Your Debt Recovery Experts

DEBT COLLECTION CALLS | PREPARING FOR DEBT COLLECTION CALLS

debt collection calls

For most people, making debt collection calls isn’t one of your favourite tasks. If you work in a credit department or run your own business, it’s probably safe to say this job is often left until last, or is missed altogether when you are busy.

Result?

Those slow paying customers get away with continuing to receive extended credit from you, helping their cash flow but not helping yours.

Sending letters and reminders is the easy option, but because it is relatively impersonal, it’s also the least effective. The tactic works with customers who intend to pay you anyway, (they just need a prod) but is relatively ineffective with habitual late payers.

If you want to get on top of your collections, our first tip is to be prepared. Here’s how:

DEBT COLLECTION CALLS: KNOW THE FACTS

Before you pick up the phone, have all the details in front of you. Having the facts keeps you in control, ensures you are confident and prevents the customer from derailing the call.

You want to avoid saying, ‘I’ll have to get back to you on that’ which means payment isn’t about to be made, and you’re going to have to make another phone call. Particularly frustrating if they are difficult to get hold of in the first place!

Here are details you’ll probably need as a minimum:

  • amount owed
  • what they purchased
  • payment due date
  • what their terms of trade with you are
  • their account details i.e. where the invoices were sent
  • details of other outstanding invoices, even if they’re not overdue
  • their payment history i.e. do they usually pay on time?

DEBT COLLECTION CALLS: HANDLING EXCUSES

Before making your next calls, make a list of common excuses you are given, and prepare some appropriate responses. Keep this list handy for future calls, because you want to be able to come back to the customer with a well thought out reply, thereby maintaining control of the call and keeping to the purpose of the call. There’s nothing worse than hanging up and thinking ‘I wish I said this or that’.

Here are a couple of examples:

Customer: We have some cash flow issues, so we won’t be able to pay this week.

You: I understand juggling cash flow can be challenging. How about you make a partial payment today, and we can discuss a payment plan for the balance? How much would you be able to pay today?

Customer: I don’t have a copy of the invoice.

You: I’ll email a copy over now, as we are talking. Once you have the invoice, when will you be able to make the payment?

Every customer is different and there is no one way that will get you results every time. What works with one customer will not necessarily work with another. However, if you do your preparation and you plan your calls, you should start to better manage those tricky customers.

Collecting DebtDebt CollectionDebt Collection CallsDebt Recovery

Slow Paying Debtors | A Tail From The Horse’s Mouth

slow paying debtors

Slow Paying Debtors

Careers in the veterinary field attract those of us passionate about animal welfare.  You might assume that they would not have issues with slow paying debtors?

When Chris Wain Equine Veterinary Services in Queensland reviewed their cash flow, they were surprised to see how many invoices were going unpaid.

April Wain, Veterinary Nurse, said she identified two issues:

  • When they were called out, the welfare of the animal was the first priority, not thinking about the likelihood of a customer not paying them
  • Individually, unpaid invoices did not justify taking further action, typically they could be $300 to $600, however a number of invoices were not being paid, so it was impacting their cash flow

The Solution:

April needed a solution that would address the issue of non-payment, whilst being affordable so as not to cut into her margins. She also wanted to work with a team who were focused on results, but not at the expense of her reputation, brand or customer relationships.

April now has a membership with Kearley Lewis, whereby for $180 a year, she has access to unlimited debt collection services. She can utilise the services whenever she needs to, and only pays a commission when she gets paid.

Not only that, her terms and conditions have also been updated, so that the commission costs Kearley Lewis charges are paid by her customers when their payments are made.

Minimum of cost, margins maintained. Simple.

What does April say?

Kearley Lewis has proven to be an organisation that take pride in their interactions with clients and debtors alike. They have provided us with a personal service that takes into account the idiosyncrasies of the horse veterinary service industry. Being able to use their expertise to help us concentrate our efforts on providing the service that we pride ourselves on has been of immense benefit.

So far Kearley Lewis has been almost 100% successful in retrieving outstanding amounts, some as old as 12 months.

