Search results for common
Black Holes and Heroes
At times, the only force holding an organization together and preventing it from falling into the abyss comes from unsung heroes within its ranks. Read this article by Ron Lutka, CMA to find out more about the unsung heroes. There might even be parallels here to your organization.
Some Recent Canadian Developments in Cross-Border Litigation
Here are some recent developments important to anyone engaged in cross-border civil litigation involving common-law Canada. One, the criteria for determining whether a court has jurisdiction over a non-resident defendant have been revised. Two, the concept of "forum of necessity" is now established in Ontario. Three, Canadian courts will not, as readily as in the past, decline to exercise their jurisdiction in cases where a parallel action (one involving the same parties and issues) has already been commenced elsewhere.
Suing a Foreigner? Keep Control of the Case with a Forum Selection Clause
In the world of cross-border litigation, I can tell you that prevention is worth much more than a pound of cure. Battles over where a case is to be litigated are common, and can be so protracted and costly that the parties never reach a determination of the merits of the case. Such battles are common because generally there are tremendous strategic advantages to litigating the case in one’s home jurisdiction, and disadvantages to litigating the case in one's opponent's jurisdiction.
PPSA & Legislative Q's
Cash Flow Myths
It's just too easy to mislead the average investor in Canada. Financial reports can be arcane and confusing even for professionals. Adding to the problem are regulators who don't care to clean up pervasive scams, much less make financial statements more usable for investors.
Common Forms of Financial Statement Fraud
In the summer edition of To Your Credit, we published an article on the work of Professor Messod D. Beneish from the Kelley School of Business, Indiana University on the subject of earnings manipulation. In the sample of 74 companies that Pr. Beneish looked into for his research, he concluded that the typical manipulators “overstated earnings by recording fictitious, unearned, or uncertain revenues, recording fictitious inventory, or improperly capitalizing costs.”
Financial statement simple analysis
In today's environment the obtaining of Financial Statements from a customer is becoming virtually impossible. A good credit professional needs to sell his customer on the benefits of supplying at least a common size balance sheet and income statement in order to justify a credit limit sufficient to meet both yours and the customer's needs.
Webster’s dictionary defines ethics as: “ A set of moral principles or values”, and ethical as: “ Conforming to professional standards of conduct.” To help guide ethical behaviour in the credit department, it’s important to start with a written credit policy.
Role of the Office of the Superintendent of Bankruptcy (OSB)
The Office of the Superintendent of Bankruptcy (OSB) is part of Industry Canada. Their role is to ensure public confidence in the market place by protecting the integrity of the bankruptcy and insolvency system.
BIA compared to the CCAA
The Companies' Creditors Arrangement Act (CCAA) is a federal law allowing insolvent corporations that owe their creditors in excess of $5 million to restructure their business and financial affairs. Under the CCAA, corporations ask the Court for protection while they prepare ...
Free Fraud Detection Resources
One of the simplest ways to detect potential fraud is to confirm certain information provided on a credit application using easy, free resources on the Internet. As a commercial collection agency, we regularly get claims where this has not been done and we discover that the information provided was either misleading or outright fraud. In either case, it is...
Differences in Risk based on Type of Business
In Canada there are three general forms of business ownership: a sole proprietorship, a partnership, and a corporation.
Cross Border and International Collections
https://creditedu.org/knowledgecentre/index.php/site/page/86You've serviced your client, you've invoiced the job, and you've not been paid. What can you do?
- current Ratio
- Acid Test
Debit - Equity Ratios
- Current Debt to Tangible Net Worth
- Total Debt to Tangible Net Worth
- Working Capital
- Net Worth
PPSA Registrations - Is this the Weakness in Your Armour?
As the saying goes, an ounce of prevention is worth a pound of cure. This expression is particularly apt when it comes to secured creditors and their registrations under the Ontario Personal Property Security Act (the "PPSA"). Although "getting it right the first time" has always been the mantra of secured creditors, the economic roller coaster ride of recent months has heightened the need to ensure a properly perfected secured claim.
Risk assessment is a step in a risk management procedure. Risk assessment is the determination of quantitative or qualitative value of risk related to a concrete situation and a recognized threat (also called hazard). Quantitative risk assessment requires calculations of two components of risk (R):, the magnitude of the potential loss (L), and the probability (p) that the loss will occur.
The Personal Property Security Act ("PPSA") is the name given to each of the statutes passed by all common law provinces, as well as the territories, of Canada. They regulate the creation and registration of...
Letters of Credit
A letter of credit is a document that a financial institution or similar party issues to a seller of goods or services which provides that the issuer will pay the seller for goods or services the seller delivers to a third-party buyer. The seller then seeks reimbursement from...
