201504 CM April

CICM WELCOMES MOVE TO BRING GREATER CLARITY ON IPs FEES
THE Chartered Institute of Credit
Management (CICM) has welcomed
the announcement by the Business
Minister Jo Swinson that will oblige
Insolvency practitioners (IPs) to provide
upfront estimates of the cost of working
on insolvency cases, thus ending the
uncertainty of unlimited hourly charges.
Philip King, Chief Executive of the
CICM, said that the news was a victory for
common sense: “The CICM has been vocal
in wanting to see up-front estimates for
work undertaken so the element of surprise
is removed further down the road in the
insolvency procedure,” he says.
“The introduction of new rules is
therefore to be strongly welcomed as are
any well-considered actions that help to
bring greater confidence to creditors and
transparency in the fees that are charged.”
In a busy time for the insolvency
profession, Philip also welcomed an
initiative by R3, the insolvency trade body,
to launch a website designed to guide
creditors through the insolvency process.
HMRC has released its long-awaited
statistics on the cost to taxpayers of
operating the controversial UK antiavoidance
measure. But the information
HMRC is able to provide only covers half
the story, says the ACCA (the Association of
Chartered Certified Accountants).
Jason Piper, ACCA’s tax technical
manager, says that the wider costs of IR35
are beyond what HMRC has the remit
or resources to reasonably investigate:
“Government has clearly identified a risk
that it wants to address, but it’s important to
make sure that the mechanisms used are the
best that we can craft,” he said.
BUSINESSES in the UK received an all-time
high £19.4 billion of funding through asset
based finance in Q4 2014, an increase of
£1.6 billion on the same period a year ago,
says the Asset Based Finance Association
(ABFA).
This jump in the use of invoice finance
and asset based lending is now primarily
driven by businesses funding growth plans
rather than replacing their use of traditional
term loans or overdrafts.
According to the research, businesses
are now using 38 percent more asset based
finance than at the height of the recession
in December 2009, when £14.1 billion
was provided. 80 percent of asset based
finance is invoice finance, while the other 20
percent represents the fast-growing area of
AVOIDING THE ISSUE
The site, www.creditorinsolvencyguide.
co.uk, explains in simple terms how
creditors can engage with the insolvency
process to increase their chances of
seeing money returned to them, approve
insolvency fees, and see action taken
against fraudulent or negligent directors or
bankrupts.
Built with the support of the CICM,
Philip presented at the formal launch of
the site on March 3rd: “Insolvency can
be seemingly complex and difficult to
understand,” he says, “but a vital part of
the process is in encouraging creditors to
engage with insolvency practitioners to help
maximise recoveries.
“Understanding how insolvency
procedures work, and the terminology
used, is key to successful engagement, and
the CICM has been pleased to support this
initiative by R3. It is a major step forward
in demystifying insolvency and provides
practical, pragmatic advice that will be
welcomed by our members and the wider
business community.”
ALL-TIME HIGH FOR ASSET BASED FINANCE
asset based lending. Jeff Longhurst, Chief
Executive of the ABFA explains that there is
also another £20.5 billion of unused facilities
agreed with businesses which they could
draw down if they required it:
“Having finance in place that allows you
to move faster than your competitor allows
you to fill orders quicker, make quicker hiring
decisions, secure those new premises and
take market share quicker.
“So getting your request for funding
approved with a rapid turnaround is really
important. With invoice finance you can
rapidly scale up or down the amount of
money you borrow. With other funding
products it can take months before you
can get finance approved and the funds in
place.”
Giles Frampton, R3 president, agrees that
creditor engagement is integral to the smooth
running of insolvency processes: “It is a core
part of a strong, fair, and trusted insolvency
regime,” he says. “The more creditors get
involved, the more effective the insolvency
process is.
“The insolvency profession, government,
and creditor groups have been determined to
make it easier for creditors, particularly small
businesses, to engage in insolvencies. This
website is an important part of that effort.”
Creditors are invited to provide key
information about directors’ and individuals’
behaviour, help locate hidden assets,
and help oversee the work of insolvency
practitioners: “The UK has a world class
insolvency regime, but it is always open to
improvement," Giles adds.
The new website contains a step-by-step
guide on how different insolvency processes
work, a guide to insolvency terminology, and
tips on how to help oversee the running of the
insolvency process. (see interview page 12).
NEWS IN BRIEF
HAVE YOUR SAY
P&A Receivables Services is launching its
2015 Global Credit Survey on 7 April with the
results being published on 1 June. Running
for its fourth year, the survey monitors
overseas trading issues and concerns,
trading experiences, payments, requests
for extended terms, risk management
and the outlook for future business.
P&A is being supported this year by the
Institute of Financial Accountants (IFA), the
Chartered Institute of Credit Management
(CICM), Sheffield Hallam University, Hays
Recruitment and The Association for Credit
in Central and Eastern Europe (ACCEE).
https://www.surveymonkey.com/r/SDM83K5.
WHEELS IN MOTION
FIGURES released by the Finance &
Leasing Association (FLA) show that
consumer new car finance volumes fell by
three percent in January 2015 compared
with the same month in 2014, but
remained 11 percent up in the 12 months
to January. The percentage of private new
car sales financed through dealerships by
FLA members reached a new high of 76.2
percent in the 12 months to January 2015.
Consumer used car finance volumes grew
by three percent in January and by 12
percent in the 12 months to January 2015.
The recognised standard in credit management www.cicm.com April 2015 9