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http://www.nytimes.com/2011/04/19/business/global/19debt.html?_r=1&ref=business

In 2001, an agricultural co-op here was supplying truckloads of wheat to an Italian pasta maker. At first, no one at the Spanish co-op, Arento, was much alarmed when the pasta factory in Milan fell behind in its payments.

The co-op did not cut off the credit until the pasta company owed €1 million, or more than $1.4 million today, never realizing how hard it might be to collect a debt in another country in the European Union. But now, a decade later, having spent years in the courts and tens of thousands of euros on legal bills, Arento has recovered only half of what was owed.

“We came face to face with the Italian legal system,” said Luis Navarro Olivares, Arento’s director general. “The trips to Milan were Kafkaesque. Really, Italy is too far away on a cultural level, a legal level and an administrative level.”

In theory, the European Union is one gigantic economic zone of about 500 million consumers all integrated into the world’s biggest trading bloc. But the ideal is still far ahead of the reality, particularly for businesses that end up trying to collect debts across the Union’s many borders. There are still 27 different national legal systems at work in the bloc, each with its own procedures for handling claims, property attachment and bankruptcies.

European officials say at least €55 billion a year in debt is simply being written off, much of it because businesses find it too daunting to press expensive, confusing lawsuits in foreign countries.

The single market is clearly a long way off from being a genuine one. If the EU was about pushing back the boundaries on trade then intra EU trade like this should come under EU law and guidelines making it easier for people to seek redress when companies fail to pay up.

Yet another example of how political spin masks reality of trading within a multicultural block.

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http://www.nytimes.com/2011/04/19/business/global/19debt.html?_r=1&ref=business

The single market is clearly a long way off from being a genuine one. If the EU was about pushing back the boundaries on trade then intra EU trade like this should come under EU law and guidelines making it easier for people to seek redress when companies fail to pay up.

Yet another example of how political spin masks reality of trading within a multicultural block.

have they not heard of Credit Insurance?

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http://www.nytimes.com/2011/04/19/business/global/19debt.html?_r=1&ref=business

The single market is clearly a long way off from being a genuine one. If the EU was about pushing back the boundaries on trade then intra EU trade like this should come under EU law and guidelines making it easier for people to seek redress when companies fail to pay up.

Yet another example of how political spin masks reality of trading within a multicultural block.

I have to agree with this. The Euro zone has all the gloss of being a fully functioning economic unit but someone forgot to put in the engine. EU law and bureocracy should have been fully integrated by now. This is the most fundamental problem in the Euro zone. It's full political and fiscal integration or nothing,

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I have to agree with this. The Euro zone has all the gloss of being a fully functioning economic unit but someone forgot to put in the engine. EU law and bureocracy should have been fully integrated by now. This is the most fundamental problem in the Euro zone. It's full political and fiscal integration or nothing,

most countries pay lip service to the EU, happy to do the right thing when it suits them.

UK seems to gold plate and have a man with handcuffs ready to enforce every crossed t and dotted i.

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It's from the NY Times.

If you've been in business at all, you'll know that's a longstanding transatlantic difference. US law takes contracts - including things like paying your suppliers - seriously. Businesses don't bugger you about because they know very well that TPTB take a dim view of any nonsense.

If a UK newspaper were to print that story, it'd be throwing stones from the most delicate of glasshouses.

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Credit Insurance / Factoring etc,

Companies use it to cover default risk / Protracted Default against non / late payment of trade debts

Che cosa?

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Credit Insurance / Factoring etc,

Companies use it to cover default risk / Protracted Default against non / late payment of trade debts

Sounds like PPI on consumer credit cards to me. Another wonderful 'innovation' from the banksters.

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Sounds like PPI on consumer credit cards to me. Another wonderful 'innovation' from the banksters.

i assume thats because you dont have your own company thats benefitted from it it

When you run a business you sell things to customers at home or all over the world, in order to avoid the original post happening you cover yourself against supplying to fckwits like Bovey ltd and the like or your world wide trade not being paid through late payment or the company that has your goods going insolvent. If you want a proper rating of a company you are trading with that actually means something then trade credit insurers ratings tend to mean something because they have this minor deterrant of moral hazard known as skin in the game.

