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.