and ruled again: “If the recovery costs are higher than the flat-rate compensation [€ 40 per unpaid bill] It provides that the creditor may claim additional compensation for the reasons given, and Company X, by submitting the fee agreement, founds that the attorneys’ fees amount to € 10,295.26 TTC and is therefore entitled to receive the payment of that amount by Company Y for the in – law costs and appeal procedure. ”

This judgment therefore consolidates the case-law according to which, as soon as the creditor justifies the costs incurred, the judge is obliged to apply Article L.441-10 II of the Commercial Code without having the power to reduce the amount charged for legal fees, which is freely determined between him and his client. It is a clear judgment debt collection costs.

In summary, it is clear from this settled case-law that the creditor’s compensation must cover all the flat-rate and successful fees of his lawyer; that it includes both the costs incurred in the first instance and the costs incurred; finally, that the claim of the creditor is justified by the mere submission of the fee agreement with his lawyer.

Is the message heard by the bad payers? We hope so!

 

Georges Vonfelt GEVO

Companies start-ups in France

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Companies start-ups in France

Companies start-ups in France. After weakening in July and then falling in August, start-ups rebounded in September. According to the French statistic office, their number rose by 4.2%. Over a year, they posted a jump of 16.6%. Microenterprises now account for more than 47% of all creations. Companies start-ups are on the rise in France. After a slump in the summer, largely due to the drop in the number of registrations of micro-entrepreneurs, they are indeed up again in September. According to data published by the statistic office on Tuesday, all categories combined, they rose 4.2% last month. A rebound that makes it possible for the first time to cross the threshold of 70,000 companies created in one month and close a mixed quarter with a slight increase in July and a drop in August. In detail, in September, 70,605 new companies were created. This increase is mainly due to the strong growth of micro-enterprise registrations (+ 6.8%, with 33,618 new listings) and, to a lesser extent, to the average business sector (+ 2%, with 36,987 new entities). 16% year-over-year increase Over twelve months and this time in raw data, the number of new companies has increased by 16.6%, a pace close to that recorded for several months. Here again, these creations are largely driven by micro-enterprises which, over one year, jump by 26% and now represent more than 47% of all new structures identified. At the same time, the number of new conventional sole proprietorships rose by 10.6% and that of companies by 8%. By sectors, the statistics highlights the “growth” of “support to businesses” which, with 27,900 creations over the last twelve months, shows an increase of 17.4%. However, this is not where creations of companies are the most dynamic. With an increase of 25% over twelve months, the industry is in the lead, followed by household services (up 21%) and real estate activities (+ 20%). Fragile dynamics Good health that many experts impute to the various measures voted to precisely promote the development of micro-enterprises. These measures include the doubling of turnover thresholds below which it is possible to benefit from a simplified tax and social system that is much lighter compared to the traditional system. The dynamic is however fragile. If the executive has agreed to give up the publication of the decree aimed at reducing social security exemptions for micro-entrepreneurs, it is still looking to save 600 million euros in 2022. And asked the professionals to present it economic proposals before the end of the vote on the finance bill this autumn.

Mandatory information on the invoice in France

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Mandatory information on the invoice in France

Changes effective October 1, 2019 In France from 1 October 2019 two new mentions will have to appear on the invoice: • the billing address if it is different from the delivery address • the purchase order number if it has been previously issued by the buyer. The sanctions for breach of the invoicing rules are reinforced by the introduction of a fine henceforth of an administrative nature. These new provisions result from the order of 24 April 2019 recasting Title IV of Book IV of the Code of Commerce relating to transparency, restrictive practices of competition and other prohibited practices. Invoice: the mandatory information in France reminder of the mandatory information existing before 01st October 2019. The date of the invoice Date on which the invoice is issued. The invoice number Unique number for each invoice and based on a chronological and continuous sequence, without “hole”, an invoice that can not be deleted. The numbering can possibly be done in separate series (for example with a prefix per year), if the conditions of exercise justify it. Date of sale or service Date on which the delivery of goods or service is made (or completed). The identity of the seller or service provider Legal name (or name and surname for an individual entrepreneur), address of the registered office, billing address (if different), Siren number or Siret, NAF code, legal form and registered capital (for companies), RCS number and city the registration registry (for traders), number in the trade register and registration department (for craftsmen). The identity of the buyer or customer Legal name (or name for an individual), address of the customer (except opposition for an individual), billing address if different, delivery address. Purchase order number When previously established by the buyer. VAT identification number VAT identification number of the seller and the business customer (only the latter is liable for VAT). These mentions are not mandatory for invoices whose amount excluding taxes is less than or equal to 150 €. The designation and counting of products and services rendered • Nature, brand, product reference. Materials provided and labor for the services. • Specific name, quantity, unit price excluding taxes and VAT rate, discounts and other possible rebates. The catalog price Unit price excluding VAT of goods sold or hourly rate excluding VAT of the services provided. The legally applicable VAT rate Especially if different VAT rates apply, they must appear clearly by lines. Discount Rebate, rebate, discount on the date of sale or service, excluding discount transactions not included on the invoice. Total amount to be paid excluding tax (HT) and all taxes included (TTC) About the payment The date or deadline for payment, the invoice, the penalty rates in the event of non-payment on the payment date entered on the invoice and the amount of the lump sum indemnity for recovery costs in case of late payment (40 €) . Invoice: the particulars Other details must be entered on the invoice in the following special cases: • The seller or service provider is a member of a management center or an approved association Add the mention: “Member of an approved association, payment by check and credit card is accepted”. • The seller has a VAT exemption scheme Add the mention “VAT not applicable, art. 293 B of the General Tax Code “. • The subcontractor no longer declares VAT is the main company that declares it (reverse charge VAT) Mention “self-liquidation of VAT”. Indicate that this is a “tax-free amount”. • Craftsmen or micro-entrepreneurs engaged in a craft activity for which professional insurance is compulsory Mention of the insurance taken out under the activity

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

The best way to cooperate with a debt collection agency

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Collection agencies help you to recover funds you would have to write off.

