Tag Archives: #frenchdebtors

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.

The customer king dictatorship, myth or reality in the age of globalization.

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The customer king dictatorship, myth or reality in the age of globalization.

 

The customer king. Everyone knows this adage! Its fame precedes it, to the point that it is like a golden rule for any good business. This simple sentence summarizes the implication it would take to retain consumers.

If we look at it from the point of view of the user, this adage the customer king suffers from numerous shortcomings, especially when the market is dominated by a few suppliers who find themselves in a situation of virtual monopoly. Who has not found himself in an ubiquitous situation when he must try to explain his problem to a telecommunications operator, a household water supply company or any other company which employs thousands of employees and whose rules are dictated by reporting and hunting down the costs of management controllers?

Is the customer king when after having renewed several times his call to a digital switchboard which indicates to us in a synthetic voice that the waiting time is more than 10 minutes and that it is necessary to think of renewing his call , then which forces us to dial different numbers on the keypad of our phone and that after endless waiting to the sound of heady music going on in loop we arrive at the station of an operator who very often is at halfway around the world and we are at the end of 5 minutes of conversation in front of the following answer “I could not solve your problem but I am not allowed to stay longer with you online. ” That speaks for itself. To believe that for these large companies the customer is no longer the king but is a simple adjustment variable in the operating account.

On the other hand, and in spite of their gigantism it seems that the GAFA are much better organized to put the customer king at the centre of their concerns.

At the other end of the scale, the small craftsman and the small business are subject to the dictatorship of their king customers because they do not have an administrative organization which would allow them to put objectivity in their approach to the customer.

For medium-sized companies, the concept of customer king may be a dictatorship with unexpected consequences. For many years, business leaders have gotten into the habit of giving precedence to the salesperson, placing less importance on administration, management control and profitability. It would also be relevant to talk about the turnover dictatorship. The entire decision-making chain (bank, manager, shareholders) has priority on eyes on turnover and profit. Few medium-sized organizations, especially in export services, will analyse the difference between the customer king and profitable turnover.

When you deal with client risk management, when you are a credit manager, you see the abuse of the customer king system every day. Such customers have always paid their invoices more than 6 months late. However, it still pays. This client will continue to use and abuse the system the customer is king. He will not be blocked; his goods will be delivered to him. Nobody will take the time to analyse the costs generated by this type of behaviour because they are not always apparent. For example, the man time necessary to follow up on these problem customers, the consequences on the cash flow of the incessant postponements, the additional costs such as the financing of the VAT for 6 months instead of 30 days etc.

It is of course necessary to put the customer at the centre of his project but the one who is profitable and the specialist in all kinds of abuse is certainly not profitable.

The customer king’s dictatorship is similar to that of the short term. In the business world, time is of the essence. Many entrepreneurs would be amazed at how quickly a little more rigor in customer management would improve the operating account.

It is not possible to let accountants and financiers decide the fate of clients on their own. We need a real credit manager who will arbitrate between the interests of the commercial and those of the administrative.

But this credit manager must have real decision-making power so that the customer king client, which is a concept to be nurtured, does not turn into a dictatorship.

In France, the number of companies having been the subject of a bankruptcy procedure decreased

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lower banruptcies rate

decrease of bankruptcies in France

In France, the number of companies having been the subject of a bankruptcy procedure decreased by 4.8% last year compared to 2018. There were 52,000 failures in 2019. These are 2,500 companies less than in 2018 who went to bankruptcy or were placed in receivership or safeguard proceedings. In the fourth quarter of 2019 alone, the decline even accelerated.  The improvement is visible in almost all trades. The number of liquidations has dropped significantly. In construction, trade, industry, business and personal services, and catering, bankruptcy is declining sharply. Road freight transport and IT and communications are sectors which experienced an increase in bankruptcy last year. One of the explanations for this good overall performance in 2019 is that household consumption held up even if it was not as dynamic as we might have expected. The domestic economic context is rather better than that of our neighbours. Job creation is still strong in 2019, which also contributed to good economic activity. Second, interest rates are still very low, which helps companies finance themselves at lower cost. After the crisis of “yellow vests”, the State was able to support companies in difficulty.  Small businesses have held up well last year if they haven’t fallen, that doesn’t mean they are doing well. Many suffer. The treasuries continue to be strained. Another fact that puts the drop in corporate bankruptcy a bit into perspective last year, many SMEs and even a few mid-size companies have experienced difficulties. Almost 350 SMEs with more than 50 employees went to bankruptcy in 2019, almost one per day. In the last three months of the year, 100 failed. The difficulties of SMEs are concentrated in the manufacturing industry. Some face forced transformation issues linked to sustainable development, in the automobile for example. As a result of the bankruptcy of SMEs, the number of jobs threatened by bankruptcy increased slightly in 2019, by 1.6%, to 175,000. How will the coming year go? Growth is expected by economists to a level comparable to that of 2019, that is to say from 1.2% to 1.3%. For 2020, there is no fear of a sharp increase in the number of bankruptcy but it seems unlikely that we will fall below the threshold of 52,000 collective proceedings. We could be around 53,000 failures for the year 2020.

