Book values of copyrights etc
Discussion
Just been looking through the accounts of a company I may be working with and their main assets seem to revolve around £132K worth of copyright materials and licences.
How does one establish the value of materials over which you have copyright and how are these usually dealt with in the accounts? I have an amount of copyrighted/trademarked materials which we sell but at the momnet I think we just have th £250 trade mark fee as the value.
I am rapidly coming to the conclusion, as someone new to this business mularky that it is all smoke and mirrors. Almost every check I carry out reveals a company that hasn't submitted accounts for two years, is much smaller than what is painted, is turning over and making less money that one might think and is living on borrowed money. I know business consultants are not renowned for their integrity but some people in top end cars, in swanky offices and with numerous staff seem to be living on borrowed time and money, or is that how business really works?
What you may be seeing is that the accounts you see at Companies House are those where various taxations etc have been minimised. There are various illegal ways of doing this, but there are many very legitimate and legal ones. For example, a good time to take tax relief from capital purchases, especially large one may leave a big company looking like it is teetering on a knife edge of only making 1% profit, or even making a loss. That does not mean that the company is not credit worthy, or has a good future.
With regard to the copyrights and their value, it may well be just a 'figure' put in the box. In reality if they had to sell these or the assets were liquidated these may be commercially worthless to anyone else.
I think it is important not to lose sight of what you are trying to go. You are not the VAT inspector looking into the finest detail, you are just ensuring that you will get paid by reducing your risks.
You could use a rule of thumb method for the risks you can assess:
If you have already worked with them before, then you are more likely to get paid.
The longer the company has been trading, the less likely it will go bust.
You can also limit your risk by making these rules of thumb policy. That way you could call on this when explaining to the MD of the year old company you have just met that you cannot extend £10,000 of credit immediately.
You can ask to be paid in £x,000 installments up to their limit, or ask for a directors guarantee. Personally, if I was asking for say £5,000 credit from a company who does not know me from Adam, I would not feel embarrassed if I were asked for this. But, if I had an offer of asking for a guarantee declined, this would tell me more about the company than a set of accounts does!
With regard to the copyrights and their value, it may well be just a 'figure' put in the box. In reality if they had to sell these or the assets were liquidated these may be commercially worthless to anyone else.
I think it is important not to lose sight of what you are trying to go. You are not the VAT inspector looking into the finest detail, you are just ensuring that you will get paid by reducing your risks.
You could use a rule of thumb method for the risks you can assess:
If you have already worked with them before, then you are more likely to get paid.
The longer the company has been trading, the less likely it will go bust.
You can also limit your risk by making these rules of thumb policy. That way you could call on this when explaining to the MD of the year old company you have just met that you cannot extend £10,000 of credit immediately.
You can ask to be paid in £x,000 installments up to their limit, or ask for a directors guarantee. Personally, if I was asking for say £5,000 credit from a company who does not know me from Adam, I would not feel embarrassed if I were asked for this. But, if I had an offer of asking for a guarantee declined, this would tell me more about the company than a set of accounts does!
JustinP1 said:
What you may be seeing is that the accounts you see at Companies House are those where various taxations etc have been minimised. There are various illegal ways of doing this, but there are many very legitimate and legal ones. For example, a good time to take tax relief from capital purchases, especially large one may leave a big company looking like it is teetering on a knife edge of only making 1% profit, or even making a loss. That does not mean that the company is not credit worthy, or has a good future.
With regard to the copyrights and their value, it may well be just a 'figure' put in the box. In reality if they had to sell these or the assets were liquidated these may be commercially worthless to anyone else.
I think it is important not to lose sight of what you are trying to go. You are not the VAT inspector looking into the finest detail, you are just ensuring that you will get paid by reducing your risks.
You could use a rule of thumb method for the risks you can assess:
If you have already worked with them before, then you are more likely to get paid.
The longer the company has been trading, the less likely it will go bust.
You can also limit your risk by making these rules of thumb policy. That way you could call on this when explaining to the MD of the year old company you have just met that you cannot extend £10,000 of credit immediately.
You can ask to be paid in £x,000 installments up to their limit, or ask for a directors guarantee. Personally, if I was asking for say £5,000 credit from a company who does not know me from Adam, I would not feel embarrassed if I were asked for this. But, if I had an offer of asking for a guarantee declined, this would tell me more about the company than a set of accounts does!
Useful advice. I have had dealings with this company before. When I worked for central govt we used him as a consultant but he was the one we were paying and he always was entreprenuerial (having gone bust twice as a result). I don't want to be in the nmiddle when he goes down for the third time.With regard to the copyrights and their value, it may well be just a 'figure' put in the box. In reality if they had to sell these or the assets were liquidated these may be commercially worthless to anyone else.
I think it is important not to lose sight of what you are trying to go. You are not the VAT inspector looking into the finest detail, you are just ensuring that you will get paid by reducing your risks.
You could use a rule of thumb method for the risks you can assess:
If you have already worked with them before, then you are more likely to get paid.
The longer the company has been trading, the less likely it will go bust.
You can also limit your risk by making these rules of thumb policy. That way you could call on this when explaining to the MD of the year old company you have just met that you cannot extend £10,000 of credit immediately.
You can ask to be paid in £x,000 installments up to their limit, or ask for a directors guarantee. Personally, if I was asking for say £5,000 credit from a company who does not know me from Adam, I would not feel embarrassed if I were asked for this. But, if I had an offer of asking for a guarantee declined, this would tell me more about the company than a set of accounts does!
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