Your Debt Recovery Experts

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.

The 12 days of Christmas Cash Flow

We may not want to be reminded, but Christmas is just around the corner and we need to think about what this means for our cash flow.

Whilst many SMEs will be at their busiest, the holiday period is also a time when cash flow can be at its tightest.

It is worth doing some work now so that your business is in good shape over the festive season.

The 12 days of Christmas Cash Flow:

On the first day of Christmas …
Review when you will be invoicing leading into the holiday period and consider when other businesses will be closing, so you can be paid on time

On the second day of Christmas …
Review which of your customers have a habit of paying late and ensure they are reminded in advance of when payment is due

On the third day of Christmas …
Consider whether you need to refer any unpaid invoices or potential bad debts to a commercial debt collector, so they can work on you being paid before Christmas

On the fourth day of Christmas …
Update your cash flow projections to anticipate any shortfalls

On the fifth day of Christmas …
Consider which customers need to pay you before you supply them further

On the sixth day of Christmas …
January can be challenging so follow up invoices before your customers and their accounts departments go on holiday

On the seventh day of Christmas …
Resolve any disputed invoices now; provide your customers with supporting documentation so that invoices can be approved for payment

On the eighth day of Christmas …
Whilst you are really busy, be sure to follow your credit policy.  Having a signed credit application form with ABN for new customers is always recommended

On the ninth day of Christmas …
Review when your suppliers need to be paid and utilise payment terms or ask for a discount for paying early

On the tenth day of Christmas …
Beware of suppliers chasing for payments if they want you to pay to a different bank account or are threatening to stop supply over this period

On the eleventh day of Christmas …
Consider offering a discount or incentive to be paid before the new year

On the twelfth day of Christmas …
Sit back, relax and enjoy the festive season

Three tips for Schools with unpaid school fees

Every parent chooses the best education they can for their children, and if they choose to send their children to a private school or college, they will make a choice so the school fees are within their budget at the time they make their decision.

It happens to all of us at some stage in our lives, situations change and so too can our ability to meet all our financial commitments. School fee payments are no different. When this happens, the most important consideration is that a student’s education is impacted as little as possible, and every school will be mindful of this, although they also have their own financial position to consider.

Our top three tips for schools when it comes to school fees:

Speak to parents as soon as possible

We always encourage open dialogue from the start, the benefits are:

–       A revised payment arrangement for the school fees could be put in place, which will ensure continuation of payment, albeit at a different level

–       Ensuring that the unpaid school fees do not escalate to a point where the parents no longer have the capacity to repay the debt or the school needs to engage with a third party to recover the debt

Engage with a debt collection agency who specifically understands schools

Partnering with a trusted debt collection agency who has access to in house lawyers is often a cost effective way to seek some assistance if you ever need it.

Establishing a relationship before you need assistance is prudent to ensure you source the right partner for your school or college. Make sure you take the time to engage with a partner who will work with you to preserve your brand and reputation and who is prepared to take the time to understand your values. You want to make sure anyone who is contacting your parents is not damaging these relationships in your community.

Review Your Enrolment Contract

An enrolment form is a legally binding contract between the school (who commits to providing educational services to the enrolled student), and the parents (who commit to paying school fees).

It’s important that you review your contract to ensure there is detail around the payment of school fees, including the impact of failing to pay.

Consideration should also be given to:

–       Providing clarification over who is liable for the school fees and ensuring that they sign the contract, eg where parents are overseas, or are separated.

–       Ensuring you are aware at enrolment of any Family Court orders or other court orders that may impact on the student. This may affect who should sign the enrolment form, who is entitled to receive information about the student (including reports) and who can collect the student from school.

–       If parents separate after enrolment, how do you ensure you are notified of any orders? What processes do you have in place to deal with the situation where a domestic violence (intervention) order has been obtained by one parent against the other? To avoid liability, it is critical that schools require parents to keep them notified of any such situation.

–       Being clear as to what services you are providing in your contract and limiting your liability for breach of contract.

Kearley Lewis specialises in providing school fee recovery services to schools and have access to in-house Law firm Lewis Holdway Lawyers.

