M. Montebourg Has Had Second Thoughts ...

... but the Genie is out of the bottle.

On Monday, Arnaud Montebourg, the French Minister for Industrial Recovery, stated that Arcelor Mittal was no longer welcome in France, and accused the steelmaker of "lying" and "disrespecting" the country.

M. Montebourg has since decided that Arcelor Mittal might be welcome in France after all, and French Finance Minister Pierre Moscovici has spent some time today trying to bury a truly colossal blunder under a welter of would-be soothing phrases.

Unfortunately, M. Moscovici's description of the possible nationalisation of Arcelor Mittal's Florange Plant as a 'temporary mechanism' is unlikely to prove very soothing to any profitable (and therefore potentially vulnerable) foreign owned business operating in France.

Unfortunately, too, I feel sure that M. Moscovici's assurances - given in Paris to an audience of US and British investors - that his Government has no intention of returning to 'an older way of thinking' or carrying out massive, general, and permanent nationalisations was received with a large degree of politely unspoken but deeply felt scepticism.

The BBC's correspondent in France has reported that business leaders there have expressed concern that the government's rhetoric is undermining confidence in French industry. They might well. It's one thing to let the Genie out of the bottle, but it's quite another thing to try and put it back.

In the meantime, I do sincerely hope and trust that someone had the good sense to apologise for M. Montebourg's intemperate and unjustifiably personal remarks when Mr. Mittal met with M. Hollande today.

The French, Mittal, and Intangible Assets

Arcelor Mittal announced in October that it planned to close two of the furnaces at its Steel Plant in Florange due to lack of demand in the steel industry. It was a business decision - and I suspect a very difficult decision to make, given that Florange is a traditional steel town and that over 2,000 workers would be affected by any closure - but it was, I believe, a good, reasonable, and well-founded decision given all the circumstances.

The reaction of the French Government has been neither businesslike nor reasonable, nor very sensible.

Arcelor Mittal gave the French Government a grace period of 60 days to look for a new owner for the two idled furnaces. The French government has apparently received two offers - but only for the entire Florange site. Mr Mittal, very reasonably, has refused to sell the entire operation, for which he paid £21.8bn when he took over Arcelor in 2006, and which employs a total of 20,000 workers. In response, the French Government is looking to seize and nationalize the whole of the site should Mr Mittal refuse to accede to its demands.

As if that were not more than enough, Arnaud Montebourg, French Minister for Industrial Recovery, told French business daily 'Les Echos' that Arcelor Mittal was no longer welcome in France, and accused the steelmaker of "lying" and "disrespecting" the country. The problem, he said, "isn't the furnaces in Florange, it's Mittal"

According to the BBC, the Mittal family said they were "extremely shocked" by these comments. I don't blame them. I'm extremely shocked myself.

I'm shocked by the inability of the French Government to recognise that a business must cut its losses if it is to remain a viable business and able to continue to employ some, albeit not all, of its workforce.

I'm shocked that any Government anywhere could fail to foresee the effects of its actions on future foreign investment.

I'm shocked that a Government Minister should feel it appropriate to make rude (and possibly defamatory) comments to a newspaper - and never mind what Minister, what Government, and what newspaper.

What shocks me most of all, though, is the fact that in its desire to seize a tangible asset - which may or may not yield the billions of Euros that it hopes to get from it - the French Government has not taken into account the intangible assets they will lose by doing so.

Lakshmi Mittal and his family will always be welcome in Britain whether they decide to invest their money in Britain or not. Hardworking, decent people are 'intangible assets', and money has nothing to do with that.

Hard Times & Employee Fraud

Earlier this year, an analysis of frauds recorded on the UK's Fraud Prevention Service Staff Fraud Database revealed an increase in the level of fraud committed by employees in 2011. This was reported "In Brief" at the time in the Institute of Credit Management Magazine under the title "Shifty Staff".

I have to say that I took exception to the title "Shifty Staff" - and that I found that "In Brief" didn't do the subject justice.

Certainly, "In Brief" stated, quite rightly, that whilst SME's are aware of the danger of customer fraud, they are reluctant to recognise the risk of fraud on the part of staff - people they believe they know well. Sadly, "In Brief" was too brief to take account of the fact that hard times increase the temptation to steal, or give advice as to how to minimise the risk and remove the temptation.

