100 per cent commission, a few extras and no questions asked!

..One agency owner shares his opinion on the fallout of the Apple Languages collapse:

As The PIE News reported at the end of last year, Apple Language Courses Abroad went bust, owing a million euro of unpaid debts to language course providers.

Was this a shock? Does it matter to the international education industry?

The quick answers are: NO and YES.

No, it was not a shock because people in the industry, myself included, as Managing Director of LANACOS, started getting feedback from clients, early in 2011/2012, that there were hundreds of non-payment of invoices from this one agency and this was affecting such basic services as tuition and accommodation not only for the agency clients but other students too. Remember, our clients talk in many languages…

There was a definite lack of money in the system and standards were falling

As an agent with 20 years experience in the industry, I have always been wary of rumours and false alarms but I knew this was more serious because of the reaction of the language centres.

There was a definite lack of money in the system and standards were falling, cost cutting was ubiquitous. Accounts departments were nervous. They were defensive when you asked them simple questions about transparency and investment dropped.

Then, speaking to other agents and directors of  language centres, the truth came out. Although Apple Languages was a “trusted partner agency of IALC”, they had serious financial problems and they owed a substantial amount to their friends. The exact amount varied but a reasonable amount has been reported now as 1 million Euro (+/-).

There was a mention of “moral obligation” to pay but these are words not actions

The next story was that no-one in their right mind wanted to buy the business but an agency was prepared to save the business for the “sake of the industry” yet was very careful to highlight they had no responsibility to pay the one million Euro debts. There was a meaningless mention of “moral obligation” to pay but these are words not actions. It is only worth the paper (or email) it’s written on.

So what are the implications for the rest of us solvent companies in international education who pay invoices and send clients to these language centres?

1. Our education partners, by not recouping the debts, are essentially giving Apple Languages a 100% commission on courses as well as giving free accommodation and superb terms and conditions, unheard of in any other industry. As we say in English it’s not cricket or fair play. Is it fair to give such favourable terms to an agency that has already benefited from naïve and poor judgement?

2. This will affect future contracts and negotiations with other agencies, because…

A)   other agencies will not get such favourable terms or commission rates

B)   staff numbers at language centres will fall to cut costs

C)   investment will suffer through lack of funds and concerns about this happening in the future with other agencies. Result: the end product will deteriorate.

Ultimately, Trust and Transparency will suffer because the market has not been allowed to take its proper course. Some players will believe that they control the market and believe (or delude themselves) that they will get their money back.

Unfortunately, this is an international market and competition is rife on the Internet, some companies, in the end will have to pay for these generous 100% commissions.

 

 

Dr Martin Pickett is Managing Director of LANACOS, based in the UK. www.lanacos.com

 All opinions are the views of the attributed author.