If anyone involved in schools, either as principals, teachers, administrators, councillors or parents, would like more information from Lewis Holdway Lawyers, please contact our Director of Dispute Resolution, Chris Morey on (03) 9629 9629.

 

Debt collection tips for SMEs

debt collection tips

Debt collection tips for SMEs – position your business to get paid more quickly

Whilst some business owners are reluctant to chase late payers for fear of losing their business relationships, it’s becoming increasingly important as we see evidence of larger businesses choosing to extend the time they take to pay their suppliers.

The recovery of business debt can be frustrating, time consuming and often unsuccessful so having a good credit controller and utilising the services of a reputable debt collection agency can be invaluable for your business cash flow.

Below are some helpful credit control tips, and whilst not exhaustive, may assist if you are reviewing your own practices.

Set a credit management policy

In determining how vigorous a risk regime your business needs to adopt, it is perhaps prudent to relate the approach you take to your profit margin.

Businesses that have a low gross profit margin cannot afford significant bad debts, and thus they should consider having a more vigorous risk assessment regime than a business with high gross profit margins. It goes without saying that no business wants bad debts, however in setting up your credit management policy, being aware of how much tolerance your business can take should provide you with a good starting point.

Partnering with a trusted debt collection agency who has access to in house lawyers is often a cost effective way to leverage some assistance if you ever need it, and if your invoices are going too far overdue.

Establishing a relationship before you need external assistance is crucial in sourcing the right partner for your business.  Make sure you take the time to engage with a partner who will work with you to preserve your brand and reputation and who is prepared to take the time to understand your business.  You want to make sure anyone who is contacting your customers is not damaging these relationships, particularly if there is potential for more business.

Setting up new customers

Suggestions for assessing new customers:

  • Always have a signed credit application from your customer prior to setting up a new account, ensuring they have provided an ABN
  • Undertake a credit check, cross checking details to the credit application
  • Allocate a credit limit (if you are happy to extend credit)

Undertaking a credit check may not necessarily prevent you from giving credit to a customer who is slow to pay, however it will mean that you’ll avoid giving credit to a debtor who has previously defaulted.

Decide what steps should be satisfied in order for a customer to receive credit terms, as credit should not be automatic. Don’t be afraid to ask for cash payments to start with, and it is not uncommon to ask for trade references and/or personal guarantees.

Set a credit limit for each new customer and check regularly for adherence to this.  If a customer isn’t paying to terms, ask for payment before new goods or services are supplied.

Know your Debtors

Make sure your invoicing is accurate and make sure it is in line with the customer’s order, including delivery details.

Follow up your customers by calling them to confirm delivery or satisfaction with the goods or services you have provided; if there are any reasons that could give rise to a dispute, find out early and not when payment is overdue.

Get to know who pays the bills – building rapport with the person who pays the invoices could be invaluable and in a larger organisation they may not even be aware of the product or service you have provided.

Collection procedures

Consider categorising your customers into good, average and ‘challenging’, and set a collection policy for each customer type.

Phoning larger customers before the due date can be a way of ensuring payment will be made on time.

Be diligent in your collections, chase overdue payments within a week of them being due. Prioritise your collection activity, chasing larger balances first.

Know your aged debtors listing intimately and follow your credit management policy regarding standard letters, calls and referrals to your debt collection agency.

Can you recover costs?

Often terms of trade will stipulate interest charges will be incurred for late payment, however do you have a clause that will allow you to recover your debt collection costs in the unlikely event that a debtor does not pay?

Often reputable debt collection agencies will ask their in house lawyers to review your terms and conditions free of charge, which is recommended so your terms of trade are fully documented up front.

Proactively manage your credit policy

Consider having a regular review to identify problem accounts and define courses of action.

Make sure your sales team are involved in your reviews so they can assist in managing the accounts and setting expectations with customers.  Ensure they know the credit limits that are in place, and seek their assistance in getting paid, particularly if there are new orders coming in.

It’s not surprising how many debtors will pay when they want more goods or services provided, or how motivated your sales team will be to help you when they want those new sales!