Intelligent Directors’ Monitoring

Date: 13/08/2010

By De Vere & Co

In 2009 one of our clients came to us with real concerns about the quality of the ongoing credit monitoring on their client companies. We agreed to research how the monitoring process could be enhanced utilising our extensive knowledge of client failures and fraud. The monitoring had to be reliable yet affordable. Our research showed that all of the monitoring systems provided by the credit industry were company orientated and limited to the companies that monitoring was pointed at. Our own experiences, however, revealed that the issues more often lay with the Directors and their personal circumstances (or changes in those circumstances). Whilst we had been looking at Director monitoring for a number of years it was only in early 2010 that we were able to put together a viable monitoring service.

We have been running trials with funders over the past 6 months and the basic principle is that the funder selects the Directors they would like us to monitor and provides us with base data. These Directors are selected for a number of reasons: they may be high risk clients, clients that have a large exposure or maybe Directors whose personal guarantees are playing an important role in the security package underpinning funding. Each funder has their own definitions of risk and red flags.

De Vere & Co will then provide immediate updates on changes to the directors’ companies and personal circumstances. Five areas are monitored under the service: the funded company, associated companies, personal insolvency, main residence and personal risk deterioration. However the detail of coverage and the cost is determined by the choice of package, (bronze, silver or gold).

Our experience of investigating frauds within the Invoice Finance sector has shown that knowledge of these changes provides advanced warning of issues that will detrimentally affect the funded business months before this information would otherwise be known. In a recent case, Intelligent Directors’ Monitoring revealed that a Director had sold his personal property and one of his associated companies had a Winding Up Petition filed against it. Following the results of the monitoring the funder approached the Director and discovered that he was living in rented accommodation and had sold his house to pay off creditors in his associated business. The deteriorated value of the personal guarantee materially changed the funder’s perception of its security.

So sure are we that funders will see the immediate benefit of IDM that we are offering a limited number of ABFA members a free 3 month trial of the product.

If you would like any further information on the Intelligent Directors’ Monitoring service, detailed case studies or would like to discuss a trial then please contact Stephen Wells or Simon Kidd on 0207 242 1012.