Ever made an incorrect payment online? | Mistaken payments

mistaken payments

A couple of months ago, I thought I’d paid the balance for our family holiday to the wrong bank account i.e. not to the travel agent.

It is easy to set up new payees online, and although we are asked to check the information before the payment is made, we all need to ensure always check thoroughly, and once we have set up our payees, that we select the right payee, because all it takes is a click .

The lesson I learnt from my mistake was that Banks don’t check the name of the account you enter when you transfer money online, they only check the BSB and account number. In my instance, I was lucky because it was only the account name I input incorrectly, so to relief the payment went through fine.

In the last few of weeks, we have had a number of enquiries from people who have paid an incorrect recipient online, and are looking to retrieve the funds. We have also had cases where employers have accidently paid a previous employee or incorrect employee and are seeking our advice.

So, what do you need to do when this happens?

Mistaken Payments: what is handy to know?

Firstly, the earlier that you notify your financial institution the greater the likelihood that the financial institution of the unintended recipient will be able to return the mistaken payment to you. Fast action in responding to the mistake and notice to the mistaken customer is key.

It’s good to be aware of the ePayments Code. This code regulates consumer electronic payment transactions, including ATM, EFTPOS, credit card transactions, online payments, internet and mobile banking, and BPAY. This is a voluntary code and virtually all banks, credit unions and building societies currently subscribe. The link to this code is: http://asic.gov.au/regulatory-resources/financial-services/epayments-code/.

Hopefully knowing the above will mean you can recover funds without having to seek legal advice.

Mistaken Payments: could you end up not retrieving your funds?

We have had one customer whose funds could not be retrieved because the bank account to which the mistaken payment was made did not contain sufficient funds. The wrong customer had swiftly used the money, despite notice of the mistake!

After exploring all options with the client, our final recommendation was to commence legal proceedings against the known customer who benefited from the mistaken payment. Provided the identity of the customer is known, this is something a Lawyer can help you with.

These cases highlight the importance of verifying bank account details before processing a payment. If a mistaken payment is made, act fast.

If you want to discuss any mistaken payments made or to discuss how to safeguard against this, please contact Su-Ann Loh at Lewis Holdway Lawyers on 03 9629 9629.

Chasing for payment? Recognise these characters?

‘Our Favourites’

We all love our customers who pay to terms, we don’t need to remind them, payment comes through before or on the due date and we all want more of these customers, these are our favourites.

‘The Busy Guys’

We’ve all learnt to manage the customers who ‘thought they’d paid’, ‘meant to pay’ or ‘forgot to pay’, these guys are busy people, and we know they’ll pay. We schedule our phone calls every month, following the same process and the arrangement works, we know the routine.

‘The Delayers’

Yes, they’re the ones, they say they didn’t receive an invoice or they want a copy of a delivery docket, but they only tell you when chased for payment. We manage these guys like the busy guys, we know the routine!

‘The Jugglers’

Then we’ve got our customers who can have cash flow issues. These guys intend to pay and they take some chasing, the timing of payment varies but generally speaking we get there in the end. But sometimes these guys are too embarrassed to let you know the issues they have. Let’s face it, juggling cash flow happens to the best of us, but sometimes these guys can go silent, and when payments get too far overdue, the situation becomes awkward, for everyone. This is when we wish someone else would deal with the matter, right?

‘The Avoiders’

Another character we wish someone else would take off our hands is the ‘I avoid paying’ or ‘I won’t pay in full’ type of character. These are the guys you reflect upon and wish you had asked for payment up front or not been so keen to accept their urgent request. It may have been the first time you supplied to them and you were keen to take on a new customer. The excitement of a new account has now turned to regret at giving them credit terms.

We’re here to help

Don’t forget, we’re here to make it easier to reopen lines of communication with cash flow juggling customers, even if sometimes it means entering into a payment arrangement on your behalf.

For customers who are refusing to pay, we can have the difficult conversations so you don’t have to. We are used to managing these types of characters and we can have success where you may not have.

Debts aren’t just bad for business, they’re stressful.

Engaging Mercantile Agents

For small businesses with limited resources, engaging a mercantile agent can save you time and money. Mercantile agents can get better results when chasing overdue accounts, because they have the time and experience collecting debts that you don’t.