Some time ago, I wrote quite a long article about fraud and how to avoid falling victim to it - and you can find it at top right on the menu of this blog under the title "Look Out For Fraud". It isn't a perfect recipe for avoiding fraud, but it may give you something to think about and some ideas as to how to minimise risk and remove temptation.

In the meantime, please bear in mind that two thirds of all employee fraud is motivated by debt, gambling, or need. "Shifty" is not quite the word to describe people in the grip of those forces.

SMEs are not social workers and have neither the time nor the resources to help staff deal with the problems that might drive them to steal, but information as to how to deal with debt in particular is freely available - and there is no reason why those resources should not be made available in the office. Even if it means posting notices in the lavatories.

The Rule in Clayton & Invoice Allocation

Invoices should never remain outstanding beyond the period specified by the Terms & Conditions that form the basis of the Contract, and everybody knows that.

That invoices do remain outstanding long – sometimes very long – past their due date isn’t as unusual as it should be, and everybody knows that, too.

One other thing that everybody knows: not only do some debtors fail to pay to terms, they also insist upon paying or part paying outstanding invoices intermittently and in defiance of any logical pattern or system – so much so, indeed, that incredulous credit personnel on the receiving end of these intermittent funds are left to wonder whether their client counterparts are playing some hitherto unknown form of Lotto, and pay invoices only as they are hauled out of a bin, randomly and at irregular intervals.

The Rule in Clayton’s Case (Devaynes-v-Noble(1816) 35 ER 781) enables a Creditor, if it so wishes, to legally and justifiably allocate payments received on a ‘first in’, ‘first out’ basis. The debtor should be told that this is being done, and why – and does not have the right to argue the point.

Clayton’s Case was good law in 1816, and it is good law now – and as many Companies follow it (whether they know of its existence or not) and allocate payments received to debts in the order in which debts are incurred, the fact that invoices are not paid in the correct sequence wouldn’t seem to matter very much, but where there are a great many pro forma invoices, this apparently simple method of allocation can create such an impenetrable maze of possibilities that neither debtor nor creditor can be sure of what is, or is not, outstanding.

This does not means that moneys cannot be allocated on a ‘first in’, ‘first out’ basis, but it does mean that, sometimes, it shouldn’t be.

Allocating moneys received to the invoices that it is intended to pay, or part pay, enables the creditor to state with certainty that a debtor has paid this, this, that, and part of that on such a date, and that this, this, that, and part of that therefore remains unpaid, and is due and owing as of today.

Keeping things on track in this way is not the neatest or the easiest way to go – and everybody know that – but it keeps the record straight, avoids the possibility of future confusion and disagreement, and will save a lot of time and trouble in the end.

No one wants to spend an entire weekend – to say nothing of most of the preceding Friday and a good chunk of the following Monday – sorting out a problem account if the origins of the problem are lost in the mists of time.

I know that.

The Case of The Phantom Franc

I have always been intrigued by ghosts. They seem to conform to certain rules - follow particular patterns of behaviour according to type - but they are so capricious that one can never be sure of seeing enough of them to take proper note of their behaviour, or be sure that they are conforming to any rule at all.

All of which makes The Case of the Phantom Franc so very interesting.

The Franc is, of course, certainly dead - we all know that, because many of us attended the funeral - but I have to say that I never encountered such a persistent and reliably visible apparition. It lingers in a thin column on my Bank Statements, whispers the price of a single leek in the Supermarket, lurks gloomily at the foots of bills from the garage. It appears,in fact, a lot less capriciously than it should, and far more often than one would expect, for the ghost that it is supposed to be.

Perhaps it isn't a ghost.

Borro-ing - Don't do it!

In busy times - and these are! - I have little time to write, and a lot of the things that I would usually read as a matter of course either don't get read at all or are just pushed into a pile that I try to get to sooner or later. But I always read Business Credit News the minute I get it - which is how I came to find out about borro Ltd.

