How to protect risks to cashflow with insurance

Posted by 7 June, 2017 (0) Comment

PROTECTING CASH FLOW2

This blog is about protecting cash flow, especially if those that owe money go bust.

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What if a buyer goes bust?

With the global recession and Brexit, business owners are having to consider the impact this could potentially have on their business.  What if a client goes bust?  If a company is owed significant amounts of money from clients, it is a major risk to cash flow.

Gareth came to us with these questions and more.  He knew exactly what he wanted from an insurance.   Dealing with imports he needed peace of mind that he had cover if stock went missing.  He also needed to know that his invoices were covered if products didn’t reach the consumer. We took time to completely understand Gareth’s business to a granular level.

What if they don’t want to pay?

Business Owners need confidence that they are going to get cover that matched their needs and not be sold an off the peg insurance that doesn’t quite do the job.  After negotiating with underwriters we carefully selected the options that matched Gareth’s broad requirements.

One option included protection against protracted debts or liquidations relating to companies that had been invoiced. It often helps with obtaining quicker payments, from companies that are happy to share the debt, when the risk of a default is backed by credible protection.

What are the risks when reducing risks?

Following up with a meeting to go through the small print and fully explain terms, conditions and exclusions is a must.  We tell it like it is, the good and the bad so our clients can make informed decisions.

The devil is in the detail and it is often a surprise to everyone, including us, when it is interpreted based on a particular business. It’s our duty to actually recommend protection that fits each client and the most appropriate has to meet their needs, rather than provide the dreaded false sense of security.

 

Wrap up; Small print can be seen as an enemy yet there’s a lot that can be learned from it. Read our blogs on the different types of policies available. I used to be surprised at the number of people that told me that they had already covered everything, then sent me documents riddled with exclusions. I now know it is a common occurrence in our sector.

Top tip; Some people find out when it’s too late.Review your debtors regulary and watch out for slow payers and avoid companies that are shown as risks on credit checks

Categories : Accountants Insurance,All Risks Insurance,Business Insurance,Company Insurance,Customer Service,Legal expenses insurance,Liability Insurance,Litigation expenses insurance Tags : , , , , , , , , , , , , , ,

No-one will sue me or blame me

Posted by 27 December, 2014 (0) Comment

Business is easier to do when people are getting on yet it pays to keep everyone happy when relationships start to falter. This article is about money, the fact that it talks when opinions differ and why it is a foreign language for some.

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I’ve had an idea…..but I can’t do it on my own

 

Inventors are not just stuck in sheds. Some of them are hugely creative and have big idea after big idea. I am contacted by inventors when they want to protect an idea they’ve created. Most of them are in “start-up” mode and it takes time for the income to pour in.

However, they still need services to help them lift off and it is not uncommon to reach bartering agreements or agree profit or equity shares with those that help them out. Wonderful isn’t it? In an ideal World, yes, in the real World it depends. Recently, I’ve been contacted by two different companies who both had similar issues with such agreements . They were both being taken to court when such “contracts” had gone sour, they were very loose unwritten agreements.

We can’t agree about everything

 

But it pays to sit down and agree the basics. The first indication that something was going wrong was the receipt of a legal document outlining a case of a service provided that hadn’t been paid for. In each case the inventor thought they had “come to an agreement” yet the complainant asserted that nothing had been written down and they expected a prompt realisation of profits, which is rare. Both inventors were upset as well as being annoyed. One was being asked for £40,000 in fees for work they had “ordered”. The other was being invoiced for £18,000 fees for time spent “assisting” the start-uo.

Even after the first legal notice was issued, the inventor contacted the person that was “owed” the £40,000 and came to another agreement. They were somewhat surprised to learn, soon after, that the complainant had obtained a judgement against them and bailiffs were chasing them for money they didn’t have. Sometimes, the courts do odd things. Launching an appeal has proved fruitless for at lease one company facing a wind up order. Their business was closed down by a judge before the appeal date arrived. It is beyond belief.

You owe me, I sue you

 

Eventually, the money was found yet it had been earmarked for marketing so the launch had to be delayed in one case. The debts were paid when they may not have been legally liable to pay them. They were forced to settle because they didn’t have the resources to defend themselves.

Defending yourself doesn’t have to be ridiculously costly but it does take up time. High quality legal resources have to be paid for. It’s not only about what you sign, it’s about what you agree.  Verbal agreements are often considered binding by one party and failure to defend a corner means louder voices are likely to be heard. The balance between defending and paying up doesn’t always leave defendants between a rock and a hard place. I have plenty of clients who have successfully defended  spurious allegations.

Wrap up; Contracts aren’t always big documents and verbal agreements are often taken seriously. It’s really difficult to juggle all the tasks when unexpected legal issues arise. Not to mention the upset if you don’t know where to turn.

