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Thursday, 28 August 2008

How to fix the property market - according to our clients

We are working with 3 mid sized regional estate agency groups from the midlands to the South-East.

All have suffered massive drops in sales transactions and all have engaged KSA to assist with cost cutting, reduction of employee numbers and reorganisation of debts using company voluntary arrangements.

I have spoken to all three today and yesterday and some interesting issues have popped out of these discussions

1. All are seeing demand for property rising slightly.

2 All have seen more sales agreed in August compared to previous months.

3. All have seen most of these sales fall through for three main reasons; worries that stamp duty will be suspended, "gazundering" and the withdrawal of mortgage offers at the last minute.

So how would they fix the market is the question we have asked all of them.

  • Get the "cretinous" government to make a decision on Stamp duty, suspension or continuation doesn't matter which. JUST DECIDE. People will hold back if there is a chance of not paying tax!
  • Remove the requirement for HIPS, this was a disaster waiting to happen. All it has done is create jobs for civil servants and consultants.
  • Provide some succour to the mortgage lenders with an extension of the £50bn BOE mortgage rescue facilities.
  • And of course CUT interest rates.

Frankly I don't think all of these are likely to happen as the political pressure on the government would be huge.

Also in my opinion why should the tax payer bail out the home market?

We need to see a recovery in savings and a period of austerity. I remember having to wait 6 months for a mortgage on my first property which cost £16,000, then I had to pay my wages into the Universal Building Society and hope that the manager Mr Davidson would let me have a mortgage based upon my savings. I had to provide a 30% deposit in 1980.

I suspect we will see more banks and building societies applying a similarly careful approach in future ?

Tuesday, 19 August 2008

Top ten tips to help your company survive a recession

Recession is coming we can help your company survive!
  1. Set out a simple strategy for survival. A one or two page business plan will help guide you through. If you already have a detailed business plan, dust it down, and add the new short term survival strategy to it. How does that impact upon the older plan, the business and the way you go about business?
  2. Follow our cost cutting guide, there are always more ways to cut costs. If you need to cut people costs, make sure that you follow correct procedures.
  3. Check your cashflow DAILY, we can provide a free cash flow model by return simply email Don't bounce cheques, be in control of your bank account.
  4. Don't stop marketing, but review all expenditure. Does old fashioned ink and paper advertising actually bring in revenues? Be honest, if it doesn't, then stop all printed advertising. Consider, Google Adwords programmes. A modest spend can bring targeted customers (Google may have brought you to this page!) If you don't know how by "Adwords for Dummies"!
  5. Call all of your customers and ask how business is for them: this will benefit you in several ways. You may sell them something new or extra. You may find out that they are in deep trouble, so beware of supplying. You may learn more about the impact of the credit crunch on their business and how may that impact on your business. So you can then adjust your plans (see tip 1). Knowledge is king in difficult times.
  6. Review prices, can you increase your prices? Can you cut suppliers costs by paying faster or earning "settlement discounts". Can you buy larger quantities at better prices, can your business help their business survive. Talk to them! Ask accountants if you can spread payments for their fees monthly. All helps cashflow.
  7. Make sure that your debtor collection is spot on. I know a plumber that issues his invoices once a quarter!! Make sure you issue your invoices EVERY DAY. Make sure that you have a strong debtor collection policy, no payment after 90 days should lead to no further supplies to your customer. Yes I know its a fine line but if your customer does not pay there is no point in sending more invoices is there? See our fuller guide here
  8. If you use factoring only draw down one a week at most. Every time to draw down costs you money. Daily drawdowns can cost £000's over a year. So if you use your daily cashflow model you should be able to control cash such that you draw down cash Mondays, issue cheques and BACS on Tuesdays and issue new invoices every day if you can. This will save you hundreds of £'s this month.
  9. If you cannot pay arrears of PAYE and or VAT, you can obtain 6-12 months form HMRC to spread the payments out. if you don't know where to start use our programmes at our shop. Spend £87 to get 12 months to spread £000,'s of tax payments until 2009!
  10. Make sure that all of your people know that times are going to be difficult and the team must work extra hard to survive the downturn.

So there you go CompanyRescue's top ten tips to survive a recession. If you need additional help we are always here to answer questions or give guidance. Call 0800 9700 539 (free from landlines).

Monday, 18 August 2008

KSA is hiring, we need good people!

Full Time Insolvency & Corporate Advice Administrator Required

Closing Date 8th September 2008

Based in our Berwick office some London work may be required.