The challenge is finding a reputable mercantile agent to assist you.

Research

·         Ensure the mercantile agencies you research collect unpaid debts for small businesses. Choose an agent with experience collecting debt for the size and type of business you run.

·         Understand who will be working with you: will there be a collector allocated to work with you and understand the way you run your business?

·         Highly regarded mercantile agents are often connected with Lawyers who specialise in debt collection. Find out what access to legal resources the agencies have.

·         Find out how long their collectors have been working there: longevity of service is indicative of good business practices within the debt collection industry.

·         Ask for a couple of references, ideally from other businesses in your industry that have used their services.

·         Find out how many years the mercantile agents have been in business.

 

Costs & Services

·         Request information about the costs. Most mercantile agents charge a percentage of the amount they collect, just check if different rates apply, for example, some may charge a higher percentage for older accounts, which often are more difficult to collect.

·         Will the mercantile agents review your terms and conditions and offer you recommendations to improve your collection rates and reduce your costs of recovery?

·         Ask if skip-tracing services are included in the package. Most mercantile agents will offer basic skip tracing services and only charge if they have to engage external resources.

 

Engaging a mercantile agent can be great for your business, and doing the research to find the right agency is well worth the investment of your time. Click here to read more.

If you have dipped your toe in the water previously and felt it didn’t work, ask yourself if you engaged with the right mercantile agent for your business.

Outsourcing Debt Collection

outsourcing debt collection

Petra McHugh, Dandenong Family Lawyers

Kearley Lewis are Australia wide debt recovery experts, who undertake collection work for their clients when their customers are not paying their invoices.

Whilst some may be reluctant to outsource their debt collection, for fear of damaging their customer relationships, Kearley Lewis understands that business is business, and breaking relationships is ultimately a bad idea. But rather than tell you, let’s introduce you one of our customers.

Why outsourcing debt collection worked

Petra McHugh is a Family Lawyer from Dandenong Family Lawyers. She has been a family lawyer for over 15 years. The work which Petra does inevitably leads people to places where they cannot, or will not, pay their invoices.

Family Law can be such an emotional process that angry customers simply refuse to pay as they’re not happy with the outcomes. Or, socioeconomic circumstances can mean those who need Petra’s services, ultimately cannot afford them.

It has left them in a hole on a few occasions.

A few times we have been too trusting, and haven’t asked clients to put money into our trust account; when the matter is finished, the customers suddenly have amnesia,” Petra says. “Another service we provide is working for country law firms. They will send us a brief, ask us to go to Dandenong Court, and then they don’t pay. We ring them to ask, they tell us they can’t pay us as they haven’t been paid.”

This situation is surprisingly common across many industries. You can’t pay your suppliers until your customers pay you. Sound familiar?

We used the services of Kearley Lewis, we gave them 5 or 6 clients of ours who owed us money. Amazingly most of the people paid us within 1 or 2 phone calls. Julio was really good, really persistent with ringing people, something we simply don’t have the time to do.”

Why Kearley Lewis for outsourcing debt collection?

“The system Kearley Lewis has in place, where you can access their documents and do some of the work yourself, is great for us. My secretary can log in, monitor the situation, and send out official letters if we feel the need.”

Not only can you outsource your debt recovery to Kearley Lewis, they can also educate and advise on how to reduce the number of debt collection issues you have in the future.

We are trying to be more vigorous with our processes around the collection of monies,” Petra says. “Customers will go on payment plans and such. There will always be a need for someone like Kearley Lewis, and we have a backlog to give them.”

If you have delinquent debtors, long term clients who owe you money, don’t fear seeking assistance. Click here to read more about the positives of engaging assistance with collections for your business.

Call Kearley Lewis, have a conversation, and let them show you how outsourcing debt recovery is good for your business, and good for your working relationships.

Call Kearley Lewis on 03 9629 8777 or email sales@kearleylewis.com.au

Debtor Management & cash flow solutions

Cash flow is the most important part of any business. Without it you simply cannot operate. One of the biggest hurdles with debtor management is ensuring your debtors pay you in a timely manner.

