Three easy steps you can implement to save your business the expense, time and aggravation of having to continually chase up your outstanding accounts.
Essentially Debt Collection made Easy
The key points
Up To Date Terms and Conditions
Having Up To Date Terms and Conditions are the cornerstone of any credit management policy. They form the rules by which you extend credit to your clients. They can be the difference to the financial success of your business provided they incorporate the appropriate legislation and leverage required when it comes to chasing your delinquent or unpaid accounts.
Provided you have the appropriate legislation included in your Terms and Conditions, you have the legal right to Register a Security Interest against your clients business when they either complete your client documentation during the process of opening an account or alternatively agree to your Quotation or Work Approval Forms. This automatically makes you a secured creditor with the same protection as the banks.
Marking a Clients Credit File
Again provided you have the appropriate legislation included in your Terms and Conditions, you have the legal right to be able to mark a client’s credit file negating their ability to seek credit anywhere in Australia for 5 years. It adds enormous leverage when it comes to chasing your outstanding accounts.
Having A Set of Rules
In order to maintain any sort of leverage when a business extends credit to its clients, there must be a set of rules. These rules are simply applied if there is an issue or dispute where one of the businesses clients fails to meet their financial obligations. They are what is known as your Terms and Conditions.
It’s one thing to have a set of rules, but if there isn’t any consequence in the enforcement of those rules, very little changes. That’s why including the appropriate legislation into your Terms and Conditions is vitally important. These include the ability to on-charge costs, penalty interest, and a Privacy Waiver allowing you to mark a debtors credit file, and of course, the appropriate PPSA Legislation allowing for a legally binding, valid PPSR.
Implementation of Terms and Conditions
Protection Against Preferential Payment Clawback
Since the introduction of the PPSA Legislation, you are either a Secured Creditor, or you are not. Unfortunately, if a business hasn’t registered on the PPSR and one of the businesses clients file for Liquidation, as an Unsecured Creditor the business leaves itself open to Preferential Payment Clawback.
Preferential Payment Clawback occurs when there is a shortfall between the liquidated assets of a business, and the amount of money owed to Secured Creditors. Essentially the liquidator now has the legal right to demand the return of any sums of money paid to any Unsecured Creditors in the previous 6 months leading up to the date of liquidation.
Being a Secured Creditor Avoids Preferential Payment Clawback.
Getting Paid On Time
Another clear advantage to having up to date Terms and Conditions is the flexibility and leverage it gives a business’s accounts staff when chasing unpaid accounts. It is always better to be dealing with unpaid accounts from a position of strength knowing that there are consequences, rather than having to try and guilt an outstanding debtor into paying their account.
Winding Up A Debtors Business
As a Secured Creditor, it makes a lot more sense when deciding to instigate winding-up orders on a delinquent debtor. As a Secured Creditor, your business is in the best position to ensure it gets paid during the process.A Secured Creditor has the legal right to appoint a receiver to their delinquent clients business as a way of ensuring they get paid. An Unsecured Creditor does not hold a security interest in their client's companies assets. They can only introduce a receiver by going to court and requesting a judge to make a court order.
If you like to know more about "How You Can Implement 3 East Step to Collect Your Oustanding Accounts" please feel free to request our FREE Facts Sheet here.Until Next Time, Have a Great Day
With over 35 years’ experience Collection Consultancy Australia prides itself in offering Products and Services designed to Protect Business Assets and Cashflow. Quite often the process can start from simply making business owners aware that there is option available, through to business specific solutions and education. We are here to let business owners know that there can be a better way to secure their financial future.
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