Accounting, credit control experience required, along with mature telecoms skills. You will be efficient, a self-starter, organised & conversant with Office, Outlook, e-mail, internet & office systems.
Insolvency CVA / liquidation /IVA experience will be advantageous!

KSA operates from Berwick & London offices providing CompanyRescue advice to struggling companies. Interesting work, fast growing, lively company. Starting salary scale of £17-20k plus annual bonuses to reflect your ability and experience.

E-mail or write to Keith Steven (Director) attaching your CV and why you want to work with KSA.

KSA (NE) Ltd, Units 7 & 8 The Chandlery, Berwick, TD15 1HE; Floor 6 Tower 42, 25 Old Broad Street, London, EC2N 1HN

Recession in UK is months away

Recession in UK 'is months away' is the big news headline today, with a change of view from British Chambers of Commerce, their news releases has been picked up by most of the media.

BCC now predicts a UK recession, 250-300,000 job losses and no recovery for at least 2 years.

Frankly, it is not really news anymore as anyone who reads the press, listens to the news and works in SME business will know, this has been discussed for some months now.

What's new? The fact that many august organisations like British Chambers of Commerce are now having to redraw their forecasts and withdraw some of their commentary, replacing it with less optimistic and rosy rhetoric now.

Economists like Ambrose Evans-Pritchard, Tim Congdon and others have been forecasting recession for some months. Indeed Evans-Pritchard reporting on the Budget on 13th March 2008 in the "Daily Telegraph" said:

"Britain is at risk; it duplicated the USA bubble and must suffer the same fate. The UK is merely 9 months behind. America tipped last autumn - Britain will tip this summer". By tip he means Britain will start to tip into negative growth by summer 2008. At that time he was shouted down by scores of people, BCC were like Mr Darling, forecasting 2.5% growth then. What price their scorn now?

I have been using a very long email signature at the end of each email message for 6 months now. In it I say cut costs NOW and preserve cashflow NOW. BCC are now effectively joining this siren call in warning for recession and 300,000 jobs being lost in the next 18-24 months.

This would suggest that their economists see difficult times ahead for the SME sector until late 2010.

What can SME's do now? I keep going back to my email signature, get ready now if you have not already. Cut costs, reduce overheads, try to increase prices and margins, manage your cashflow daily, oh and get the tin hat on.

Economists are saying we are going to have 24 months or longer of stagnation, then recession, then stagnation then slow growth maybe starting early 2011.

Friday, 15 August 2008

Limited Liability Partnerships; we are working with a number of LLP's to help them restructure. In one case a firm of solicitors with very high levels of bank debt approached us to see if a company voluntary arrangement for a LLP was possible.

Our normal policy is to go through all options for our prospective clients, we compare the advantages and disadvantages of administration, CVA, liquidation, receivership and so on. Then its a process of elimination and pick the most appropriate option - CVA of course!

In a law firm's case if it was to enter administration or receivership then under Regulation 8.2 of the Solicitors Recognised Bodies Regulations 2007, recognition of the solicitors will automatically expire if a winding-up order or administration order is granted under Part II of the Insolvency Act 1986, or a resolution is passed for voluntary winding-up, or an administrative receiver is appointed, in respect of a recognised body.

What does that mean in plain English?

Well simply the firm would lose all of its clients because the Solicitors Regulation Authority would remove the legal work and clients from the company to protect their interests, upon the granting of an administration order. In lay terms a SRA hit squad would arrive and remove all of the files and take control of the trust accounts etc.

So we suggested that a CVA was in the best interests of the bank, the unsecured tax and trade creditors and staff. Although an annual assessment of the members (lawyers) will be carried out by the SRA, the CVA does not lead to automatic breach and loss of the solicitors ability to practice.

Thus our CVA process will lead to an orderly reduction in bank debt, around 50p in £1 for tax, trade and VAT creditors and retention of around 60 jobs in this case.

Tuesday, 12 August 2008

UK Government's Desire for a company rescue culture!

Quote from local Government Minister in Rochdale papers.

"We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible".

That's good then? Why do so very few business people know what the company rescue options are?

Do the government ministers responsible know the difference between administration, company voluntary arrangement (or company voluntary agreement according to "The Times" today), pre-pack administration or liquidation? Suspect not.

One day back in April 2005 when MG Rover was having a torrid time, the then DTI secretary of State Patricia Hewitt announced on the Ten o Clock News that MG Rover had "called in the Receivers".

