MyCRA Specialist Credit Repair Lawyers

Tag: commercial credit

  • Employee fraud: what could it cost your small business?

    Media Release

    employee fraudEmployee fraud: what could it cost your small business?

    2 September 2013

    When it comes to employee fraud, a national credit expert warns small businesses they are particularly vulnerable to “losing it all” if fraud strikes, and cannot afford to be complacent about checks and procedures regardless of business size.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says SME’s can easily lose their good credit rating right under their noses if an employee chooses to pilfer funds.

    “Many SME’s run on credit, having a smaller amount of capital – and it can mean some months are a delicate balancing act to get accounts paid on time.”

    “Even a single instance of fraud can mean accounts go unpaid, posing a great risk to the business’ credit rating. In some cases it can also seep through to the owner’s personal credit rating which can also be tied up with the business,” Mr Doessel says.

    The Australian Financial Review reported last month that close to one in two Australian businesses reported at least one incident of economic crime in 2011, with 16 per cent of respondents suffering losses in excess of $5 million. (1)

    The AFR featured PricewaterhouseCoopers’ Global Economic Crime Survey, which has been undertaken every two years since 1999.

    The survey showed it’s rare that fraud is committed by someone outside an SME. In a small business, employees tend to be given control of cash, inventory and accounts receivable and there are few monitoring systems to check on them.

    “Operators of small and medium enterprises tend to believe, often incorrectly, that risk management to limit potential theft and fraud is too costly to implement. Other SMEs don’t have the resources to respond adequately to crime and can be heavily damaged, or even bankrupted, by a single incident,” it was reported.

    Mr Doessel says if the business owner is not made aware of the fraud right away it can lead to defaults on the business credit file or the owner’s credit file. The business can then face great difficulty obtaining any credit.

    “Most businesses can’t expand, they can’t buy vehicles, or even take out mobile phone plans once there are black marks on the company credit file,” Mr Doessel says.

    He goes on to say, that instances of fraud, as with any negative listing which shouldn’t be there, can be difficult for the individual or business to resolve.

    “The onus is on the credit file holder to prove the listing has errors or shouldn’t be there. Clients can often be given the run-around by Creditors, and there is less legal obligation on the Creditor in the commercial credit landscape,” he says.

    How To Prevent Fraud In Your Small Business     

    1. Reference Checks for Potential Employees

    ASIC Spokesperson Joanna Bird recently told Australian Broker that in a review of industry practice they found there weren’t enough businesses conducting thorough reference checks as part of pre-employment screening.

    “Nearly everybody did a police check, but in fact not everybody did reference checking,” she said. (2)

    2. Credit Checks for Potential Employees

    A Survey of Fraud, Bribery and Corruption in Australia and New Zealand published by KPMG earlier this year showed one of the top motivators for fraud was personal finance pressure. (3)

    Mr Doessel says employers should consider doing a credit check on potential employees.

    “A credit file check where appropriate, would certainly alert the employer to any major debts which could possibly provoke an employee to undertake fraudulent activity,” he says.

    Accountancy and Advisory firm William Buck also recently gave some insight into fraud prevention. Here are some ideas Director Grant Martinella offered to prevent fraud:

    3. Check financial statements for any adjustments.

    “Look out for any unauthorised accounting adjustments to financial statements and consider using software to report on any source data changes and discrepancies,” Mr Martinella told Business Insider Australia. (4)

    4. Be wary of key people who refuse to take annual leave.

    “Fraudsters may be reluctant to go on leave to avoid having someone else take over their responsibilities and look over their work while they’re gone.”

    “Enforce compulsory annual leave, segregate duties so people aren’t acting alone, and ensure that there are clear reporting channels,” Martinella says.

    SME’s who need assistance with their business credit rating following fraud can contact MyCRA tollfree on 1300 667 218 or visit their website, www.mycra.com.au.

    /ENDS.

    For media enquiries, please contact:

    Lisa Brewster – Media Relations  Ph 3124 7133     media@mycra.com.au

    Graham Doessel      – CEO Ph 3124 7133  

    http://www.mycra.com.au/  246 Stafford Road, STAFFORD QLD. Ph: 07 3124 7133

    MyCRA Credit Repair is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files.