Cash Flow Finance, or Invoice Finance as it is also known, can speed up the cash flow of a business if it sells to other businesses.

How it works

Invoice finance is where a business’s accounts receivable ledger, (or part thereof) can be used as collateral against obtaining finance. The debtors ledger is sent to the finance company and they can remit funds to the business. The amount of the ledger which is financed varies depending on the debtors involved. When debtors begin paying the invoices, this repays the finance company.

Benefits of the solution

Kearley Lewis works with a handful of reputable invoice finance providers. The benefits of using an invoice finance company are:

·         You speed up your cash flow and get paid more quickly by your debtors

·         You can reduce your chances of having bad debts

·         You can obtain finance without providing real estate as security

·         Your costs for finance can be factored into your pricing

·         You can obtain debtor insurance as part of your invoice finance package

·         You get access to your funds immediately, while your competition wait until their debtors pay

Contact us

If your debtors are putting pressure on your cash flow and you’d like to talk about your potential invoice finance options, call Julie Lamers on 0406 744842.

Legal Action or Mercantile Agent?

When your business is not being paid for work that’s been completed or goods that have been delivered, do you think the next step is legal action?

Do the costs of potential legal action mean that you are reluctant to engage a Lawyer?

You don’t need to go to a Lawyer when you are in this situation. A mercantile agent will usually work on a commission only basis, meaning if you don’t get paid, you won’t get a bill. These days, the rates charged are competitive and with the right terms and conditions, you may even find that the commission costs can be claimed from your delinquent debtor.

A mercantile agent is an expert in recovering unpaid debt and specialises in talking with debtors and negotiating payment. If they can’t collect your debt, they will advise you of this and in conjunction with their Lawyers can advise you on whether legal action is recommended and the potential costs of this course of action.

At Kearley Lewis we have in house lawyers that we work closely with, and if we believe you need to speak with them we’ll let you know. Our Lawyers can work through more complex situations, including contract disputes and the breakdown of business partnerships. Read more about our in house Lawyer, Su-Ann Loh and her insights into debt recovery here.

If you would like to know more about how we could assist you, call us today on 03 9629 8777 or click here for more information on why you may wish to engage us.

 

Interview with dispute resolution Lawyer, Su-Ann Loh

Su-Ann Loh is the Director of Dispute Resolution at Lewis Holdway Lawyers & lawyer to Kearley Lewis, mercantile agency.

In this interview, Su-Ann shares the issues that she most frequently comes across, as well as her tips on how to avoid having debt collection issues.

Su-Ann works across both organisations within the Lewis Holdway community, and therefore ensures that all files and processes are legally compliant and have oversight from a lawyer.  If files ever need to be escalated to Su-Ann, she will already have had intimate knowledge of the file.

“It means as a mercantile agency, Kearley Lewis can provide clients with a full service, and they can have confidence that our legal team has oversight of the debt collection process, thereby maximising collection rates.”

Su-Ann has been working in the Lewis Holdway Community for 10 years this July.

So, what are the most common issues that come across Su-Ann’s desk?

The most common issue is that there are still many businesses who trade without having written terms and conditions. Su-Ann says:

“The easiest answer to this problem is to have a customised set of terms and conditions and a contract of trade drafted up for your business. I explain it to clients like this, it may cost a little bit to see the doctor for preventative care, but I can assure you that you will be grateful for that input early on, because you don’t have as much control of the situation when you’re on the operating table.

The difference in cost between having your terms and conditions drafted, versus the issue of collection, especially if it is an issue that is referred to a lawyer, is not insignificant.”

Su-Ann feels that service providers and the suppliers of non-tangible products, need her expertise more. Why is this?

“The service provided is not always quantifiable, and because of that, with our modern times we are seeing a new generation of consumers, who don’t necessarily see the value in the service being provided. Putting a paper trail in place crystallises the relationship and reinforces the value of the service you undertake.”

Are there any industries that you get frequently involved in and why?

“We have a range of industries that we work with frequently. Many of our clients are in the construction industry, recruitment, wholesalers across a number of industries and we also do an increasing amount of work with service suppliers.

Any business that sells on credit terms may have instances where the relationship doesn’t go smoothly, and this is where we can assist.”