Now given she had overall responsibility in Government for business and The Insolvency Service you might have thought she would get her facts right? First she would have checked the state of play before going live on TV and making that statement? Right?

Not at all. You can imagine some mandarin or spin meister saying "Just say what you think is right".

Fact: MG Rover was in discussions with trade insurers, suppliers, bankers and unions to try and set out a survival plan that evening. Ms Hewitt effectively pulled the plug on that and the future of the company with her unilateral INCORRECT announcement.

Truth was an Administrator was also being consulted and within hours was appointed. The board felt it had no option after the Government effectively kyboshed the company.

So if the then Secretary of State could not tell the difference between administration and administrative receivership, I suppose I can forgive the Times journalist today getting CVA meaning wrong!

PS remember "Railtrack plc", ah yes another Government initiative to kill off an unwanted business and nationalise it. Will we see more of this favourite Labour party ploy in the time it has left?

Monday, 11 August 2008

Bankruptcy Breach - Sole Trader imprisonment

This is an interesting case because it highlights the little known provisions in the Insolvency Act preventing bankrupts from taking credit without disclosing that they are in fact undischarged bankrupts. Thanks to Business Credit News for sending me this.

"From DBERR - Kent kitchen fitter jailed for bankruptcy offences

A Kent-based kitchen fitter who took nearly £30,000 in deposits from customers but failed to complete their kitchens has been jailed for bankruptcy offences after prosecution by the Department for Business.

Lincoln McLean, 51, of Canterbury, was jailed for two years for offences against the Insolvency Act which prevents bankrupt people taking deposits for work.The court heard McLean accepted deposits from customers, promising them a new or refurbished kitchen, but then took the money and never completed the work.

Business Minister, Pat McFadden said:"We are determined to crack down on cheats like these who profit by deception. Honest people who have handed over money have suffered as a result."This prosecution sends a clear message to would-be fraudsters that they won't get away with it.

"McLean was sentenced on 01 August, 2008 in Canterbury Crown Court and received a total of two years imprisonment on 5 counts contrary to s360((1)(a) and Schedule 10 Insolvency Act 1986 (12 months on counts 1, 3 and 4 and 12 months consecutive on counts 6 and 7, as listed on the indictment.

I suppose it begs the question did the customers ever check out this guy's references? Or did they not ask for any before handing over their cash?

* This case refers to money taken from five customers, for a total of £29,630.* Mr McLean's prosecution and subsequent sentencing resulted from complaints received by the Official Receiver in Croydon, who then referred the matter to the prosecuting authorities.* As an undischarged bankrupt, McLean was not entitled to accept deposits as he thereby obtained credit, in breach of S360 of the Insolvency Act 1986.

Friday, 8 August 2008

Wet wet wet

So wet in fact the trains stopped running on my journey from London to Berwick last night and I was chucked off at Newcastle. No trains, no taxis. Had to stay the night!

Floods? In August, what kind of summer is this? And the forecast is for another wet weekend. Think its going to hammer my farmer friends, trying to harvest, the fields will be bottomless.

Still my colleague Iain Campbell won't mind he has a long weekend off to decorate his house. Think I'd rather be at work than do that!

The weather is about as bad as the losses being made by the big banks this last period. Will all the UK's banks survive this torrent of bad news and losses? It is not inconceivable that another Northern Rock is out there just struggling to keep its head above water. After the de facto nationalisation of Northern Rock here and Freddie Mac / Fannie Mae in the US, some may say banks are just too big to fail?

Oh really, so what do my clients have to do to be saved by the tax payer? If banks can be greedy profiligate and still get rescued, then why can't my clients? No, in their businesses the buck stops with the board and they take the blame for failure. The buck could include a lost job, lost home and personal bankruptcy.

Other than Adam Applegarth of Northern Rock, still not one senior director of a major UK bank has resigned or lost his job (as far as I am aware). They need not worry, if the bank fails they will have made a fortune anyway. Who knows they may even be rescued by you and me the taxpayer?

Strange times indeed.

Wednesday, 6 August 2008

Credit crunching your company? You don't need to go into administration, receivership or liquidation right away!

Look the credit crunch is hitting my clients' businesses, the manufacturing sector and the services sector. In other words the real world and people like you!

So is the credit crunch hitting your business? If so we can provide a range of 5 top tips and tools.