    (1) http://www.afr.com/p/sticky_fingered_employees_found_KPZjUqkaEcB8m8YhKHZatL

    (2)http://www.brokernews.com.au/news/breaking-news/employee-fraud-the-red-flags-you-need-to-identify-now-178606.aspx?utm_source=Australian+BrokerNews+eNewsletter&utm_campaign=bb8879c81a-ABNewsletter&utm_medium=email&utm_term=0_7af1e9f6de-bb8879c81a-43569498

    (3) http://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/Fraud-Survey/Documents/fraud-bribery-corruption-survey-2012v2.pdf

    (4) http://www.businessinsider.com.au/five-signs-that-you-might-be-working-with-a-fraudster-2013-8

    Unsubscribe me from this list

    Image: Stock Photo/ www.FreeDigitalPhotos.net

  • Small business finance regulation deferred

    small business financeIt seems the controversial draft legislation regulating small business finance has been deferred – with the Government now saying it wants to take the time to get reforms right. This follows a barrage of criticisms from business groups that the new laws would make it much harder for small businesses to get funding.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.

    The Government’s Christmas ‘surprise’ for small businesses in the form of draft legislation to regulate commercial lending certainly met some criticism in the lending and small business sector.

    The legislation proposed prohibiting people from “engaging in credit activities” in relation to a small business credit contract or a small business consumer lease unless they hold a permit.

    Business publication SmartCompany confirmed last week in the story ‘Government backflips on plans to regulate access to credit for small business‘ that Treasury will put off any action on small business finance.  T

    hey said Financial Services Minister Bill Shorten announced the withdrawal of the draft legislation at a meeting with the Council of Small Business of Australia and the Commercial Asset Finance Brokers Association of Australia last week.

    It was also reported in Australian Broker today in the story ‘Commercial lending off the table…for now’ that Treasury indicated that its consultations had found “a need to further examine a number of key issues” relating to business credit.

    “Treasury’s release said that the Government considers that it is important to get the reforms right, given the important role that small businesses play in the Australian economy,” Gadens Lawyers partner Jon Denovan told AB.

    The CAFBA said in a statement that the government’s move to dump the draft legislation was a common sense result.

     “CAFBA maintained staunch resistance to all aspects of the draft regulation and was unwilling to accept or compromise its position, as CAFBA fully understood the debilitating impact of the proposed regulation and the flow-on effects to every small business in Australia,” it was reported in SmartCompany.

    This was our position on the draft legislation when it was released just days before Christmas:

    CEO of MyCRA Credit Rating Repair, Graham Doessel says the proposed changes would be widely criticised by small business advocates as stifling the flow of business credit in Australia and that the changes are unnecessary form of “hand holding” for Australian business owners.

    “Australian small businesses are already doing it tough getting credit out there post GFC – this is going to mean they will struggle even further to expand and there will be less start-ups,” Mr Doessel says.

    Where we did want to see change, was in the basic rights afford to commercial credit file holders before recovery is commenced.

    In the consumer landscape, if an account is overdue, then the account holder is afforded a 30 day right to remedy under the Credit Reporting Code of Conduct. This is meant to ensure that fair and reasonable means have been taken to attempt to recover the outstanding amount before further action is taken, and before the consumer’s credit file is defaulted.

    As commercial credit is not covered under the Code, this right is currently not provided to commercial credit file holders.

    The common courtesies which consumers are afforded and which many assume stay with them in the commercial sphere just don’t apply – many don’t realise just how big a risk commercial credit is.

    Here’s more from our media statement:

    “It’s like the ‘wild, wild west’ out there with some lenders defaulting small businesses with little to no warning.”

    Once a default is placed on a commercial credit file, then the length of time it remains on the credit file is legislated by the Privacy Act 1988.

    “A commercial credit file holder is still subject to 5 years of bad credit if they end up with a default listing, the ramifications are still the same – they are generally refused mainstream credit, refused mobile phone plans, car finance and credit cards – but the rules for how the default gets there in the first place are just not there,” Mr Doessel says.

    “In theory, you can be one or two days late in paying a commercial account and you can have your ability to obtain credit ruined. There is no right of redress, as there is no legislation governing notification requirements in the commercial credit sphere.”

    Mr Doessel says the Government has completely missed the mark on what small businesses need to thrive and survive.