What services do you offer that our readers may not know about?

“The service that a number of our larger clients utilise us for is having Kearley Lewis as an extension to their accounts receivable area.  Each month they pass across their invoices that are past a certain age, and the team at Kearley Lewis then undertakes collections on their behalf.  If a file does have to go to our legal team, we are in effect the client’s lawyers as we work so closely with Kearley Lewis, who in turn works closely with our clients.

This outsourcing is a cost-effective way for clients to have support for their collections and access to lawyers when they need them, rather than having these resources permanently in their business.”

So, what are Su-Ann’s top tips to avoid having debt collection issues?
  • Have a really good internal debt collection process, and stick to your payment terms.
  • Have clearly written terms of trade, which appear more than once in your paper trail (for example, on the back of your invoices as well as your credit application).
  • Do credit checks on new clients, with permission. This can be undertaken through the Kearley Lewis website.
  • If you don’t feel comfortable giving a particular client credit terms, consider taking part payment, ask for payment up front or cash on delivery.
  • Know your customer & pay attention to WHO is paying the bills. Your debtor can change entities and it can affect you, without you even knowing it has occurred.
Some businesses may be reluctant to use Kearley Lewis’s services as they have a perception it could be expensive. 
What would you say to businesses such as this?

“Perception is different to reality. Understand what is real by doing your research on the service offering of Kearley Lewis and, by all means, make a comparison with other mercantile agencies. Then measure this by undertaking a commercial cost benefit analysis and comparing the cost of signing up as a member of Kearley Lewis for one year, against the losses your business could stand to suffer if collection isn’t tightened. Those losses are not just referrable to the unpaid invoice, but also the time lost in rendering the service or the product and the internal cost of your collection. There is also the matter of reputational loss for your business in the industry and among it’s customer base.

I would also encourage businesses to speak with the General Manager of Kearley Lewis and get a sense of the file handler, who will ultimately manage your file for you; you will find that Kearley Lewis matches the file handler and their industry knowledge to relevant clients.

More often than not, the clients who have the most painful experience with debt collection are the ones who have left it too late or did not take precaution in their trading relationship with certain belligerent payers. My recommendation is not to let a one-off experience take away the benefit of having a mercantile agency like Kearley Lewis work alongside you in helping your business minimise its losses from bad debts.”

If your business would like assistance or support with collections, contact us on 03 9629 8777 or read more below:
https://www.kearleylewis.com.au/about/the-role-of-a-commercial-debt-collection-agency/

How can you be paid for providing the best education?>

Private education is a prestigious and well renowned institution of the Australian Education landscape. Parents have a sense of pride to know their children attend a private school. The sense of community and belonging is stronger. Unfortunately this form of education comes at a cost, and many parents are racking up unpaid debt for their children’s education.

Schools often keep students on, even if the parents aren’t meeting the tuition fees, because they do still receive funding from the government. It is financially a better position for the schools to have a child in the seat, and ethically it is better to give a child an education, than to deny them one due to money not being paid.

However what can happen is this situation becomes the norm and children go right through school without the parents paying the tuition fees. Why? Why don’t the schools demand payment, rattle the can at the parents and ask for the tuition fees they are rightly owed?

Firstly, schools can feel uncomfortable when it comes to applying the skills of debt collecting and some families genuinely do go through financial hardship. Secondly, it can be a delicate balancing act of not upsetting parents and students, versus being given what you are owed. Thirdly, there are parents who just do not listen to the schools when they ask to get paid. The parents have not had to pay before, why pay now?

This non-payment can lead to a reputation for the school not collecting fees. Unfortunately in some communities whilst there are some families facing genuine financial hardship, there are also individuals who will take advantage and seek to give their kids a free education at a private school. The unintended consequence of this can be that the school has to recoup on monies owed by increasing tuition fees for subsequent years, penalising future students for the behaviour of past students.

So what can you do?

Work with Kearley Lewis

  • We help you set up your collection procedures to ensure you have a credit policy in place and that you follow it.
  • A flat fee, yearly membership, gives you access to populate and send final notice letters to parents whenever you need them.
  • Kearley Lewis can handle collections for you and have the difficult conversations.
  • We do not collect a commission unless we collect your debt, and we offer extremely competitive rates for schools.
  • Speak to our legal team to help you out even further.