When appropriately used a cooperation with a commercial overdue collection company can be a maximized resource for your own company. But you have to respect some basic rules to make a common profit out of the started actions.
• Place the accounts at the right time not to soon and not too late.
• Deliver all the pertinent documentation and a background story
• Trust the advice and counsels of the collection professionals
• Don’t go directly in touch with the debtor when he is in the hands of the agency
• Make the cooperation not with extreme old invoices, give the agency a chance to collect the receivables and start a long term relationship. Changing permanently the agency is not a positive point.
The commercial collection agency will help you to focus on the reliable customers paying their invoices on time. If a customer you have sent to the collection company contacts you it’s because he doesn’t want to deal with them. Accepting to start negotiations is a very bad point because the same customer will start this game again. And at least he will be the winner earning a free credit giving him and advantage toward his competitors.

Collecting bad debts is difficult. A lot of received amounts will never be paid no matter what tactics are utilized. Instead to test an agency with the oldest files, send them files they can collect because it’s the reason for what you made a deal with them.

Debt collection Costs in France important news.

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Since 2012 it’s foreseen in the French law that the collection costs, lawyer and success fee, have to be charged to the debtor.

In the first years after this new law we had to face massive opposition from the judges. You have to know that concerning business and commerce the judges are not professional ones but local entrepreneurs elected from their pairs.

In numerous judgments the commercial courts refused to take consideration about the debt collection costs.

Till the year 2014 there was nearly no single judgment charging the debtors with the collection costs.

The Commercial Court from Paris was leading in this matter refusing systematically the demands to cover for the creditors the collection costs.

Since 2016 the situation is moving very fast and a lot of judgments agree to charge the collection costs including the success fee to the debtor.

The Courts from Paris changed completely their minds and accept in nearly every file to charge the collection costs to the debtor.

But the creditor has the obligation to provide to the Court all the information concerning the costs he has to pay including the agreement with the debt collection company.

The major concern is hat the creditor is obliged to start a litigation process related with costs. A great judgment is senseless if at the end the debtor has no sizable assets.

For that reason it’s necessary to get in advance a professional advice about the chances to collect the money after the running of a litigation procedure, this kind of procedure lasting in France for one to one and a half year.

The small amounts are excluded because it makes no sense to go to Court when the unpaid debt is low.

Georges Vonfelt
www.gevo.fr

In France the necessity of a signed quotation.

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In France you have the obligation to let the customer sign the quotation on which you both agreed.

If not you will face major difficulties to prove that the customer accepted the amount of the carried out works.

The highest French Court called the „ Cour de Cassation «had to rule about the following facts: An Artisan made for a Farmer a renovation of a building without a signed quotation. At the end of the renovation the farmer refused to pay the bills arguing that he never agreed with those works.

The artisan was only able to provide testimonies from other people working there.

The Court decide that this is not sufficient to prove that the Farmer agreed about the works because for a quotation for more than 1.500 e the signature of the customer is mandatory.

The artisan couldn’t get paid for his Job.

The Judgment was issued the 11 October 2017 under the Number 16-22507.

Conclusion: in France you have to get as many signed writings and documents as possible to prove your debt and to have the best chances to get paid.

The danger of the Payment Terms

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It’s not a secret that the payment delays are in reality a supplementary discount for your customer. What are the points you have to consider for the fixing of your payment terms?

In every case you have to follow the legal obligations like in France where the payment delays are fixed by law on a maximum term of 60 Days after delivery.

Competitors, Business Fields and the wishes of the customers are also points that the suppliers are considering.

But there is a concept which is not always token under consideration it’s the cash cycle of the customer

In the Gastronomy Era where the supplier’s deliver several times a week and where the customers pay immediately a payment term about 60 days is without sense and is a free financing of the customer.

In the fashion Business where the goods are sold 4 to 6 month after delivery the shop owners will have difficulties to pay within 30 days or they will need a short term credit from their Bank in a period where the Banks are very unadventurous for this kind of financing.

The Fashion supplier has to be creative and he has to help his customer for the financing of the deliveries (value dates, payment plans) adapted to the cash cycle of the retailer.

A supplier who doesn’t take under consideration the cash cycle of his customers will face payment delays, unpaid invoices and debt collection files.

The significance of the writings under French law.

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The French civil proceeding is mainly written.

Also if a civil proceeding ends with a pleading audience, the judgment is mostly postponed to allow to the Court the studying of the writings and documents included in the conclusions of the parties.

It’s also the fact with the testimonies.
A French civil testimony is always hand written the witness don’t appear at Court.

You have a clear example if you examine the dispositions of the law introducing the 40 € debt collection fee applicable the 1 of January 2013.

Under French law the debtor has to pay to his creditor for each on the due date unpaid invoice a lumps sum equal to 40 € , the payability starting after one day payment delay after the due date.

But to be able to apply this disposition and collect those debt collection fees you have to write it on your invoice and in your sales conditions.

Making business in France is related with the written documentation of all the commercial process of your sales.

Verbal agreements have to be strictly avoided.