Hypothec Definition: - Is a charge on property upon which an unpaid creditor may enforce payment of the debt. It is the right of a creditor to take a...
Construction credit is a unique and specialized form of mercantile credit. Although the field follows many of the same principles, practices and procedures as mercantile credit, there are a number of factors that make the practice unique. In order to be successful, the credit professional must...
Terms used by CPA's
A CPA will competently assist an organization (whether it is a privately held business, a publicly owned corporation, or a nonprofit organization) with preparing reports on its financial performance. Such reports help owners and managers make operational decisions, enable creditors to evaluate loan applications, and provide individuals with information to make investment decisions.
The Quickening of Innovation in Asset Based Financing
Some would call it evolution: others, revolution. Semantic flourishes aside, financial technologies are increasingly in the foreground as drivers of product differentiation and proliferation in the asset-based financing industry.
The Automotive Industry
https://creditedu.org/knowledgecentre/index.php/site/video/185Discussion topics will include: Key financial metrics for auto dealers, Inventory turnover and inventory cost vs. floorplan debt values, Gross profit and Absorption ratios, Debt-to-tangible net worth and debt service coverage, Dealing with the credit arm of banks to finance growth, Covenant requirements and what happens if covenants are in breach, and Common tax-planning items and the misconceptions this can have with credit institutes.
How a commercial lender will evaluate your creditworthiness for a loan
When you apply for a commercial loan, lenders assess your credit risk based on a number of factors known as the “5 C’s of Credit.” Understanding these factors will help you build your personal and company credit standing while ensuring your ability to obtain credit when your business needs it most.
Here is a breakdown to help you better understand these factors and what all lenders look for:
Five Most Common Business Credit Mistakes
https://creditedu.org/knowledgecentre/index.php/site/video/202How often has your accounts receivable department attempted to collect a payment, only to discover that a client has gone bankrupt, or cannot be compelled to pay an invoice? Each unpaid account is significant revenue lost. But there are ways to minimize this loss.
Do You Have a Credit Policy for Your Organization?
If your business lets your customers receive goods or services now in return for a promise to pay later, then your business grants credit. And you are not alone. Most businesses grant a credit to their customers, especially if their customers are other businesses (B2B—business-to-business). In fact, this is the most common type of credit offered in the business world and most of the credit offered in this way is unsecured.
Q and A (1)
What can creditors do to protect themselves when a customer remits a cheque, for less than the full amount owing, and marks it "Paid in Full" or words to that effect? Also, what can a creditor do to protect themselves in this situation when their company uses a "lock box" or "shared service" center and the A/R personnel may not even see the cheque prior to it being negotiated? Is the law that governs these scenarios Federal or Provincial?
Courts are very familiar with this tactic and will generally not give effect to it. A cheque marked “paid in full” may very well be evidence of an agreement to reduce the debt owing, but it is easily rebuttable by clear evidence that the creditor accepted the payment only as partial payment. This is based at least partially on the concept of consideration. Put simply, this concept involves the idea that you do not get something for nothing. What the debtor is attempting to do in this situation is to receive a discount on its debt without providing any real benefit to the creditor in return. The courts will not allow a debtor to unilaterally alter its agreement with its creditor - which is what it is attempting to do with the notation on the cheque.
One possible method of dealing with such attempts would be regularly forwarding statements thanking the debtors for any payments received and indicating the account balance to date. If the debtor then challenges the statement arguing that payment had been made in full by way of the cheque in question, all the creditor would have to do would be to respond by saying it was received in partial payment. Unless the debtor is able to produce some sort of an agreement with the creditor showing the creditor’s agreement to accept the reduced amount in full satisfaction for the amount owing, it is extremely unlikely that the courts find in favour of the debtor.
Of course, if the creditor notices the notation before it deposits the cheque, it can also send a specific letter to the debtor thanking it for the payment and saying that the payment has been applied against the amount owing, that the creditor did not agree to accept the payment in full satisfaction of the amount owing and that the balance remains owing by the debtor.
The law governing these scenarios is the common law of contract, which is a matter within the jurisdiction of the provinces. As such, the law as interpreted in one province may not necessarily be applied in another. However, frequently the courts in one province will consider and often follow the decisions of courts in other provinces.
https://creditedu.org/knowledgecentre/index.php/site/wiki/64Persons who are connected by a blood relationship, marriage, adoption or common law partnership; while so related, they are deemed not to deal with each other at arm's length. The Act provides that the definition of related persons extends to corporations, shareholders and directors in certain specified situations.