Ann: Trading Halt, page-402

Think about it this way

1. Let's say 95% of clients can't or won't pay $15k upfront, so remove that option.
2. Client pays monthly via direct debit (yes acceptable, but cashflow bad for BIG)
3. Client accepts FCC LOC, pays BIG upfront (good option for BIG)
4. Client just wants to pay monthly (and BIG sends invoice to FCC for 80% upfront)

Remove 1.
Leaves 2. 3. and 4.

2. Is the easiest sell, very simple. However BIG cant afford to cover the first 3 months costs upfront, so they use 4. unbeknown to the SB

This IMO is how a lot of this revenue is coming in as cash receipts.

I'm not necessarily saying its bad, in fact it makes some commercial sense, but what it does is it puts BIG in the firing line for any non payers, and also puts into risk the company itself.

I think BIG need to come clean on the true breakdown of what revenue amount is being funded and front ended.

Even First Capital say...

When offering payment terms to customers do you research their ability to meet the agreed terms? In most cases the answer is probably no. Often businesses deal with their trading partners with no insight or knowledge as to their commercial credit position.

FC said...

He said it did not secure the payment obligation of Big's customers who have received video content and agreed to pay by instalments.

So what about the clients that have not received the video and BIG has already taken 80% upfront on the invoice?