Top tip; Do not ignore issues that are on the “too difficult list”. They have a habit of resurfacing  and investor shareholders hate that too. It is not fair but the deepest pockets usually win.

Categories : After The Event,Business Insurance,Company Insurance,Design Insurance,Domian name protection,Intellectual Property Insurance,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Patent Insurance,Trade Secret Protection,Trademark Insurance Tags : , , , , , , , , , , , , , , , ,

Lambs slaughtered in Den

Posted by 28 March, 2014 (0) Comment

This article is about people eliminating threats to their business, taking risks and getting others interested. Read on to find out how the intrepid pitch for investment yet fail to illustrate their position on risk, never mind secure someone else’s hard earned finance.

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Dragon’s Den is a risk worth taking

 

I learn a lot when watching Dragons Den. It is always interesting to see a great idea. Everybody loves those. Yet, a lot of the time we are treated to ‘car crash television’ where it appears that the unprepared have been literally thrown at the Dragons. I have actually cringed when watching the programme, yet it is rarely the Dragons that scare me. It’s some of the characters that arrive and put their “worst” foot forward. On the other hand, my heart does sink when a genuinely warm, credible person drops themselves in it. Even then, I don’t feel sorry for too long because I have a lot to learn myself.

Even though I’m watching on television, it’s not hard to spot the weak points that are being attacked. I’m always alarmed by those who do have a great idea, a coherent plan and still fail because they didn’t think about the objections that would inevitably be raised. When they shoot themselves down in flames I feel their pain. I suppose not all of it can possibly be unwitting. I expect some people do well out of the exposure even if they don’t get the investment they were after. Good luck to them!

Sometimes you can smell the ill-preparation

 

Recently a couple of entrepreneurs explained they had a huge following and people were biting their arms off to extend their travel and tour company business to take in festivals in different places. I had heard of this type of business yet they seemed to have a way of making it cost efficient and therefore more profitable. The Dragons were listening. Right up until one of the Dragons mentioned that they were not happy that the risks to the business had been thought about in detail. The lady announced that “all it takes is for one hotel to go down and you are snookered”. I had heard the guys mention that they were ATOL/ABTA protected which means that their clientèle are flown home in the event of the holiday providers having financial problems.

They should also have mentioned that ATOL/ABTA (and others) provide insurance that covers them for most of the other costs that follow such issues. They didn’t. Why not? Didn’t they realise this protection was available? Had they decided that insurance was too expensive for their business? It didn’t sound right that people who had been sending clients on trips to festivals around Europe hadn’t put any protection in place for their clientèle, never mind their business. I remain puzzled because the investors lost interest. No surprise there then.

When the Dragon questioned whether they would be able to continue if a third party let them down, all they had to do was say they would insure the risk. Even if they hadn’t arranged it at the time they could have accounted for the investment in their plan. It rarely “breaks the bank” to protect oneself.

 

Wrap Up: If you have a great idea think about the threats that could interfere with your business plan. Reduce them or eliminate the impact completely where possible because Dragons are risk averse, they only  take balanced risks. They don’t assume. They gauge their possible ROI based on all the variable outcomes. You can too.

 

Top Tip: If you are looking for investment try and understand just how risk averse your investors are before you pitch to them. Their previous investments will give you clues.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,Design Insurance,Domian name protection,General Requirements,Health & Safety,Intellectual Property Insurance,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Patent Insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Trade Secret Protection,Trademark Insurance,Uncategorized Tags : , , , , , , , ,

Insurance claims departments grill their clients

Posted by 13 December, 2013 (0) Comment

Not all insurance companies treat claimants the same. This article is about what happens when an insurance company settles a claim for a break-in, the methods they use to reduce claims, and the daft things they do afterwards.

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“Someone’s breaking in across the road”

 

A man is up later than he should be. He hears a loud bang, and peers out his front room window. He sees that there are some shadowy figures and torchlight inside the office premises across the road.  Stopping himself from rushing across the road, he calls the police instead. He took the sensible option. By the time he finishes the call to the police the burglers are gone. It’s a classic commercial theft. Kick the doors in and take whatever isn’t nailed down and can be sold for cash.

The police contact the owners and the premises are secured, which is difficult to do when a UPVC door has been ripped from it’s hinges! Yet it’s a temporary measure, a more permanent fix can be worked out later. Computers, monitors and petty cash have been taken.

Insurers step up… then down again

 

The client contacts us in the morning and we make the report to their insurer, who won’t do anything until the crime reference number is allocated by the police. Armed with this, we make a detailed report explaining what items have been stolen and what damage has been caused. The people handling the claim seem amiable. A few hours later we receive the email acknowledgement, yet they start as they mean to go on requesting why my client kept so much petty cash. The irony.