Borro are on-line pawnbrokers - and I don't know why I'm so surprised that no one has come up with that idea before - and the Company offers SMEs ( and other customers) short term loans of up to £1,000.000 secured against high value assets - art, antiques, diamond jewellery, yachts, prestige cars and, of course, gold. For obvious reasons, there are no credit checks. After all, if someone has your high value asset sitting in a warehouse somewhere they really don't need to spend the time and money checking your creditworthiness, do they?

Rates include all costs associated with couriers, valuation, storage and insurance - as well they might. The monthly interest on loans up to £19,999 is set at 4.99%. The APR equivalent is 68.8%.

In a Press Release published by Business Credit News today, the CEO of Borro stated that "UK businesses remain caught in a credit drought as yesterday's Bank of England statistics show that lending to companies went down 3.5% compared to a year ago", and added that "small business owners have had to turn to personal funds to boost their businesses".

That is undoubtedly true. SME's are still having a problem getting the financing and support they deserve, Project Merlin hasn't been the magical answer that we had all hoped for, and small business owners are still having to dig deep, cut down on staff, and use personal funds to keep their heads above water. However, and whilst I have no doubt that Borro is a reputable Company, and I have nothing against pawnbroking in general, I think I have to remind you that the traditional sign of a pawnbroker was three golden balls.

At the sort of rates Borro are offering two of them are yours...

Round & Round We Go

Some days ago now, I received an e-mail from Stephen Cowan, who is a Managing Partner at Yuill & Kyle, debt recovery lawyers based in Scotland. It relayed a press release dated 6th Feb 2012 from the Department for Business, Innovation and Skills. The e-mail was headed 'Government and Business Press for Prompt Payment - and I knew exactly what the Press Release was going to say before I read it.

Once again, Government and industry is calling on businesses and public organisations to pay suppliers on time and for small firms to pursue those who put them at risk by delaying - and once again the same organisations and the same people are supporting this cause:

The Forum of Private Business, a not-for-profit organisation that offers advice and help to SMEs in the UK - much of which is free on-line via articles. Membership of the FPB has never been an expensive proposition, and the Forum is now offering an introductory membership to provide SMEs with a basic business support package free of charge.

The Institute of Credit Management which publishes various useful guides and runs the Prompt Payment Code, which promotes best practice between organisations and their suppliers. Businesses and organisations that sign up to the Code commit to paying their suppliers within clearly defined terms, and also commit to ensuring there is a proper process for dealing with any issues that may arise.

The Association of Chartered Certified Accountants (ACCA) which has recently published a new guide on prompt payment.

I have known of these organisations and many of the people who work with them and promote them for many years. I appreciate and admire both the organisations and the people, and I would advise any SME to take what is on offer from any one or all them, because what is on offer is well worth having - particularly as some of it is going to cost nothing. What troubles me about this new initiative is that it is the mixture as before which, like all the previous mixtures, fails to address the real problem.

The real problem is fear. Fear of being delisted by a powerful customer for failing to agree to its terms. Fear of the result of using existing legislation to make a complaint about a powerful customers' failure to pay according to terms. That fear is based in self-interest and a desire to survive, and I fear that no amount of education, no inducement, nor any legislation will ever succeed in overriding it.

Very, Very Bright Young Things

If anyone was expecting 2012 to be an instant improvement on 2011, they are wiser now: at the moment it seems we shall be lucky to get the mixture as before, rather than - as seems likely! - something rather worse. Or, at least, that would seem to be the case if you read the news, and forget that cheerful and upbeat is not nearly as newsworthy as death and disaster.

At the moment we are all hearing and reading a lot about rising levels of unemployment all over Europe, and the possibility of a 'lost generation' of young people who have little or no prospect of getting a job; no one seems to be interested in talking about young people who have decided that they would rather be found than lost.

End a grim month on a cheerful note! Take a look at some young people who are definitely not interested in getting lost by visiting Sharing the Making.

'Sharing the Making' would be an interesting and impressive concept at any time; in the present climate, the courage and confidence and expertise of all the 'makers' showcased on the site is an extraordinary tribute to them all.

It's also an excellent indication that SME's can thrive and prosper in Britain whatever the climate. But you won't be reading anything of the kind in your newspaper tomorrow morning...