Edited by Tamara De Lempicka

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thats probably because you clearly know fck all about it

When you run a business you sell things to customers, in order to avoid the original post happening you cover yourself against supplying to fckwits like Bovey ltd and the like against your world wide trade not being paid through late payment or the company that has your goods going insolvent. If you want a proper rating of a company you are trading with that actually means something then trade credit insurers are superior because they have this thing that deters moral hazard called skin in the game.

Eh? From your link:

Credit insurance is a term used to describe both business credit insurance (a.k.a. trade credit insurance) and consumer credit insurance, e.g., credit life insurance, credit disability insurance (a.k.a. credit accident and health insurance), and credit unemployment insurance,[1]

The easy way to differentiate between these two types of insurance is:

* Business credit insurance is credit insurance that businesses purchase to insure payment of credit extended by the business (their accounts receivable).

* Consumer credit insurance is credit insurance that consumers purchase to insure payment of credit extended to the consumer (insurance pays lender or finance company).

Consumer credit insurance is a way for consumers to insure repayment of loans even if the borrower dies, becomes disabled, or loses a job. Consumer credit insurance can be purchased to insure all kinds of consumer loans including auto loans, credit card debt, loans from finance companies, and home mortgage borrowing. Although purchased by the consumer/borrower, the benefit payment goes to the company financing the purchase or extending the credit to the consumer.

Honestly I was being facetious, but I don't think I was that far off the mark after all.

My point is this - it is just another expense to business that if things were run better wouldn't be needed. Either way the banksters get to take a % of the trade - through the fee for this insurance if it isn't needed, or through transaction fees (CHAPS, FX, etc.).

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When you run a business you sell things to customers at home or all over the world, in order to avoid the original post happening you cover yourself against supplying to fckwits like Bovey ltd and the like or your world wide trade not being paid through late payment or the company that has your goods going insolvent.

Unless you're selling megaweapons to people so dubious the insurers won't touch them with the proverbial bargepole. Then you get the taxpayer to underwrite you and call it export credit guarantees. :angry:

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Eh? From your link:

Honestly I was being facetious, but I don't think I was that far off the mark after all.

My point is this - it is just another expense to business that if things were run better wouldn't be needed. Either way the banksters get to take a % of the trade - through the fee for this insurance if it isn't needed, or through transaction fees (CHAPS, FX, etc.).

im talking specifically trade credit, banks arent involved anywhere in the transaction, it is insurance, of course you could make the insurers obselete by ending banking and debt/credit tomorrow or forcing all companies to pay on or prior to receipt of goods (good luck with that) but whilst it exists i imagine these insurers will exist and they serve a useful purpose

Edited by Tamara De Lempicka

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im talking specifically trade credit, banks arent involved anywhere in the transaction, it is insurance, of course you could make the insurers obselete by ending banking and debt/credit tomorrow or forcing all companies to pay on or prior to receipt of goods (good luck with that) but whilst it exists i imagine these insurers will exist and they serve a useful purpose

Fair enough. Going back to the OP though, even without credit insurance they should have realised sooner that they were being taken for a ride. Simple common sense really. Just don't deliver any more until they pay for the last 'x' deliveries.

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Eh? From your link:

Honestly I was being facetious, but I don't think I was that far off the mark after all.

My point is this - it is just another expense to business that if things were run better wouldn't be needed. Either way the banksters get to take a % of the trade - through the fee for this insurance if it isn't needed, or through transaction fees (CHAPS, FX, etc.).

If said expense means that bills and wages get paid, I'd say it was an essential expense.

Many businesses go bust and/or trying to avoid making payments (or prioritise when cash flow is bad). It is a legitimate business model to ask a 3rd party to handle credit control - that's their business interest and they have a better chance of judging and allocating risk.