 

Hypermarkets in France a new deal. A lot of Hypermarkets make losses.

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Hypermarkets the new deal

Hypermarkets in France

Hypermarkets in France a new deal.

In France, consumption declined in most Hypermarkets in 2019. The glass is half empty or half full. Optimists will find that two thirds of the Carrefour Hypermarkets in France make money. Pessimists will point out that a third of the park pulls down the result of the branch. The issue is also sensitive to Auchan, the other chain of very large Hypermarkets. In its December issue, the trade magazine “Linear” examined the “evil of self-service hypermarkets” and advanced “the real numbers”. The trade magazine recalls that the self-service hypermarkets Carrefour, Auchan and Casino recorded sales of 2.7 billion euros between 2014 and 2018, of which one billion for the first two. Consumer habits are changing. Consumers commute less and tend to local supermarkets. The shift from non-food shopping to e-commerce and specialized supermarkets also explains the dissatisfaction of certain Hypermarkets. “Linear” keeps its figures from union sources. According to this information, the decline in sales is associated with a decrease in profitability. Carrefour France’s hyper integrated and franchised companies reportedly had a current operating deficit of 132 million euros in 2018. For comparison: Auchan Retail France generated a profit of 479 million in 2014. Operating profit (80% of activities are carried out by Hypermarkets) decreased to -155 million. The magazine also confirms that “89 businesses would make losses” at Carrefour Hypermarkets SAS ‘191 locations in 2018. The Carrefour Group does not comment on these figures, which it does not publish. In an interview with “Linear,” Marie Cheval, general manager of consumer markets, only states that 41 Hypermarkets will launch Rebond, “an operating model that inspectors entrust to directors to compensate for deteriorating profitability.” Dejan Terglav, General Secretary of FGTA-FO from Carrefour, responds to “Les Echos” and assesses all these figures as “likely”. He fears that the group will default to leasing around twenty hypermarkets. Carrefour has started to revive its consumer markets. 2018 is the first of the Group’s transformation plan that has invested particularly in competitiveness and prices. This strained numbers and margins. Kepler Cheuvreux underlined this “conscious strategy”. Since then, sales space reductions have been initiated, such as the rental of space to Darty. The Hypermarket soldier needs to be saved.

B to C debt collection costs in France a nightmarish situation when debtor is an individual.

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B to C debt collection costs in France a nightmarish situation. The B to C debt collection costs in France were the subject of a new judicial decision dated September 26, 2019. This decision concerns the collection costs charged to individuals by the collection agencies. The decision of the Administrative Court is as follows. The collection of damages from the debtor must, except to qualify as deceptive marketing practices, be preceded by a justification of the nature and amount of the damage alleged. According to the judges the only fact for the administration to note that neither the proof of bad faith, nor that of the reality and the quantum of the damage, were reported, was sufficient to reclassify the damages and interests in debt collection costs constituting deceptive marketing practices. The burden of proof of the bad faith of the debtor and the loss suffered is on the creditor. Failing this, the collection firm is exposed to heavy criminal penalties for deceptive marketing practices. The context of this decision is related to the practices of some French recovery firms that try to make debtors pay damages by referring to Article 1231-6 of the Civil Code. The root of the problem is related to the small amount of the claims in the B to C files. To make their actions profitable some collection firms do not hesitate to claim substantial damages from the debtors to cover the debt collection costs incurred. The Court’s decision confirms that in practice and for debtors with a private person status, it is in fact impossible to claim recovery costs except to risk very heavy penalties. How to produce receipts for debts of a few tens of euros. And it is equally true that not paying small bills for an individual is a real lawless area, the debtor not in fact risk anything to pay his bills when he sings, if he decides to pay. No one is going to expose the debt collection costs of proceedings for a claim of a few tens of euros.