It’s this sort of nit picking that really annoys people. They didn’t ask how much petty cash they had before the break in. Indeed, they even make a generous allowance for it as a policy benefit. Yet they use it as a tactic to delay making a payment. It wasn’t the only tactic, they argued about the broken door too.

Settlement achieved

 

It took a few days to resolve, yet the experience left a sour taste with the client.  “How will they behave if we have a major loss?” I reassured them that this company was better in the big losses, which is why we had chosen them. It’s just that you need to have experience in order to push the small ones through, because this company uses smaller claims to train their staff. They don’t tell you that in their literature before you buy from them – we have the inside track.

Once the client has his full payment he asks me to look for alternative insurance providers, which is understandable! Who wants to be contractually tied to someone that makes it difficult together what the contract is supposed to provide? Especially when it’s before a problem with the terms and conditions. A “can-do” attitude means a lot to those who want their businesses to run smoothly. They avoid suppliers that make their life difficult after advertising that they would make it easy. Insurers could take note, but they won’t. This insurer said they would be happy to lose this client because it was “petty cash” that made them attractive to thieves. Poppycock.

Wrap Up: There are hundreds of reasons why insurers are slow to pay out, some are procedural, others personality based. As Forrest Gump said, claims departments are like a box of chocolates. You never know what you’re going to get……unless you have opened them before.

Top Tip: Make sure your adviser has handled similar outcomes to those that you’re worried about if you really want the reassurance that insurance allied to service can provide.

 

 

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,Design Insurance,Domian name protection,General Requirements,Health & Safety,Intellectual Property Insurance,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Patent Insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Trade Secret Protection,Trademark Insurance,Uncategorized Tags : , , , , , , , , ,

Your Data is a Commodity – Your Privacy is not

Posted by 28 June, 2013 (0) Comment

This article is about car insurance, not that I can help with your car. It’s to do with the commoditisation of car insurance because of the thirst for our data, why insurance companies are slowly waking up to it’s pitfalls and 2 things you can do about it whilst they slumber.

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Car Insurance Crackdown

 

You may have noticed that there has been a significant increase in the number of arrests of people involved in staging fake car accident over the last 6 months.  Behind the scenes, this is because the government said it would crack down on whiplash claims. Most people thought this meant individuals making out they were hurt following minor shunts would find it more difficult to get compensation. In fact, the government have also put pressure on insurance companies to do something about the cartels who were taking money out of your pocket.

Organised criminals have had an easy ride with this money making venture over the past few years, because insurance companies turn a blind eye to these ficticious claims because they simply recovered most of their costs from the car insurance buying public.

 

Cheaper premiums come at a price

 

Insurance companies don’t make much profit selling car insurance, some make no profit at all. They do make money from different types of referral fees. Some referral fees are from solicitors who pay for leads for personal injury claims. Others are car hire companies who charge more to hire a car to someone who’s vehicle is damaged in an accident, than they would if you or I if were to hire.  The third, usually secret referral fees, are paid to those that sell or aggregate car insurance policy data. Yes your date of birth, address, your other personal, protected information.

I have used the aggregators myself, because it is a great way to find an appropriate provider. However, it never ceases to amaze me, the level of information people are prepared to disclose, to shave £10 off their annual car insurance premium. Very few people realise that the direct marketing they receive is highly targeted, and would probably reduce if they spent less time giving their personal information to the internet. All they need do is uncheck the boxes about marketing material. Insurers would then have to work harder at reducing fake claims to make money.

Round about gangs rounded up

 

It will take the authorities a while to round up the highly organised car crash syndicates that have been milking insurance companies for years. I mention roundabouts, because that is a favourite for these gangs. Insurance companies took their eye off the ball. When they analyse trends in their data, they realised that ridiculous amounts of accidents have happened at the same junctions. When they look into it deeper, with the help of the authorities and CCTV, they were astonished to find that there have been zero accidents at some of the said roundabouts or junctions.

Follow the money is the usual mantra, because individuals receiving the settlements are obviously tied into the scam in some shape or form. However, with organised crime being behind these scams those receiving the payments do not exist or are the victims of Identity Theft – their ID’s have also been fraudulently claiming benefit, living in a flat with heaven knows how many people, the story goes on.

When insurance companies are not losing money they may fail to analyse trends. This is not the first time that this scenario has played itself out. In the 1990s car thefts were a huge problem, leading to some “hot hatches” becoming virtually uninsurable, because they were so easy to break into. The car industry had no motivation to improve its security because they charged their clients to repair vehicles and install the new stereos. The insurance companies charged those suffering thefts increased premiums, and car insurance premiums across the UK rocketed.  It was only when the public made a racket that the government stepped in and ordered the car, and insurance, industries to do something about it. We now have largely plastic stereos embedded in cars with fantastic security features. The newest technology allows you to pay according to how safely you drive. Now that is progress.