    “Most don’t need restrictions on available credit, they just need the basic credit reporting rights that they deserve,” he says.

    We’re glad the Government has put this legislation on the backburner, but still hope at some stage commercial credit reporting will be reassessed.

    Image: franky242/ www.FreeDigitalPhotos.net

     

  • Great shot, wrong target: Gillard Government’s draft legislation to regulate small business credit completely misses the point

    regulate small business creditMedia Release

    Great shot, wrong target: Gillard Government’s draft legislation to regulate small business credit completely misses the point.

    21 December 2013

    The Federal Government has published draft legislation which proposes regulating small business credit, but an advocate for accurate credit reporting has criticised moves to regulate access to credit for small businesses, saying what is needed is not less credit, but simply a better credit reporting structure.

    Small business publication, SmartCompany, reported…that draft legislation put out by Financial Services Minister Bill Shorten’s office proposes prohibiting people from “engaging in credit activities” in relation to a small business credit contract or a small business consumer lease unless they hold an Australian credit licence.

    “Responsible lending obligations do not apply to small business credit contracts or to investment credit contracts generally, but only to specific classes of these contracts,” a spokesperson for Mr Shorten told SmartCompany.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][i]

    “The substantive obligations in the National Credit Code do not apply to small business credit contracts and to small business consumer leases. Other than the unjust contract provisions, these provisions also do not apply to investment credit contracts.”

    The spokesperson declined to comment on whether the proposed legislation will make it tougher for small businesses to obtain credit.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says the proposed changes would be widely criticised by small business advocates as stifling the flow of business credit in Australia and that the changes are unnecessary form of “hand holding” for Australian business owners.

    “Australian small businesses are already doing it tough getting credit out there post GFC – this is going to mean they will struggle even further to expand and there will be less start-ups,” Mr Doessel says.

    But he does say any changes to credit reporting for small businesses would be welcomed.

    “There is a gaping hole in the basic rights afforded to commercial credit file holders before recovery is commenced, and this needs to be dealt with,” he says.

    In the consumer landscape, if an account is overdue, then the account holder is afforded a 30 day right to remedy under the Credit Reporting Code of Conduct. This is meant to ensure that fair and reasonable means have been taken to attempt to recover the outstanding amount before further action is taken, and before the consumer’s credit file is defaulted.

    As commercial credit is not covered under the Code, this right is currently not provided to commercial credit file holders – and Mr Doessel says many times small business owners have been caught out.

    “The common courtesies which consumers are afforded and which many assume stay with them in the commercial sphere just don’t apply – many don’t realise just how big a risk commercial credit is.”

    “It’s like the ‘wild, wild west’ out there with some lenders defaulting small businesses with little to no warning,” he says.

    Once a default is placed on a commercial credit file, then the length of time it remains on the credit file is legislated by the Privacy Act 1988.

    “A commercial credit file holder is still subject to 5 years of bad credit if they end up with a default listing, the ramifications are still the same – they are generally refused mainstream credit, refused mobile phone plans, car finance and credit cards – but the rules for how the default gets there in the first place are just not there,” Mr Doessel says.

    “In theory, you can be one or two days late in paying a commercial account and you can have your ability to obtain credit ruined. There is no right of redress, as there is no legislation governing notification requirements in the commercial credit sphere.”

    Mr Doessel says the Government has completely missed the mark on what small businesses need to thrive and survive.

    “Most don’t need restrictions on available credit, they just need the basic credit reporting rights that they deserve,” he says.

    /ENDS.

    Please contact:

    Graham Doessel – Director Ph: 3124 7133

    Lisa Brewster – Media Relations media@mycra.com.au

    Ph 07 3124 7133 www.mycra.com.au www.mycra.com.au/blog 246 Stafford Rd, STAFFORD Qld

    MyCRA Credit Repair is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files.

    ——————————————————————————–

    [i] http://www.smartcompany.com.au/politics/053547-government-sneaks-in-draft-legislation-to-regulate-small-businesses-access-to-credit.html?utm_source=SmartCompany&utm_campaign=82bc6a73e2-Friday_21_December_201221_12_2012&utm_medium=email

    Image: Ambro/ www.FreeDigitalPhotos.net[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]