Hedge Fund the rise of one whom nothing predestined to become the best manager of history.

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Hedge Fund the rise of one whom nothing predestined to become the best manager of history “The man who solved the riddle of the markets” Wall Street Journal’s Greg Zuckerman’s book is the book that everyone is talking about on Wall Street. He portrays the rise of one whom nothing predestined to become the best manager of history. The mathematician Jim Simons, whose fortune exceeds 23 billion dollars, is at the origin of a UFO: the Medallion fund. Since 1988, this quantitative hedge fund has recorded an average annual gain of 66.1%, reduced to 39% after deducting its commissions. Over 20 years (1985-2004), George Soros’ hedge fund (Quantum fund) had an average annual return of 20.2%. Prize of excellence Aware of its value, the Medallion Hedge Fund has taken the highest rates in the industry, 5% of assets and 44% of profits generated through its performance. Hedge Fund typically take between 1.5% and 2% of assets and 20% of profits. Given its success, this Hedge Fund no longer accepted money from investors since 1993. In 2005, it was reserved exclusively for employees of the Hedge Fund. For Simons, this fund was to remain relatively small, less than $ 10 billion, to continue to perform well. The founder is aware of the law of diminishing returns in the financial world: the more the capital is important, the more a manager is struggling to remain as efficient.

Inconceivable In an interview with “Institutional Investor” in November 2000, the founder of Renaissance said: “Today we manage $ 4 billion, perhaps $ 7 to $ 8 billion in the future. But 70 billion, never! It is inconceivable. I am 62 years old and in the next three years I would like to pass the torch. Today the Hedge Fund manages $ 110 billion, and Jim Simons retired in 2010 while remaining involved in his company, being non-executive chairman. The Medallion has been a fantastic Hedge Fund appeal and advertising product, which has launched other funds such as Renaissance equities. He managed the increase in his assets and the change in size of his fund. “Make money when I sleep” In 1978, Jim Simons left his position as professor of mathematics at Stony Brook University to found his first Limroy Hedge Fund. Like other traders of the time, he tries to anticipate the decisions of the Federal Reserve but without much success. Yet at the time, he consulted the opinion of an economist, Alan Greenspan, who would become the president of the Fed between 1986 and 2007. His poor results prompt him to seek a trading system without human interference. “I do not want to worry about markets every minute. I want models that make me earn money when I sleep. He then embarked on quantitative management in the futures markets, particularly commodities. It speculates on potatoes, oil or pig carcasses but again the yields are random. The Hedge Fund, Renaissance Technologies, which was born in 1982, decided to move up a gear and began to build systematic and rigorous quantitative management. “There are movements and configurations in the markets that are not ‘visible to the naked eye’ by traders, but Renaissance wanted to exploit these anomalies in a systematic and rigorous way,” says Greg Zuckerman. Grey matter The fund is progressively recruiting the best mathematicians, astrophysicists, linguists, artificial intelligence specialists and computer scientists. It ensures their loyalty by allowing them to invest their bonuses in the Medallion Hedge Fund, where the average investment of employees is now around $ 50 million. Those who leave the company are subject to very strict confidentiality agreements and a non-competition clause over a very long period. It is not possible that they go into another Hedge Fund to disclose the secrets of the company.

The “home culture” of Renaissance, the antithesis of that of Hedge Fund of the time, was in three words: humility, patience, work. No star manager took positions according to his “instinct”, a word banned internally. His traders had to follow the signals of mathematical models and never take personal initiative. In fact, very few Wall Street professionals have been recruited by Renaissance who prefers to hire IBM alumni. The Medallion fund also invested some of its money in about 40 Hedge Fund. It was a way to seize opportunities that he had not identified himself while benefiting from information feedback on the markets. Data gathering. To help it achieve good market forecasts, this Hedge Fund was one of the first to recognize the importance of having as much financial data as possible. He has collected very old and good course histories. Databases often contain errors that a statistics specialist was responsible for flushing out and correcting. The fund was collecting data that was not available to its competitors: one of the contributors regularly went to the New York Fed in Manhattan to manually collect prices on bonds that were not public. Anticipating the rise of “high frequency trading” (ultra-fast trading machines), the fund invests early in technology and computers at the forefront to increase the speed of its transactions and be the first to seize opportunities. The “gross” anomalies in the markets have long since disappeared and the fund must innovate to remain efficient. “The mathematics we use can be sophisticated,” he told Institutional Investors, “but we start from data analysis, we do not have preconceived notions.” “In our business, we want action, we appreciate a certain level of volatility. In 2008, the year of the financial crisis, the Medallion fund jumped by 80%.

