Thinking of switching bank accounts? How important to you is an eco-friendly bank?

Switching bank accountsCompetition between banks is now so fierce that customers are looking for a unique selling point to differentiate one from another.

If you are thinking of switching bank accounts, or opening a brand new account, you probably have certain key requirements when choosing a current account.

Assuming that features such as debit card and overdraft facilities are similar between banks, the point of difference could be the bank’s eco-friendly policies.

Green banks – not just a gimmick

Many banks now have environmental policies in place, but some use this as a marketing tool just to attract new customers. It can be difficult to know if their ‘green’ policies are part of the bank’s overall strategic plan, or just a marketing ploy, but environmentally-friendly systems could include:

–          Offering paperless statements – you access your statement online instead

–          Promising to plant trees if you opt for online statementspower-plant-4035_150

–          Using recycled paper for day-to-day correspondence

–          Sourcing renewable energy to power branches

–          Implementing energy-saving measures within general banking activities

–          Using technology, such as conference calls, to reduce the number of miles travelled by bank executives

HSBC were one of the first banks to take steps to become carbon neutral. In 2005 the bank implemented its plan to buy green electricity, plant trees, reduce energy-use, and purchase carbon credits, in an attempt to lower the impact of their carbon emissions on the environment.

By purchasing carbon credits, green banks can ensure that for every tonne of carbon dioxide they produce, the equivalent amount can be saved elsewhere. This is achieved by paying another company to reduce their own carbon emissions by the same amount in the same year.

Banks need to set an example to the business world in general, by promoting a ‘green’ way of working. Eco-friendly processes within branches, using sustainable materials and renewable energy, is now commonplace, but they need to monitor carbon emissions regularly to know if they remain carbon neutral.

Is Bankruptcy A Route That’s Too Easy To Take?

Declaring bankruptcyIn 2004, one of the rules of bankruptcy changed, whereby a person can be discharged from bankruptcy after just one year, rather than three years.

The rule was amended to allow business people to start again financially, but it also meant that individuals could use this ruling to their advantage.

This amendment has led to much criticism of bankruptcy law, and it’s been suggested that taking the bankruptcy route is now too easy, with few repercussions for people who have irresponsibly allowed debts to spiral.

Recent research has shown that more than half the population of the UK believe that one year as a bankrupt is not long enough, and that too many people are taking the ‘easy’ way out of debt.

So is taking the bankruptcy route really too easy?

Declaring yourself bankrupt may result in

– having to give up any assets of value, and all debit and credit cards
– losing financial interest in any property owned
– losing a job, if the employment contract does not allow bankruptcy
– any disposable income being used to pay off debt, potentially for several years
– bankrupt’s credit rating being severely damaged

When viewed under these circumstances, bankruptcy doesn’t seem such an easy route to take. Total control of a bankrupt’s finances is handed over to either an Official Receiver, or a professional insolvency practitioner, whose priorities lie with the creditors who are owed money.

The fact that bankruptcy is announced publicly in the London Gazette and the Individual Insolvency Register can dissuade people from following this route. Even with the prevalence of debt in today’s society, there is still a social stigma attached to declaring yourself bankrupt, and many people try to hide the fact from family and friends.

For the general public, declaring themselves bankrupt remains a huge life event, and for the vast majority of people it’s not taken lightly. There are repercussions for more than the year it takes to be discharged, as a note of the bankruptcy remains on an individual’s credit file for six years. This means that a person will find it difficult to obtain any type of borrowing for that time, which may hinder their overall financial recovery.

How Credit Rating Agencies Can Help You Stay Afloat In A Sea Of Economic Uncertainty

One way for small business owners to reduce the possibility of bad debts and the cost of chasing late payments, is by checking out the financial health of their potential customers online. Credit rating agencies produce reports that will help assess the risk factor of allowing credit to new customers, and also provide new information about existing ones.

The information contained in a credit status report is gathered by the agency from various sources:

  • Companies House provide copies of a company’s recent accounts which are then analysed by the credit rating agency
  • the Register of County Court Judgements shows any court orders against the customer for non-payment of debt
  • general information may be supplied by other clients of the agency.

Information about the owners or directors, the size of the business and the year the business was started, also helps to provide an overall view of the potential customer.

Terms of Trade are not only for new customers

When existing customers run into financial problems, they may tell you that it’s just a short-term problem, but knowing whecalculator-1818_150ther you are likely to receive payment and how long it will take, will help you budget and keep control of your own cash flow. Online credit checking software allows for ongoing checks on existing customers so that if their credit score changes, you’ll know about it and be able to take the necessary steps.

It may be worthwhile investing in this type of software if you run a business that offers a lot of credit to customers, as you’ll be able to keep up with significant changes in their financial situation.

Online credit checks are fairly inexpensive, usually around £20, and are a quick and easy way to discover detailed information about a new or existing customer. Forming part of your business Terms of Trade, they can save the time and effort of chasing late payments or writing off bad debt, and let you focus on building up sales and increasing your bottom line.

Don’t Get Stung By Late Payers – How To Get Paid On Time

Getting paid on time can seem like an endless struggle for small business owners, even if they have good credit control systems in place. The time and manpower needed to chase debts could be put to better use, and it can be tempting to write off more debts than you should.

So what is the answer to the common dilemma of how to get paid on time?

The Pay On Time website supports small business owners in their quest for prompt payment and improved cash flow, by providing free advice, and online tools and resources. One of the most useful resources is a Late Payment Interest Calculator, which generates a late payment demand that calculates and updates interest on a daily basis.

The calculator also includes an amount for compensation, and both this and the interest amount use the current legislation figure.

The main idea behind the site is to get small business owners together as a group, to tackle the problem of late payers. You can become a Pay On Time supporter and be part of their ‘Prompt Payment Directory’ with a logo on your website and social networking links in your directory listing. However, you have to agree to 4 conditions to become a ‘supporter’achievement-18134_150

• Agree payment terms at the outset of a deal, and stick to them.
• Explain your payment procedures to suppliers.
• Pay bills in accordance with any contract agreed with the supplier, or as required by law.
• Tell suppliers without delay when invoices are contested, and settle disputes quickly.

You’ll find lots of useful information on this website, including articles on understanding credit ratings; how to check the credit-worthiness of a potential customer; and the importance of having specific Terms of Trade.

There is a discussion forum if you need some advice in a hurry, late payment letters and templates to download; and you can also stay up-to-date with official late payment legislation.

Late payers have such a negative impact on the cash flow of small businesses, that dealing with them proactively is no longer an option, but a necessity. How to get paid on time has become a huge problem for small business owners everywhere, many of whom are just keeping their heads above water anyway, and would welcome the support of a like-minded group.