Credit Management Jan:Feb 2019

OPINION
PULLING
THE WOOL
Looks can be deceptive, and costly, especially
when it comes to the granting of credit.
AUTHOR – Derek Scott FCICM
I
wonder how many problems
in relation to payment or even
bad debts have been caused by
the granting of credit based on
a potential customer’s image?
I believe the number would be
pretty substantial. If only I had a pound for
every time I have witnessed an instance
of this nature! Many would have been
made by people without any real training
or experience in credit management, but
some certainly have been from so-called
‘credit professionals’.
The image conmen (mainly men but
some women!) use various methods to
gain credit facilities, firstly in the business
titles that they adopt, using words like
‘group’ or ‘international’ or something
close to the name of a large company.
They appear to use a prestigious address,
or claim to have multiple overseas offices
or branches. As individuals, they may
have apparently earned a good many
qualifications, with splendid initials after
their names, or belong to an illustrious
trade body.
SWEETS AND BEAUTY
These are just some examples of people
using false titles that I had the pleasure
of coming across. In relation to the word
‘group’ the best example must still be in
Scotland where the head office turned out
to be a sweet shop! The term ‘international’
was used on a regular basis often coupled
with lists of offices overseas. One was
a beauty salon in the north of England
which claimed to have branches in every
overseas major city including Paris and
Singapore.
It was all bogus, and just a front for
a scam operation which ended up with
the person involved being hunted by
the police. I am certain, however, that a
few years later they re-surfaced on the
TV looking for funds to finance a new
business. Somewhere I have a video of
these programmes and they often use a
company name close to that of a major
business. Regretfully I could not recover
the SME’s money.
GOLDFINGER TOUCH
The outstanding example of a person
running more companies than you can
shake a stick at was in a south coast
town where from a small office a man
known as ‘Goldfinger’ ran virtually every
type of business you can think of, from
construction to medieval banqueting.
We bought a company and I inherited
a group of very old debts. I noticed though
they were different types of businesses
that all had the same address. I had
some extremely interesting meetings
with the gentleman who drove a car
with a personalised number plate, and
numerous reasons why he had not paid,
even though he appeared very wealthy.
The last confrontation was in court, but
like all his creditors I did not get paid as
he vanished abroad as every company
went bust.
On a smaller scale, I have encountered
other ‘groups of businesses’ based in a
hairdressers, porta cabins, and even a
derelict colliery’s bath house! However,
believe it or not, I did recover what they
owed.
I often found directors had many letters
after their names, but if you checked these
were not earned, but just organisations
where if you can pay, you can join. Some
sound important, and that’s still the same
case. Then there are trade organisations
logos, but again anyone can join. I knew
someone who earned his living selling
membership to these types of bodies on a
commission basis only.
BURLINGTON BERTIE
Then of course we have the individual’s
personal image. They are usually the very
essence of style – well-spoken, astute
etc. We have the ‘name droppers’ who
remind me of the line from the old music
hall song ‘Burlington Bertie, Everyone
Knows Me’. Usually they have been
with some important person, Lords and
Sirs are a favourite, but it might even be
someone from the Government. Several
times I was told ‘of course I know the
chairman!’
I found many SMEs incurred bad debts
because they are impressed by these
types of people, and often because their
addresses were in ‘posh parts of town’. I
have door knocked at some of the most
palatial properties you can imagine with
at least two up-market cars in the drive.
No doubt all on credit and not paid for!
I have also met what I can only call
likeable rogues who reminded me of
Charlie out of Bergerac (for our younger
readers, that was a detective drama series
based on Jersey from the 1980s. Ed.),
but when dealing with them you needed
your wits about you.
IMAGE COUNTS
Many years ago, someone, though I
cannot remember who it was, conducted
an experiment in relation to whether
a person’s image could affect a credit
decision. They arranged for two men
to visit major department stores in
London; this is my interpretation of what
happened, and no real surprise.
The first man was dressed in a rain coat,
football scarf and cloth cap. He went to
the area where you could arrange a store
credit account.
‘Can I help you sir?’
‘Yes, I would like to open a credit account.’
‘I see, can we have some details please?
First your full name?’
‘Fred Smith.’
‘Your address?’
’24, Harold Wilson House, Bevan Estate,
London.’
‘Occupation sir?’
‘Waste Removal Operative.’
They completed a few more details
and then after a short deliberation the
store credit executive said: ‘I regret sir
that we are not in a position to open a
credit account for you, but we will give
you a discount card to use when making
cash purchases.’ The man subsequently
spent several hundred pounds in the
store.
The Recognised Standard / www.cicm.com / January / February 2019 / PAGE 32