Wrap Up: Some gangs are found with 1,000’s of fake ID’s and crossed referred them to create accidents and benefit claims. Insurers can pool their resources and cut this out and we can help ourselves by ticking the right boxes.

Top Tip: It will take some years for the dodgy claims to subside and premiums to reduce. Meanwhile the only sure way to reduce car insurance premiums is to increase the excess, here’s a link to a nifty tool that allows you to do just that. We cannot help with car insurance, because resolving claims is such a nightmare. So we decided to take advantage of this tool and provide you all with a solution. We do not ask for your inside leg measurement before offering you a quotation.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , ,

Landlords lord it over leases

Posted by 14 June, 2013 (0) Comment

Small print, in leases, that is rarely read, can lead to insurance problems, uninsured losses of occupants and confusion over who pays for what when thieves target leased or serviced offices.

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The price of fashion

 

Mark calls me and tells me that his office has been broken into overnight. Indeed, all six offices in his building have been turned over.  The office is in a fashionable part of London, and somehow they managed to bypass the security on the front door, unpick the locks on the first floor security door and then pull each of the glass doors to each office, off their hinges. Mark wasn’t initially concerned about the items stolen because it was only a redundant laptop, and a safe full of paperwork, rather than money.  He did feel sorry for the five other companies on his floor, because the laptops that were stolen from them were new, contained sensitive data, designs, plans, and other important information… not all of which had been backed up.

How the thieves got past both doors seemed a bit of a mystery, the CCTV was in operation and the footage would show who exactly the thieves were.  However, it transpired that the main door lock was not working properly, and the heavy security door on the first floor had not been locked by the last person to leave. No one wanted to admit it was them who had left last, and in such circumstances it’s never easy to determine who that might have been.  The CCTV could identify the culprit, albeit not the culprits that everyone initially thought the CCTV would be used to identify.

 

Landlord negligence is uninsured?

 

The broken door to the street had been reported to the landlord, so they had been negligent in not arranging for an immediate repair. This certainly would have prevented the problem,  but how did the thieves knew that this door was not working. It’s not sinister, they are purely opportunists. It’s daft that both security doors were left unlocked at the same time but it happens because we’re human and forget things. Sometimes these mysteries are never unravelled. Mark would have been gutted if it had affected his cover.

I had already visited Mark’s premises, to ensure that the security that he did have control over was accepted by his insurance company. When we first explored Mark’s prospective requirements, we had to negotiate with insurance companies because some of their humans had forgotten that a trendy office should have a glass sliding door. If you ever look at insurance company requirements you’ll find they’re quite ambiguous when an unusual feature is in existence. This often crops up with serviced offices, because landlords of these places do not spend a lot of money on the security because they assume nobody will get past the desk security.

They don’t realise that it’s not unusual for someone to “stowaway” in a premises and rifle through unattended offices overnight, before pushing an emergency exit door open and carting off their booty. Thieves love serviced offices because landlords are never going to warn proposed clients of this weakness when they are trying to sell them their office space.

 

Who is going to pay?

 

You would think that the landlord would accept responsibility, having not fixed the door. However, in my experience, they simply refer you to the clause in the lease, which confirms that they are not responsible for a loss of this type. The way leases are worded, it could be argued that they are not responsible for anything, but I am not a lawyer – I only wish I were that clever. The excess on office insurance is usually quite low – around the same amount as an hour of a solicitor’s time. It makes sense to pay a solicitor to review a lease or serviced office agreement. They will advise you on exactly what the landlord not taking responsibly for, giving you the opportunity to cover yourself for the balance

So, how do you enforce your rights against a negligent landlord? You could, in theory, stop paying your rent – to balance things out. However, you will find that an established legal process will kick in when you don’t pay your rent, because clauses in the lease normally dictate that there is no relation between the two issues. You might have to sue them, or at least threaten to. And if you are going to do that, you will need some sort of legal backing. This is widely available; indeed, a lot of people have this form of protection, yet because their cover has not been explained to them in detail they would not even know.

Wrap up: When you are in an office or any premises where you do not control the security, it makes sense to ensure that your premises are well protected. If undesirables do visit, and find that your security is stronger than everyone else’s they will, at least, leave you until last because they are usually in a hurry. It takes seconds to prize a door open and rifle through an office – thieves are usually after things they can sell for cash, don’t you just love the modern phenomenon of “pop-up” pawn shops. The fact these thieves took the safe indicates that they had a getaway vehicle, yet this is not always the case. The security to your premises is your responsibility. Don’t expect a landlord to be too concerned about it.

Top Tip: Mark discovered that the sensitive information in the safe meant that he did actually have to notify people if their privacy was likely to be breached. This is a requirement of the data protection commissioner, and applies to anyone who collects certain types of sensitive data. Fortunately, Mark and I had discussed this at the outset and the cost of doing this was not prohibitive.

 

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , , ,