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5 key steps to recover EOFY unpaid invoices

With the end of the financial year looming, now is the time for businesses to clean up any outstanding payments. Here are some tips to smooth out the process and improve your cashflow.

 1. Communicate clearly with debtors

5 key steps to recover EOFY unpaid invoices

If you expect your customers to be disciplined with payments, it helps if you are meticulous with your invoicing too. As the end of the financial year nears, remind your customers of any invoices that have not been paid and ensure you have all invoices for each customer on the one statement. Email this to them and allow an appropriate time for payment, depending on your payment terms. Do not omit important details such as the amount owed, the payment due date, their terms of trade and the client’s payment history. When you provide this level of information, there can be no excuses from slow-paying clients.

2. Get on the phone and request payment

Never be afraid to call your clients if invoices are unpaid. Ultimately, they should appreciate a courteous, personal approach rather than an impersonal email, and hopefully it will prompt them to pay. Remember that payment is more likely if you can accept credit card payments over the phone while you are talking to them. However, cold calling still requires preparation. Before making the call, ensure you have all the relevant customer information in hand so you can speak authoritatively with customers and avoid having to get back to them with any information before payment can proceed. If the customer is having legitimate cash-flow issues, you could suggest making a partial payment on the spot, and arranging a payment plan for the balance.

 3. Engage with clients if there is a payment dispute

Inevitably, there will be times when a client disputes your invoices. Rather than putting such cases in the too-hard basket or ignoring the issue, quickly find out exactly what the problem is and work with them to resolve the issue. Being upfront usually results in faster payments, and it also enables you to develop trust with your client.

4. Make it easy for debtors

The harder you make it to pay, the slower payments are likely to be. So simplify invoicing for your clients by providing clear banking and credit card details on your invoices. Let them pay their invoices on your website, too, or through other online platforms as many people now prefer to make payments simply and at a time that suits them.

 5. Call in the experts

If you still don’t get paid, contact us to help you. Outsourcing your payment problems allows you to get back to running your business while we address your issues with debtors.

For more information, contact us on 03 9629 8777 or collect@kearleylewis.com.au.

Cash Flow Checklist

Cash Flow Checklist

When the holidays are over and we return to work, one of the first things we need to get on top of is the status of our accounts receivable.

Whether you’ve been really busy or closed over the holidays, this will inevitably be on your ‘to do’ list.

For many businesses, getting through the holidays and keeping the bank balance positive has taken some work. Some won’t have been so fortunate and need to collect their unpaid invoices … yesterday!

Then there’s the businesses who have been so busy over the holidays that they need to catch up on their invoicing and administration. Sales have been great, however now the cash needs to be collected.

Cash Flow Checklist

Here’s a handy checklist to run through in the new year, to assist in prioritising the tasks when you’re working on your cash flow.

1. Ensure orders are completed & invoiced promptly

Firstly, invoice for the orders that have been completed. Make sure any orders that have not yet been fulfilled are completed promptly, so you can invoice for these also.

2. Ensure Invoice Queries Are Resolved

Get onto any invoices queries straight away, the sooner they can be authorised, the sooner they will be paid.

3. Follow Up Outstanding Invoices

Start contacting your overdue customers. You will soon get a handle on who is back at work, so be first in best dressed, and have your invoices pushed to the top of the pile for payment.

4. Send Reminders

Send customers advance reminders of when payments are due.

5. Can your sales team assist you?

For many industries, January can be the time when the sales team are encouraged to take annual leave. Can any of your sales team who are back at work assist with chasing up overdue accounts for you? These colleagues may have some good relationships that they can reach out to, and assist in getting a commitment to pay.

6. Can you assist the sales team?

It may be really useful to assist the sales team in generating new sales at this time of year. They may be grateful for a list of historical sales by customer from you to see which customers were ordering last year.

7. Review your credit limits

Are there any customers who have reached their credit limit with you? Think about whether you need to review these and ask for payment up front or a deposit invoice instead of extending further credit.

8. Make It Really Easy For Customers To Pay

Have all payment options on the face of your invoices, and think about what an early settlement discount could do for your cash flow if you offered it for payment before the end of January.

We Can Help

Remember, when we chase your customers for payment, we ask them to pay you directly, meaning your bank balance gets an immediate boost.

If you need a hand chasing up unpaid accounts, send them to us as soon as you can, so we can work on them for you.

Let’s follow up those slow payers and get your cash flow flowing again! Call us on 03 9629 8777.

Healthy cash flow

heathy cash flow

We’re well into the new financial year now, and many businesses would have reviewed their debt recovery processes and procedures, to ensure they maintain a healthy cash flow and minimise potential bad debts this year.

When we are winning new business, it’s great for our P&Ls, however if we don’t follow up on our invoices and get paid, it’s not great for our cash flow.

Do you need to review your credit terms or invoice frequency?

You may have standard credit terms that you offer your customers e.g. 30 days, however do your customers pay in line with these?  Does the payment cycle work for the cash flow of your business?

It may be that you could think about having shorter terms, so that you are paid more quickly.

Similarly, you may wish to look at how frequently you invoice. If you invoice monthly, what would be the impact to your cash flow if you invoiced weekly?

The sooner you invoice, the sooner you will be paid.

Follow up your sales invoices

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. The sooner you resolve any issues, the sooner you will be paid.

Stay close to your customers, give them no reason not to like you. Just like people buy from people they like, they pay the people they like.

And remember, those who shout loudest get paid first!

Do you need to review your terms of trade?

Do you have a clause in your terms & conditions that will allow you to recover your debt recovery costs back from your debtor in the event that they do not pay?

If you do incur costs, you want peace of mind that you can recover these as well as the debt.

There are many clauses that can assist in the speedy recovery of your debts, and help maintain a healthy cash flow. Read more here on the benefits of having customised terms and conditions for your business.

Ensure your business is protected with customised terms and conditions

Here’s a question to ponder: does your business have customised terms and conditions?

If you are like many other business owners, the response is likely to be along the lines of “Umm, not sure”, or “we haven’t got around to that yet.” The truth is that updating T&Cs is one of those tasks businesses often put on the backburner – and it can be costly.

Even if they were drafted in recent years, it is important to know when you will next conduct a review to ensure any new legislation is factored in.

Sure, you may be running a successful business and be one of the lucky ones that have avoided payment disputes, but drafting or reviewing T&Cs is an important part of any business’s operations. It also provides peace of mind, so put it on your to-do list.

The case for Terms & Conditions

They can protect the thing that keeps most business owners awake at night – cash flow. Without them, businesses can end up spending a significant amount of time chasing unpaid debts and resolving disputes – or, worse still, writing off bad debts because nothing was agreed in writing.

They remove uncertainty if a dispute does occur. Yes, a handshake agreement with customers sounds nice, but in the absence of written terms and conditions you risk uncertainty and misunderstandings. Clear terms leave little wriggle room for customers who try to go back on their word.

Sound T&Cs are valuable for a business in the event of having to chase payments through a debt collection agency or when they need to engage a lawyer; they can also assist when seeking to recover costs.

Mutual benefits

It is important to note that terms and conditions protect both parties and clarify a trading relationship.

Remember, though, that terms should be customised for your business. Copying someone else’s T&Cs is risky because they may not have consulted a lawyer themselves. Each business will inevitability have different forces at play.

Help at hand

The good news is that we can help you. Our lawyers can review or prepare a customised set of terms and conditions, to improve your ability to successfully follow up on unpaid accounts.

Don’t forget – laws change, as does the way you trade with your customers. Check your T&Cs and sleep soundly!

Don’t give up on unpaid debts – lodge a credit default

Some debtors are stubborn, to put it kindly, and simply refuse to pay their accounts.
So what should you do if you have unpaid debts and all your efforts are falling on deaf ears?

Unless they are disputing the debt, we recommend lodging a default on the debtor’s credit rating. Why? You want to ensure that your unpaid debts are not going unheeded and that there will be some pain and consequences for not paying.

The benefits of lodging a credit default include:

· knowing that a default will stay on the debtor’s credit file for five years.
· hurting their ability to gain credit with other suppliers and financiers.
· demonstrating to others that you have had an issue and raising a red flag for those who may be considering extending credit to them.
On a positive note, too, we see more payments being finalised once a default has been lodged.

What to expect

You may be thinking: Won’t that client dump us if we lodge a credit default? Yes, that is more than likely, but remember that you don’t need clients who don’t pay their bills. This is especially true if it is not an ongoing client and there is no relationship to salvage – it’s just about getting paid.
In the case of a longstanding client it is quite often possible for us to identify problems in advance and resolve issues around why they are not paying on time (or at all). Properly handled, this process can strengthen a potentially toxic relationship.
Once a credit default has been lodged, you will find that some debtors pay immediately in order for the default to be marked as paid, while others will contact you down the track when they need the default marked as paid. The latter typically happens when they are having trouble gaining credit elsewhere. Your debtor may approach you at any time in the five-year period following lodgement.

How it works

Certain conditions must be met before a credit default can be lodged and our debt recovery process ensures these are ticked before we lodge on your behalf.
The real message is simple – don’t close the file on unpaid debts. If you’ve had unpaid debts, before giving up ask us about lodging a default.
It is often a good way to prod tardy payers – and ensure that you get your money.

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.

Collecting Debt from Individuals

We are often asked, as a mercantile agency, how we approach collecting debt from individuals.

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have produced a guideline. This guideline helps us to understand how the Commonwealth consumer protection laws apply to debt collectors, as well as in house collection departments within businesses. The guideline is online: https://www.accc.gov.au/publications/debt-collection-guideline-for-collectors-creditors

How may contact be made with a debtor?

If an individual owes you money and will not pay, you are entitled to contact them to ask for payment. You can contact them:

  • by phone
  • in writing (includes emailing, texting and social media contact)
  • in person.

 Am I restricted to when I can make contact?

Contact with a debtor must be made at reasonable hours, taking into account their circumstances and reasonable wishes. The following can be considered appropriate times and are the local times in the debtor’s state or territory:

  • phone contact between the hours of 7:30am–9:00pm on weekdays; and
  • 9:00am–9:00pm on weekends
  • No contact recommended on National public holidays

Face to face contact should be an option of last resort. Generally, face to face contact should only be made if reasonable attempts to contact a debtor by less intrusive means such as phone calls, emails or letters have failed, and face to face contact is considered appropriate and necessary. Reasonable hours of contact for face to face contact are:

  • 9:00am–9:00pm on weekdays and weekends
  • No contact recommended on National public holiday

How often can I make contact?

Debtors are entitled to be free from excessive communication or undue harassment. As a guide, contact should be limited (unless requested or agreed otherwise) to a maximum of 3 phone calls or letters per week (or 10 per month).

Generally, visits to the debtors home (or another agreed location) is not recommended and should only take place if there is no other way to make effective contact with the debtor, or if asked (or agreed) to a visit.

If repayment arrangements can be worked out over the phone or by letter, then face-to-face contact should not be necessary.

You must not:

  • threaten
  • harass
  • physically intimidate the debtor.

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.