Archive for the ‘Integrity’ Category

Is YOUR Business selling to RETAIL?

April 24, 2017

It wasn’t that many years ago when a manufacturer didn’t really worry about Accounts Receivable (A/R’s) if one sold or supplied to a BIG NAME firm, e.g. General Motors (GM), Chrysler, Delphi, Kodak, Blockbuster, Schwinn Bicycle, Marvel Entertainment, Hugo Boss, Reader’s Digest, Trump Hotels, Sears, Radio Shack, etc., because they always paid you and you really didn’t worry the same as the neighborhood “Mom & Pop” operation, right? Even if you gave 30 or 60 day terms and didn’t get paid for 90 days, it just meant you waited but why would you really need worry.

Unfortunately, today’s world has changed substantially and auto makers like GM had to restructure with governments bailing them out, Radio Shack went under and Sears recently said there was “substantial doubt” as to their long-term operating ability. WOW! Many of the names listed above have all had to restructure and that meant unsecured vendors were not very happy.

So how do YOU manage your business to ensure that you will be paid and remain afloat? I have met so many companies, through the years, that would often have 80% of their sales from a small number of customers and I would always recommend prudent Risk Management – “don’t put all your eggs in 1 basket” – and suggest they consider diversifying their markets and considering options for transfer of their risk, e.g. trade credit insurance. Some clients neglected to follow any or much of my advice and I do know of several who are no longer in business.

Trade credit insurance is often used by firms in Europe but not so often in North America. Why? Europeans may have been less reliant on one’s reputation, perhaps, but my own banking background tells me that North American banks don’t suggest the option, don’t know enough about it and don’t vary credit terms adequately to encourage YOU obtain this. I also hear that terms are much more favorable in European banks for those companies who do purchase the option so many of you don’t feel the savings warrant the added expense.

Where I do find many Canadian (can’t say the same is more or less frequent in the US) companies using Trade Credit Insurance is in their Export Financing but why only for those types of deals? Perhaps you Factor your A/R’s but I just read “Wells Fargo & Co. is among the firms no longer providing Sears vendors with factoring — short-term financing that helps gives them a cushion.” Imagine then what I seem to hear more often than not – insurance works when you really don’t need it but often doesn’t respond when you truly have the need. Do you feel that way or have you heard this said?

This is why I continue to preach Risk Management and supplementing with a suitable Risk Transfer mechanism (insurance should not be solely price-driven when purchasing but knowing what is and is NOT covered and buying the policy from a reputable agency/brokerage with adequate Errors & Omissions insurance of their own and a suitably rated (I tend to like AM Best A-ratings or better) underwriter for your General Liability, Trade Credit, Cyber, Crime, Specialty and Directors’ & Officers’ Liability policies.

I do hope you realize that insurance buying may be 1 of the most important business decisions you make each year but I do know that you overlook this importance because of the trust you place in your providers and the lack of understanding of what is really behind an insurance contract.

 

Let’s discuss today! I can be reached on Twitter (@WRiskManager), on LinkedIn or Facebook and by e-mail – larryewinsurance@gmail.com

 

Info derived from http://www.msn.com/en-ca/money/companies/sears-payless-woes-push-retail-vendors-to-get-more-militant/ar-BBAcFIC?li=AA54rW&ocid=spartanntp and other online material.

What is #Integrity? How does anyone in the #Sales field prove beyond a doubt that YOU should #trust him/her?

March 15, 2017

I shared on #LinkedIn, earlier today, an interesting read for all concerning the #banking #industry and the pressures their staff are facing today to #mislead, #sell, etc. their #clients into #services they may or may not need. As a former banker, I have seen many of the same “tricks”. For that reason, I was fearful for many years of the open competition (what we called an unbalanced playing field) between the #banks and #insurance sales. In my own jurisdiction, we were known as #brokers because we dealt with several different insurance companies for our clients but many other locales use the word #agent but the difference matters little.

I use the term unbalanced or uneven because most people are not aware of the size of the Canadian banks (#RBC, #TD, etc.) vs. any insurance company. AND less that #LifeInsurance (e.g. #SunLife, #Manulife) dwarf much of the #Property/#Casualty sector in #Canada so that there is no possible way of balance if you eliminate barriers between the different sectors of #finance.

If you don’t believe this then look at what shows in a #Google search on #Wikipedia – RBC has TOTAL ASSETS of C$1.09 #trillion (2015), Toronto-Dominion Bank has TOTAL ASSETS of C$1.08 trillion (2015), Sun Life Financial has TOTAL ASSETS of US$246.853 #billion (2015), Manulife has TOTAL ASSETS of $935,176 #million CAD (2015), #Intact Insurance has TOTAL ASSETS of $21.236 billion (2015).

Some insurance companies (e.g. #Wawanesa, #Economical) are among the largest CANADIAN insurance providers to YOU but because of their “#mutual” status do NOT report Assets to Wikipedia because they are not #PubliclyHeld #corporations. So let’s look at Net Income as a measure. Intact Insurance showed Net Income of $706.0 million (2015) – the LARGEST Canadian Property/Casualty insurance company – and A.M.Best ratings show Wawanesa Insurance with Assets of $2 Billion or greater, Economical Insurance with Assets of $1.25 Billion to $1.5 Billion, #Cooperators Insurance with Assets of $1 Billion to $1.25 Billion. Anyone can quickly see that there is really NO comparison in size between RBC and a small insurance company, correct?

To prove my point, Wikipedia also states that RBC had NET INCOME of $10.026 billion in 2015 which dwarfs the $706.0 million that Intact shows for the same year and only supports my premise that the playing field can never be level.

Today, however, I feel mixed emotions as to whether this would be good or not because I know that insurance sales can be just as focused on sales and, too often, NOT on the real needs of the client! Why do I believe this? I have experienced working with and against people who used the “cut and paste” approach – obtain a copy of the insured’s current #policy, submit for #quotes and find the lowest #price for those coverages being currently provided. Why? Well, many of you will go back to your long-time provider and then ask if he/she can match the policy price, right?

Do you do this? If so, are you not encouraging a level of poor #service from your providers? Maybe, even a bit of #dishonesty because there are those individuals who will overlook something you might truly need just to lower your cost!

Whatever happened to integrity? If #reputation and one’s #handshake are not important to #business, should #government always have to legislate and permit the courts to #adjudicate? We all love to tell #lawyer jokes but are we not the real reason we need the legal profession?

This is why I no longer can involve myself with sales because I feel that my own integrity and reputation are, somehow, discoloured by those around me whose own views of selling are so dissimilar to mine. I am a Consultant, yes, a #Risk #Management consultant and this means that I only work for you, Mr. Business-#owner or #Executive.

Let’s talk and I will again share an earlier post here from LinkedIn that was subsequently posted to my Twitter feed.

“#integrity has always been of paramount importance to me! Too many in #finance – #banks #insurance companies, agents/brokers – put their own interests above that of their clients/customers. As a #RiskManagement consultant I work for my clients to advise 1st because I NEVER sell anything. If you #trust your connections then think again – http://www.cbc.ca/news/business/banks-upselling-go-public-1.4023575”

I can be found on #Twitter – twitter.com/WRiskManager – or on LinkedIn – http://www.linkedin.com/in/wriskmanager/ – and also on #Facebook – http://www.facebook.com/WRiskManager-159010316375/ – and look to a growing number of followers on those sites.