CM December DECEMBER 2018

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INTERVIEW AUTHOR – SEAN FEAST “I knew that if I didn’t do it then, I might never get around to it,” he explains. “As it was, the company did not accept my resignation, and I was able to take a sabbatical, travelling across South America, North America, Australia, New Zealand and India, and spending several weeks skiing in France. My fondest memory was in Central Australia, sleeping out under the stars in a swag bag. It is only then that you realise how small you are!” INTEGRATION ROLE On his return, Derek once more threw himself into his role, moving to Leeds and spending four years with the business until it was taken over by the Lloyds Banking Group (LBG), by which time he was the Chief Operating Officer for its Retail operations, responsible for more than 14,000 staff at its peak. He was latterly the Integration Director of LBG, and as such has some sympathy for the IT traumas recently experienced by TSB as it looked to migrate systems: “We had every form of contingency plan but in the end we were able to stand the team down after a week as the programme had been a success,” he says. The workload, however, was relentless: “We were working every day, starting with a conference call at 7-30 in the morning and finishing with another at 6-00 at night, for the better part of 18 months,” he continues. “I was working for Mark Fisher, the COO for LBG. Mark had led the RBS/NatWest integration which was the benchmark project of its time, so knew what it took to be successful. He was super smart but very demanding.” Moving south once again, Derek was tempted away from LBG with an offer from Travelex to become the global CIO: “We’d come to the end of the integration programme and all of the jobs I might have been interested in were filled, so the opportunity came just at the right time. Travelex was getting ready for a sale; it operated in 26 countries that had been somewhat under-invested in terms of technology, and so there was a great deal of work to do. In the time I was there, we were able to significantly improve service levels and make some general improvements to systems and processes, but we never quite achieved everything we wanted.” Derek stayed on until after the business was sold, and shortly afterwards he agreed to join Ken Stannard at Cabot. “Ken had spoken to me before to get me to join him at Marlin, and now that the business had merged with Cabot, Ken’s role had expanded to include Europe and he needed a dedicated managing director for Cabot’s debt purchase operations. While I had never bought debt before, I had sold some.” Using his accountant’s skill in getting beneath the skin of a business, Derek identified where further improvements could be made, especially in the use of analytics and improving the customer journey. The business had just become one of the first to achieve FCA approval, and was looking to optimise its position in the market. “I felt we’d become something of a ‘tickbox’ company,” he tells me, honestly, “in the way that we engaged with customers. In one of the first calls that I listened into, a woman was making her last payment, and wanted to give us some feedback. She said that while we had always been very helpful and polite, she did not have the same experience with every creditor. Even then I thought that we could do more, and so worked hard with the management team to further improve our customer engagement and better understand the customer’s individual position.” BOARDROOM MEETINGS Since joining the business, Derek has instigated a regular Friday morning Boardroom catch up, involving every department, listening to calls and discussing how those calls were handled: “If a customer cannot pay, they cannot pay,” he adds. “Yes of course as a Debt Purchaser, the amount we collect and over what time period is important. What is more important, however, is achieving the right outcome for the customer, because in doing that you can build a sustainable business.” SIZE ADVANTAGE As the largest Debt Purchasing business in the UK, Cabot has the advantage of size. This has enabled it to invest in new digital technologies such as ‘Eureka’. Eureka analyses conversations in real time, converts them into text and defines ‘rules’ that can prompt the consultant into asking specific questions based on what has been said. “Our consultants are very well trained,” he says, “but Eureka is an excellent tool in helping them help their customer to the right outcome. They really like it.” Size and scale have also been important in meeting the additional costs involved in gaining FCA approval: “The FCA has been a good thing for the industry overall, because it has led to a focus on the customer and demonstrating good customer standards. Yes it has added an additional layer of cost but arguably this was needed.” Derek says that being the best that you can in whatever you do, is a good mantra to live by: “You have to make the most of any opportunities that come your way,” he explains, “and throw yourself into whatever you do. But by the same token,” he adds, “keep life in perspective.” A keen sportsman and a self-confessed evangelical ‘green’, Derek still likes to keep fit by cycling and has set himself a number of personal challenges for the year to run 1,000km, cycle 1,000km, and perform 12,000 sit ups and 12,000 press ups. He’s on target, but still has 311K left to run at the time of writing. But Derek’s particular passion is for cricket; he coaches a local Under 11’s team and as a batsman modelled himself on the great Geoffrey Boycott: “I could bat all day and still not score many runs,” he laughs. You have to make the most of any opportunities that come your way, and throw yourself into whatever you do. But by the same token, keep life in perspective. The Recognised Standard / www.cicm.com / December 2018 / PAGE 18