  1. Common sense advice from people who work in turnaround and insolvency every day. Sometimes we point people in the right direction after a phone call to 0800 9700539. Fear often rules heads and minds - not rational business thinking, talk to someone at KSA now.
  2. 483 different guides and pages on our website often help business people in the middle of the night. I love that, when we get an email from someone at 1:55am saying thanks. Its all free and confidential, we won't contact you unless you want us to.
  3. Our expert programmes - did you know you can get 6-24 months to pay PAYE and VAT to the Crown? Wouldn't that help cashflow? Could this buy your business a breather? See here expert programmes for your business buy our programmes from as little as £87, get thousands of £'s of cashflow savings.
  4. Get our free daily cashflow model, we use it every day for our own business! Easy to use and helps stop bounced cheques! YES FREE, if you want one call me or email now. 07974 086779.
  5. Use a CVA (company voluntary arrangement ) to cut costs, remove employees, kill leases, downsize overheads and SURVIVE the recession. We can help even bust companies!

So our top 5 tips to survive the recession! Will your business be here in August 2009? If you are worried get help now.

Tuesday, 5 August 2008

Welcome Garry to the Blogosphere

Garry Mumford and Claire Ansbridge have launched a Blog for Insight Associates - we work closely with these chaps and chapesses down in sunny Stansted.

I have worked with Garry since mid 90's when he was the first accountant I had ever met who KNEW what a CVA was! In a time when I was working with The MacDonald Partnership plc I ran a series of seminars on the company voluntary arrangement tool, how we were using it and why it was so powerful.

Seems like only yesterday but it was 1997! So 11 years later and I am still ranting on about CVA's and CompanyRescue of course.

So Garry has launched a blog to tell people about his great business Insight Associates and the The Outsourced Finance Department. If your business is growing, if you are a salesman and accounts are those "orrible things that have to get done Sunday afternoon around kitchen tables" or if you have lost an internal accountant and you are high and dry....then TOFD could be just right for you.

Say Keith told you to call!

Friday, 1 August 2008

MFI - next for Administration

So the next big retail failure is probably going to be??? Well perm one of many?

I think reading the press, that that the announcement that Paul McGowan and Andrew Pepper of Hilco have "joined the board" of MFI heralds the break up or failure of that long running saga called MFI.

Hilco have been spending the last 5 years sniffing out value, discussing deals, making sharply discounted offers, pressing directors to accept as SECOND last resort. "Hey the last resort is Administration ". Anyway they know their onions and have tabs on most struggling multiple retailers.

With a well connected team in the retail world, and some very quick witted people they are well positioned to pick up the retailers with lots of stock, good sites (alongside some rubbish ones) and no future.

You will see the Hilco name more in 2008-2010. What about MFI though?

So lets say MFI has senior debt, bonds, junior debt and lots of suppliers (unsecured debt). They may have rent arrears (stuffed landlords - that's a technical term), too many employees and a failure of management. So that's a classic distress buy for Hilco.

My bet is you will see the following:

Closure of stores.


Suppliers will be asked to wait.

Employment levels will fall.

Then covenants (bank/senior/junior debt) will be breached.

Hilco will acquire the business

Hilco will trade it for some weeks (de-stocking and leveraging debt)

Then Hilco will "flip" the business to a buyer.

Good luck shareholders of MFI?

Bad news on all fronts

It says something about the current febrile economic conditions when Breakfast news leads with headlines about annual reports from BA and Alliance & Leicester. Profits down 88% and 99% the news reader almost shouts. What will the media say, when company failures rise, unemployment rises, inflation goes past 5%, house prices continue their fall and drop by more than 25%? The end of the world is nigh?

How will this all end? Will it be a recession and if so why is that a bad thing? Why is it ok to grow every year for 14 years and then have a "fit" when growth stops or declines modestly? This has always puzzled me. Perhaps it can be summed up by "greed and fear". Bull and bear at its basest human emotive level.

Still the good news, (there is always a silver lining) is more and more companies are asking for our help. July was our busiest month ever for enquiries into KSA. This week we have taken on 5 new clients alone.

My first statement to all worried directors when they ask the solution to their problems is, "look its going to get tough out there for up to 2 years, batten down the hatches, cut costs and lose people now to survive it. Then if the downturn is less steep and we have reorganised your debt, you will emerge leaner and meaner in the upturn".

For some that's too aggressive and they walk away from us. I would rather they walk away now, as to be honest, they don't seem to get it! Will they survive, who knows.

Have a good weekend!
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