MACM Articles

Credit Information at your Fingertips ...

Credit in Today's Business Commerce
Irrespective of the industry sector that we do business in, we are often being faced with a hostile commercial environment. Who is in business knows well that in some industries, supply is exceeding demand and customers are becoming more knowledgeable and powerful. Customers are dictating the markets and those firms that are not meeting or exceeding customers’ expectations are indeed struggling.
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Island Treasure - Interview with MACM DG
Sean Feast, Managing Editor of CM Magazine – The Chartered Institute of Credit Management (UK) Magazine for Consumer and Commercial Credit Professionals, interviews Josef Busuttil, Director General of MACM – Malta Association of Credit Management.
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Payments taking longer
Businesses in Malta will not be pleased to learn that the time it takes to get paid has not improved but has actually deteriorated, from 83.50 days to 91.67. The Malta Association of Credit Management reported an increase of 8.17 days between the annual average for 2014 and 2015, which it measures as the Average Days Sales Outstanding (DSO). The survey was conducted amongst its members: suppliers and service providers selling on credit in Malta, hailing from all sectors of the Maltese economy.
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Financial Transparency from full disclosure
Trade credit does not come for free. It costs money and also carries an element of risk. To ensure that customers requesting credit are trustworthy and can reasonably honour their commitments and pay their dues on time as agreed with their suppliers, the latter should analyse and evaluate the risks associated with the specific customers prior to granting them credit.
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Urgent Changes Needed to Companies Act
The Malta Association of Credit Management (MACM) has long been highlighting the shortcomings that have emerged over the past 20 years since the Act was introduced, particularly those relating to the penalties and administrative sanctions applicable. It therefore commissioned a comparative overview of the local law with relevant UK legislation. The MACM’s preliminary analysis of the overview identified both definitions that needed to be tightened up as well as changes to the remedies.
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Company Directors Should be Well Regulated
Limited Liability…..is being abused by some of the directors of companies who deliberately or recklessly cause their companies to run up unsustainable debts through overtrading.
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THE RECENT EXPERIENCE OF A SUPERMARKET CHAIN: Lessons Learned?
The Maltese business community and the local media followed with great interest the recent experience involving a supermarket chain which evidently is in serious financial difficulty, leaving a number of creditors and suppliers in the dark about whether they shall be collecting their dues or writing them off. The recent unfolding of events brought about memories of a major bankruptcy that happened around a decade ago following which we would assume that lessons would have been learnt by all. But in reality, one questions whether the local business community, regulators and authorities actually learned these lessons or not! The Malta Association of Credit Management (MACM) was a catalyst in this recent episode. Being a not-for-profit organisation, without commercial interests and with the sole objective of providing a central national organisation for the promotion and protection of all credit interests pertaining to Maltese businesses, MACM reacted proactively as soon as it believed that there were signals of potential business collapse that could have a negative impact on a segment of its members. In this respect, a significant number of meetings with the various respective stakeholders were held to ensure that the interests of all the creditors, members of MACM, were meticulously and appropriately represented.
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Cross-border debt recovery
"European businesses consider the European Union as a potential market for doing cross-border commercial transactions. This is due to the EU market size, the single market rules which result in less compliance costs and the absence of cross-border bureaucracy. Notwithstanding the benefits, not all is rosy to conduct cross-border commercial transactions in the EU. Stark differences in culture, language and customers' attitudes and preferences may still exist, hence, hindering cross-border trade. But one of the biggest concerns of businesses is to recover cross-border debt from their respective customers."
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Tackling Cash Flow Problems
"Clichés describing the importance of cash flow in managing a business are numerous. A cash flow problem can easily lead to business failure and a poor cash flow situation can happen to a business with sales bursting through its roof. In Malta, we have experienced bankruptcies of businesses with high sales turnover who were nevertheless unable to meet their bills and pay their suppliers. Some of these cases are still fresh in the minds of suppliers who have never been paid and whose saga is still echoing in our courtrooms. Poor cash flow management should not be taken frivolously because it can cause liquidity problems for the business community with a negative effect on the economy at large. Poor cash flow leads to late payment which very often has a domino effect in the economy."
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Audit Reports - what about credibility and intergrity?
I always contend that trade credit is the oil that keeps the commercial wheel turning in an economy. But money costs money! Credit does not come for free and although it may help suppliers to sell and maintain competitive advantage in the market, it may carry a substantial element of financial risk to the supplier/trade creditor.
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