The “Value-Added” insolvency business?

There are all sorts of ways of doing business and all sorts of theories on how the good ones work,  but there is one underlying feature that lies at the core of all successful enterprise; the delivery of added value. Value, of course, doesn’t mean price. Water is valuable; indeed essential, but there is so much of it that it usually has no price. So price is a function of scarcity, not value.

But making water easily available and guaranteeing that it is free of contaminants is valuable, saving time and effort and making the consumer feel safe. So, next time you buy a bottle of water, you can reflect that it is not the water that you are paying for, but the bottle, its convenient delivery to your hand and the guarantee of quality.

So, if you want to improve your business prospects, the most assured way of doing so is to work out what value(s) it delivers, and how those can be increased and also, how they are perceived. Then, assuming you are doing something that other people can’t easily do/make themselves, you have the makings of a business.

Question – What value(s) can an insolvency process deliver?

Actually, there’s quite a lot of them; delivering a dividend to creditors, investigate and recover misdirected assets, identify delinquent directors. But I think the main things that good IPs deliver are reduced stress, the prospect of a fresh start and the chance to get a good night’s sleep. Of course, it’s more complicated than that and few people have the aptitude to do this work, which is why we can often charge high fees. As a leading QC and part-time judge said to me at an SPG conference a while back,”We [judges/the public] need to make sure IPs can earn enough to attract more and more quality people into the profession”. Quite.

Of course, you can’t just go for value, because there is the issue of price to consider; a concept that I have sometimes struggled to impart on some of my staff. Here is an approximation of one conversation with an administrator at my last firm.

Me (reviewing the time on a case) – “Jack, why have you spent all this time agreeing the unsecured claims?”

Jack (looking a little puzzled) – “Well, I got the last of the cash in last month and that was the next thing to do.”

Me (trying to keep the high pitch out of my voice) – “Jack, you’ve spent £3,400 of time on that”.

Jack (looking disturbingly like Tony Blair explaining the Iraq war) – “Yes. Well, there are 200 creditors and there’s four big ones whose claims are really muddled in the books….”

Me (feeling the weariness of my years) – “Jack – there is only £12,000 left in the case; our WIP was £8,000 before you started on the claims and it is now nearly £11,500. It’s going to cost at least another £2,500 to close the thing. Didn’t you think to check the WIP before getting into so much work”

Jack – “Errrr…. ?”

I am pleased to say that after some further explanation, Jack did get my point and the experience led to a series of training sessions for all my staff, partly on that particular issue, but about the values we needed to deliver in order to keep getting paid (me by the clients; them by me). From those training sessions, we went on to remodelling our job planning, our check lists, investigation methods, report styles and staff-development programme.

Did it lead to better profits? We were never able to prove that absolutely; there are too many variables in any year of an evolving professional practice. But I do know that all my staff moved on to taking greater responsibility and enjoying the work more. Reports to creditors got shorter AND more meaningful. And I spent less time in detailed case work, able to take more time for other things.

Here, then, a few things to think about–

  • Do your systems make your staff think about the financial implications of their actions?
  • Have your staff got a clear idea of how much initiative they can take, and when to call on you or a senior manager to give directions?  This can be particularly important with a mid-level manager whose belief in him/herself (a quality that you need to foster) sometimes leaves you in places that are either expensive (bad) or exciting to your RPB (really bad).
  • Does your case plan include an outcome statement that can be regularly updated to trace where the work is going?
  • And, does the case plan feed into your overall WIP management in a way that is clear and helpful?

I could go on, but I really do need to get out more.

 

 

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