 

Business failures in France

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Business failures in France. It’s an encouraging signal for the French economy: French companies are less likely to experience Business failures. Their number was 10,500 in the third quarter of 2019, according to the count made by the company Altares, down 6.4% compared to the same period last year.

This is an exceptionally low level, unmatched since 2007. The improvement is notable in construction, retail, catering and personal services. Even sectors such as business services and industry – particularly agribusiness – are experiencing a decline in Business failures.

Increase in claims of large Companies

All is not rosy however, since the average size of the failing companies increases. Thus, 73 companies with more than 50 employees went to court in the third quarter for Business failures, against 56 at the same time last year. As a result, the number of jobs threatened by these Business failures is growing. Nearly 37,300 jobs are at risk, 2,350 more than in the summer of 2018. These Companies alone account for nearly one third of jobs at risk.

“It has been several quarters since the Business failures of large Companies increase quite markedly,” said Thierry Millon, director of studies of the company Altares. Children’s clothing stores Orchestra, the airlines eagle Azur and XL Airways suffered disappointments last quarter.

Threats in the fourth quarter

Why are some large Companies experiencing more Business failures than before? “The activity has been pretty good since the end of 2015, but some companies have used their money to manage their working capital needs and not to solidify their growth. Today, with the slowdown, they are in financial difficulties, “says the expert who also notes” a degradation of payment behaviour since the spring. ” Vigilance is therefore in order. With a particular focus on the fourth quarter, marked last year by increased difficulties for some businesses and in the restoration because of the movement of “yellow vests”. However, this winter, the public transport strike on the pension reform is threatening.

Signs of weakness in the automobile and construction

Without large-scale social movement, “this year, the number of Business failures should be around 53,000, down from 2018 when France had experienced 54,700 Business failures, according to Thierry Millon. Again, this would be the lowest level since 2007. Even if it should remain low next year, the loss ratio will however hard to maintain at this low water level next year. “Some sectors are showing obvious signs of weakness. This is the case of the automobile or construction for example, “said the leader of Altares. On the other hand, companies should be able to count on the expected healthy performance of household consumption.

General terms and conditions of sale between professionals in France mandatory information’s

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General terms and conditions of sale between professionals in France mandatory information’s.

Obligation of companies

In France the basis of commercial negotiation between professionals, the General terms and conditions of sale must be communicated to buyers who request it. Which mentions should be included? How to communicate them? What sanctions in case of non-compliance with these obligations?

Between professionals (B2B), the General terms and conditions of sale must be communicated to buyers or service seekers who request it. In this case, they must respect specific rules both in terms of their drafting and their mode of communication.

This obligation to communicate the General terms and conditions of sale between does not apply if no customer requests it.

The mandatory mentions of the General terms and conditions of sale between professionals

When they are formalized, the General terms and conditions of sale between professionals must obligatorily include a number of mandatory information provided for in Article L.441-1 of the French Commercial Code. They must include:

  • Settlement terms (including terms relating to payment terms, penalties for late payment and recovery fees)
  • Any price reductions and discount conditions
  • The unit price scale.

Particular mentions

The General terms and conditions of sale may also include optional information such as the terms of termination of the contract, clauses relating to cases of force majeure (natural disaster for example), retention of title or limitation of liability of the seller.

The rules of communication of the General terms and conditions of sale between professionals

If no particular formalism is required by law, the general conditions of sale must be fixed in writing, by any means constituting a durable medium. Generally, the general conditions of sale are found on pre-contractual documents (advertising documents, etc.), contractual documents (purchase orders, contracts, etc.) and annexes (signs, posters affixed to points of sale, etc.). ).

It is possible to establish general conditions of sale differentiated according to the category of buyers of products or applicants for services. To define its categories of buyers, a distinction must be made between:

  • Wholesaler or trader (B2B) buyer
  • Supermarkets
  • Any specialized company
  • distance selling businesses.

The obligation to communicate the general conditions of sale applies only for professionals of the category concerned. The supplier can therefore write as many different terms and conditions as there are categories of buyers.

 

What sanctions in case of non-compliance with the general conditions of sale between professionals?