Not everything that banks do is part of an evil conspiracy.

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If said expense means that bills and wages get paid, I'd say it was an essential expense.

Many businesses go bust and/or trying to avoid making payments (or prioritise when cash flow is bad). It is a legitimate business model to ask a 3rd party to handle credit control - that's their business interest and they have a better chance of judging and allocating risk.

Not everything that banks do is part of an evil conspiracy.

I wasn't saying it was an evil conspiracy. Just that you're going to have to pay out a % of what you have earned to a middle man either way. Arguably too many middle men leads to an uncompetitive market.

Based on the last decade I would however question if a third party really can estimate risk better. Although they will still be able to make a profit each year and pay bonuses of course. Because they're worth it.

Edited by efdemin

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One of my neighbours works in trade finance - factoring, leasing, that sort of stuff. They have a company-wide ban on dealing with the Italian market, even if it's a British company exporting to Italy. Too much trouble and corruption. It's the only European market where this applies.

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I wasn't saying it was an evil conspiracy. Just that you're going to have to pay out a % of what you have earned to a middle man either way. Arguably too many middle men leads to an uncompetitive market.

Based on the last decade I would however question if a third party really can estimate risk better. Although they will still be able to make a profit each year and pay bonuses of course. Because they're worth it.

You aren't forced to use credit insurance, but those without can hardly bleat on about it being unfair when their creditors fail to pay. Some corners just aren't worth cutting, once the business is of a certain size.

Also, if the insurance company don't manage the risk well, they won't be in the business of providing credit insurance for long. It is their job to gauge the risk and set the cost of the insurance appropriately - they will have many actuaries, checking company records, history etc.

Many businesses both small and large will not have (nor want) to employ actuaries and pay for their required resources, when they can just sub contract this responsibility to another company.

If you think they make so much money, then I would suggest you get that credit insurance company started without delay!

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One of my neighbours works in trade finance - factoring, leasing, that sort of stuff. They have a company-wide ban on dealing with the Italian market, even if it's a British company exporting to Italy. Too much trouble and corruption. It's the only European market where this applies.

From reading some posts in this thread, I should think your neighbour will be too busy drinking champagne and deciding what to spend his bonus on! ;)

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If they had credit insurance though and decent factoring company of any size they would have lawyers in Italy ready to go into bat. We have had this on a number of export accounts. After X days you hand it to the factoring company and they go medieval on them (its funny to watch from the sidelines)

Edited by FIGGY

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And give more money to parasites? Much better to only deal with companies you trust and leave the others to your competitors.

Not everyone has that luxury. If you're in a highly specialist business that deals worldwide on large value one off sales then this isn't an option.

I use L/C (letter of credit) although the admin can be a pain. 50% up front so at least some cost is covered is another option that's easier, but sometimes the customer won't do that.

If they won't do l/c or significant proportion up front, well .... you have your choice.

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I wasn't saying it was an evil conspiracy. Just that you're going to have to pay out a % of what you have earned to a middle man either way. Arguably too many middle men leads to an uncompetitive market.

Based on the last decade I would however question if a third party really can estimate risk better. Although they will still be able to make a profit each year and pay bonuses of course. Because they're worth it.

If you've never had your a** on the line waiting for some of money coming in from the middle of nowhere that might leave you £50k down personally if it don't turn up then I can understand why you might think this sort of stuff is a waste of time.

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And give more money to parasites? Much better to only deal with companies you trust and leave the others to your competitors.

Sorry but normal Credit Insurance is a legitimate financial product of spreading the risk. CDS is a different manner, however

I don't like financial firms very much but they have legitimate roles in the economy. Without credit insurance, LC, marine insurance,

you will still be buying overpriced locally made product and be deprived of various imported luxuries.

I am feeling a bit dubious about the Spanish coop extending euro 1m of credit - don't think British firms will extend that sort of credits

without full background check & insurance or a Spanish firm would have given that sort of terms without full checks.

Wondering if there is an element of insider job ?

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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