OPINION BUDGET SURPRISES Time to dust off your old manuals? AUTHOR – Frances Coulson MANY of the initial reports of the budget streaming into your inbox will have cheered small businesses, focused as they were on income tax, digital commerce tax and business rates cuts. However in the world of insolvency and therefore in the wider credit arena, two areas of the budget sent shockwaves through the finance and insolvency professions and will have a radical effect on credit, business start-ups and rescue as well as the very concept of limited liability. First, the big announcement, in respect of which there was no prior warning or consultation (even, it seems within HMRC or BEIS) the resurrection of Crown preference in insolvency. The view is that VAT, Employers’ NIC, PAYE and CIS are all taxes collected on behalf of the Crown and therefore should not form part of the available funds for unsecured creditors in an insolvency. For example, Company A supplies Company B with widgets for £1,000 plus VAT. Company B pays Company A £1,200 – £1,000 is for the widgets and £200 is for Company B’s VAT payment which Company A should pay over to HMRC. So far so logical. However, in a real-life situation cash fluctuates and all the VAT, to take one example, is not sitting in a deposit account for HMRC but is used in the business of Company A. So long as Company A pays that VAT over to HMRC on the due date no problem, but if Company A is insolvent and the £200 is no longer there, the administrator or liquidator of Company A will realise its assets and, where appropriate, bring claims against directors to replenish the company pot for creditors. At present, aside limited preferential creditors such as employees, the company pot after payment of secured creditors is paid to the unsecured creditors – including HMRC – ‘pari passu’. In administration the Enterprise Act 2002 which abolished Crown preference also made provision for a ‘prescribed part’ carved out of floating charge realisations (as floating charge holders were getting a Crown windfall in the Crown no longer being preferential) of up to £600,000 for unsecured creditor then including the Crown. From 2020 it seems the prescribed part will change or go. In insolvent estates HMRC will rarely have trust money in the form of carefully preserved tax to recover so will eat into unsecured creditor returns generally. At the time of the Enterprise Act arguments were made that the abolition of Crown preference was good for business and for UK plc. They were right. The old order meant that HMRC were far too quick to liquidate and make a grab for their cash when in fact business rescue was feasible. This is a shortsighted move even if done in the name of the good of the taxpayer. What UK plc needs is a good flow of lending, a good rescue culture, and an efficient pursuit of those who trade at the expense of their creditors and fail. Instead lending and trade credit will tighten and the Crown might well find that its take goes down not up. All this at a time when businesses face the Brexit challenge. While the changes announced do not usurp the position of secured lenders with fixed charges, many of the challenger lenders who have proved so vital in SME lending do not have fixed charges and might look harder at their lending criteria. BARRIER TO BUSINESS As if this wasn’t bad enough the other HMRC proposals, which were (briefly) consulted upon-and apparently universally condemned-in their ‘Tax Abuse in Insolvency’ paper, have also been adopted in the budget. These proposals allow HMRC – as Judge Jury and Executioner – to determine when a company is guilty of tax evasion or avoidance, or phoenixism, and look directly to directors for recovery. Again, this must tighten lending. The Treasury has previously been keen to resist any erosion of limited liability as a barrier to business, but it seems that this is all forgotten in a shortterm land grab by HMRC. Many now successful businesses have arisen from early failure. Would entrepreneurs try again so readily if their family home is on the line? Would a lender support them trying again or provide a distressed business with finance under the post 2020 regime? Less likely. Fewer and fewer businesses are built on fixed asset bases in the SME market. Floating charge and unsecured lending has enabled such business to thrive. Time to tighten your credit policies? These proposals allow HMRC – as Judge Jury and Executioner – to determine when a company is guilty of tax evasion or avoidance, or phoenixism, and look directly to directors for recovery. Frances Coulson Head of Insolvency and Litigation at Moon Beever Solicitors. The Recognised Standard / www.cicm.com / December 2018 / PAGE 19
Page 1 and 2: CREDIT MANAGEMENT CM DECEMBER 2018
Page 3 and 4: 4 EDITOR'S COLUMN SEAN FEAST DECEMB
Page 5 and 6: ITSWISETOSTAYALERT! SANCTION &PEP D
Page 7 and 8: New team for the digital market ATR
Page 9 and 10: Cedar Rose launches new late payer
Page 11 and 12: Bailiff research ridiculed as ‘ma
Page 13 and 14: OPINION First impressions Philip Ki
Page 15 and 16: OPINION Sean Feast FCICM Not so Fai
Page 17: “If you work hard then good thing
Page 21 and 22: ASK THE EXPERTS AUTHOR - Lauren Car
Page 23 and 24: Exclusive offers for all CICM and F
Page 25 and 26: OPINION AUTHOR - Peter Walker On th
Page 27 and 28: TRADE TALK A true collaboration Wor
Page 29 and 30: Fallen angels in the making FIRMS n
Page 31 and 32: COUNTRY FOCUS AUTHOR - Adam Bernste
Page 33 and 34: OPINION AUTHOR - Chris Sanders FCIC
Page 35 and 36: The Recognised Standard / www.cicm.
Page 37 and 38: PAYMENT TRENDS AUTHOR - Jason Braid
Page 39 and 40: CAREERS ADVICE CREDIT SALARIES UK 2
Page 41 and 42: A Credit Manager walks into a bar
Page 43 and 44: EXCLUSIVE REPORT AUTHOR - Nalanda M
Page 45 and 46: “CSA compliance essentials is a o
Page 47 and 48: CICM QUALIFIED your way CICM qualif
Page 49 and 50: CICM MEMBER EXCLUSIVE Your CICM lap
Page 51 and 52: 3 YEARS IN 2018 Credit Controller A
Page 53 and 54: MAKE YOUR CASE Karen Young Peter Wa
Page 55 and 56: Are you a Leader or follower? CICMQ
Page 57 and 58: Proud supporters of CICMQ With over
Page 59 and 60: BRANCH NEWS A Successful Re-Launch
Page 61 and 62: MULTILINGUAL SENIOR CREDIT CONTROLL
Page 63 and 64: CICM KNOWLEDGE HUB Access over 1,00
Page 65 and 66: FOR INFORMATION, OPTIONS AND PRICIN
Page 67 and 68: FROM THE ARCHIVE Credit Management

CM December DECEMBER 2018

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