In the event of a breach of the drafting and communication requirements of the general conditions of sale, Article L.441-1 of the French Commercial Code provides for an administrative fine of up to:

  • € 15,000 for a natural person
  • 75 000 € for one personeiffel-tower-1156146__340

In the secret of a debt collection company and its methods

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In the secret of a debt collection company and its methods. The terms vultures, sharks, mafia methods and other “bird names” are often referred to when describing a collection society. What is it really? Do debt collection companies get rich on the backs of people by practicing unorthodox methods or are debt collection companies doing their Job only? Camille V. calls exasperated debt collection company who claims 27.90 € for an unpaid radiology bill. She has already reported several times to the medical office that the payment was made. His interlocutor Didier O. remains calm. He verifies on his screen and informs Camille V. that it is enough for him to send the proof of the transfer so that the letter of formal notice becomes irrelevant. Camille V. has already hung up and pronounces another well-sworn oath before cutting the communication. Anyone looking for recognition and consideration for his job would be better off not working in a debt collection company. The brand image of this industry is disastrous and the one who receives a letter of formal notice in his mailbox explodes blood pressure. We are looking for positive attitude! Didier O. has worked for 15 years as sedentary debt collection officer he is not a hooligan of a thick brute, he is smiling and sporty appearance. To be hired he had to meet the following criteria: calm, ability to convince and positive vision of life. One of the secrets of a successful debt collection is to receive the file very early, which greatly increases the chances of obtaining payment without having to expose significant costs. This transfer by the companies of recent receivables makes that many delays of payment are only due to negligence or absences for example for leave. A debtor who receives a letter from a debt collection company is immediately on the defensive. According to a survey, 65% of the recipients of this type of mail from a debt collection company believe that the amount claimed is not due. Telephone subscribers, energy providers or consumer credit companies rely heavily on the services of debt collection companies. It is wrong to believe that debt collection companies merely send out standard letters for which they receive disproportionate fees. Especially for trade receivables the debt collection company will have to convince the one who owes money to find an amicable agreement with his supplier sometimes see a partial debt forgiveness. Nobody has any interest in bringing legal proceedings, as the popular saying goes, a bad deal is better than a good trial. The muscular and menacing boxers are not unique to serious debt collection companies. It is in the interest of the debt collection company to settle the file as soon as possible and with the least possible inconvenience for those who owe money. On the other hand, it is abnormal that in France the individual in bad faith does not bear any costs and that for small claims (individual or professional) there is no way to obtain payment without having to bear considerable costs. In the Nordic countries the situation is different and high costs are due even for small debts. In some foreign countries (Germany) there are pressure tactics to oblige the payment of these costs. There is however a satisfied person it will be the client of the debt collection company who will recover his due.bodyworn-794099__340

Commercial Debt Collection and Business Bankruptcy

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avoid empty pockets

avoid empty pockets

Commercial Debt Collection and business bankruptcy are sometimes linked. When a file arrives in a debt collection office, when the amount of the debt recovery is high and the debtor’s situation is fragile the debt collection actions sometimes lead to the bankruptcy of the debtor company. One can therefore ask the question of the relevance of the action of the debt collection company. In reality it is not the recovery actions that led to the bankruptcy of the company it was certainly already in a state of cessation of payment. The recovery procedures are only the drops of water that broke the camel’s back. The bankruptcy procedures are mostly long and dead-end, the creditor said unsecured (the one who has no security) having very little chance of recovering what is due to him. Should we in these cases renounce recovery actions? the answer is clearly no because only the one who acts keeps a chance to get his bills paid. One of the most common prevention tips was to tell suppliers to learn about the creditworthiness of their customers and keep their credit limit under supervision. This common-sense rule now faces new difficulties. Indeed, the secret of business in a world in full transparency becomes more and more opaque. In France, for example, it is now possible for small and medium-sized businesses to make their balance sheets confidential, whereas a few years ago this was considered a crime that could be prosecuted by the public prosecutor’s office. It is no longer uncommon to see companies that are well-rated by intelligence companies suddenly go bankrupt. One of the remedies to business bankruptcy losses is to adjust the credit limit to the size of the client. It is common to see the debt collection of important files that concern very small businesses. When a company is in trouble it will rush into the arms of a supplier ready to give it credit. The salesperson will be enthusiastic about developing his turnover and everyone will fall into the trap of supplier credit. It is the exporting companies that are setting up in a new country that are most likely to fall into this kind of trap. The losses and debt collection difficulties are in fact linked to the short-term profit policy which penalizes the exporters who have not planned a moderate development and supported by a substantial budget.