With our way of helping you collect debt, we build a relationship with you, and we build a relationship with the parents who owe you money, believe it or not. We are personable and dedicated to ensuring we don’t burn bridges with the work that we do. If families are facing financial hardship, we’ll discuss this with you.

If you’re interested in getting paid, and not being left in debt, then call us on 03 9629 8777, or drop us an email here at collect@kearlylewis.com.au

See what our clients say about us here.

Debt Collection: Top 3 Tips

Debt Collection: Top 3 Tips

Debt Collection: Top 3 Tips

 

1. Know your customer

Always ask new customers for a signed credit application, and ensure they have provided you with an ABN. Undertake a credit check and cross check the details to the credit application. You want to make sure you know who you are dealing with and avoid extending credit to the wrong customer.

2. Accurate and prompt invoicing

If you invoice promptly and all the information is accurate (including a reference to the purchase order) it will make it easier for your customer to approve and pay your invoice.  Attaching supporting documentation will prevent your customer from requesting any further information from you. Do everything you can to prevent unnecessary delays.

3. Collect payment from your customers promptly

Follow your credit policy and ensure you chase your debts promptly.  Gain the reputation with your customers that you will follow up payment. There’s nothing wrong with calling customers before the due date to check that payment will be made.

 

If you have some challenging customers and would rather not make the difficult calls, Kearley Lewis would be happy to assist you with your debt collection needs. 

It may be that you are spending too much time chasing customers and you need to focus on other areas of your business.  In which case, let us undertake your debt collection activities. 

We source and retain the best people to work with our clients and our people do everything they can to protect every client’s brand and reputation.

All our relationships are important to us and we strive to ensure that the values we demonstrate support and promote positively our clients, our staff and our business partners.

Call us today on 03 9629 8777.

Protecting Small Businesses from Unfair Contract Terms

Protecting Small Businesses from Unfair Contract Terms

Are you a small business or is the party you trade with a small business; that is, an entity that employs fewer than 20 persons? If so, then you need to pay attention to the legal changes that will come into play on 12 November 2016.

The changes relate to the small businesses who trade on standard form contract terms; that is, contracts that are pre-prepared before any discussions relating to the transaction and where the terms are not usually negotiable. A clear example of a standard form contract is a credit application used by many of our clients for the provision of services or goods on credit terms.

Where your standard form contract (e.g. credit application) involves an upfront price payable of $300,000 or less, or has a duration of more than 12 months for an upfront prince payable of $1MIL or less, than you should review the terms of your contract before 12 November 2016 to ensure they are not unfair.

This is because by 12 November 2016, there will be changes to the ASIC Act and the Australian Consumer Law and those changes will state that if your contract is deemed unfair, then it will be treated as though the term never existed which means that you will not be able to rely on it in Court. This will obviously give a belligerent debtor customer scope to dispute their liability for monies owed to you. This could be critical for your cash flow as a small business.

So what does it mean for a term in a contract to be unfair? A term is unfair if:

  • it would cause a significant imbalance in the parties’ rights and obligations arising under the contact; and
  • it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and
  • it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

Some examples of terms that would be unfair are:

  • A term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party’s consent.
  • A term that limits, or has the effect of limiting, one party’s right to sue another party.
  • A term will be deemed unfair if it is a term that permits or has the effect of permitting one party to vary the upfront price payable in a contract without giving the other party an opportunity to terminate the contract.

If you think your contract terms may be caught by the changes outlined above, it is critical you have them reviewed before 12 November 2016, including the covering sheet to your contracts, such as the front cover of your credit applications.

A good set of terms and conditions that is enforceable forms the crucial backbone for successful trading relationships in any business.

If you would like to talk to a lawyer about whether the changes apply to you and have your contract terms reviewed, please contact Su-Ann Loh (Senior Associate, Dispute Resolution Practice Group) or Peter North (Senior Associate, Business Practice Group) on 03 9629 9629 or by email at suannl@lewisholdway.com.au and petern@lewisholdway.com.au.