A note from Angela
Welcome to the 2020 financial year! We hope the 2018/2019 year finished strongly, with all your accounting up to date, and of course, your invoices paid.
To help you ensure your procedures are as ironclad as possible, in this newsletter, we take you through three simple things you can assess and action. You’ll also find important information relating to what is and isn’t acceptable in chasing up a late payment, and we share a good-news update from ASIC that will make company directors more accountable.
At Optimum, we’ve been undertaking a little new-financial-year housekeeping, including renewing some of our clients’ appointment of collection agent agreements. You might ask why we need to take this step from time to time. Well, although we operate across Australia, our national administration centre is based in Queensland, and therefore this is where our Collection Agents Licence is held. It’s a legal requirement in Queensland that we hold a current signed Authority to Act on behalf of every client to enable us to collect monies and take other actions to prevent debt and manage accounts on our client’s behalf. Having this paperwork in place means that we can continue to act for you without interruption. Optimum Recoveries is proud to be a licenced debt collector and our practices, trust accounts and files are audited regularly. We welcome this additional compliance requirement as another measure that gives us, and our clients, peace of mind.
In today’s competitive business environment, many of our larger competitors have elected to offshore their debt collection staff to minimise costs and create global efficiencies. We don’t subscribe to this model. At Optimum, we only employ local staff, who are all fully licenced, trained and up-to-date with Australian regulations.
If you have any queries about this or would like to find out more, just ask me or your Optimum Account Manager.
Until next time,
Angela
Three reminders for the new financial year
Now that the flurry of all that June 30 activity is over and the dust has settled, August is a great time to take a long, hard look at your existing procedures. Are they as watertight as possible? Do any need tightening up or tweaking? And are all your employees correctly trained to follow them?
We want your new financial year to be smooth and positive. Here are three timely reminders to help you make sure there are no unexpected bumps or hiccups along the way.
1. Follow up on overdue payments sooner rather later.
Late payments are disappointingly common, especially for small businesses. According to Xero’s latest Small Business Insights report, payments to small businesses are on average 23 days overdue. Remember that the older an account is, the harder it is to collect. Schedule a payment reminder to be sent two days prior to every invoice due date, and another for two days after (if it hasn’t been paid). If no response or payment is forthcoming, maybe it’s time to pick up the phone and politely request an update. While it might seem fair and reasonable to give your clients a couple of week’s grace on payment terms, it’s really only hurting your cashflow.
2. Are you collecting everything you’re entitled to?
You’ve already been negatively impacted by a customer not paying their invoice by the agreed date, but are you also at risk of additional costs and fees once that money has been recovered? Sadly, we often see this happen when creditors don’t have adequate protection in place. We recommend checking that your Terms and Conditions contain clauses that allow you to recover the collection costs along with realistic administration fees. We also recommend adding an interest clause to ensure that you are collecting everything that you are entitled to, so that you’re not being treated as a free bank. These terms must be provided to the debtor, and signed by them, prior to your services being provided. In conjunction with our legal partners SMSLaw, we can assess your current T&Cs and make any adjustments so that you’re covered.
3. Credit check and monitor your customers. And don’t forget to check yourself, too.
Conducting regular credit checks and ongoing monitoring on your customers can help protect you from the risk of unpaid invoices. But when was the last time you conducted a search on your own personal credit rating? It’s surprising that many people forget to do this at least annually. These days, it’s easier than ever to search and access a broad range of financial information on individuals and companies, but remember that this works both ways. If your credit score has been affected by paying a few bills late a few too many times, or if there’s an error with some of the information on your credit file, you don’t want prospective creditors to find it before you do! Ensure all information about you is correct and up-to-date. Your Optimum Account Manager can help you obtain a search and set up an annual review.
When does following up late payments put you at risk?
You’ve provided the agreed service, sent the invoice, but your debtor won’t pay. Surely you have the right to just keep following up until they do pay? Well, technically, no. There are certain regulations that both creditors and debt collectors must comply with in the process of recovering outstanding invoices. During a recent presentation to business owners, we identified that some people aren’t aware of these regulations. But failing to follow them can put you at risk.
The ACCC and ASIC have jointly produced the Debt Collection Guideline for Collectors and Creditors that steps through all the regulations you must follow when dealing with debtors. It contains lots of information about what you can and can’t do, with some interesting case studies, but at 64 pages long, it’s a fair read!
Did you know, for example, that contact with the debtor must be limited to a maximum of three phone calls or letters per week, and a maximum of 10 per month, and that no contact is allowed on public holidays? If you make contact over and above this, it may be deemed ‘unreasonable and excessive’.
Make sure you play it safe when it comes to recovering what’s rightfully yours. Take actions within the guidelines and if you need assistance, your Optimum Recoveries Account Manager can expertly handle the process for you. Contact us to see how we can help.
New rules crack down on MIA company directors
At Optimum, we’re delighted to hear that the government is making it harder for business owners to ‘do a runner’ from a failing company. Under current legislation, directors can resign or abandon their company, leaving it effectively rudderless with no one at the helm. This makes it very difficult, and sometimes impossible, for a creditor to recover outstanding debt because there is simply no one to pursue. It also means that ASIC often has to wind up and deregister the company, and is unable to establish whether any misconduct has occurred.
Under the new reforms recently proposed in parliament, directors will no longer be able to tender a resignation if this would leave the company without a director. They will also be prevented from backdating their resignation through the tightening of the notification process to ASIC. Directors who fail to notify ASIC within 28 days of their resignation will have their resignation date set to whatever date ASIC is notified.
We look forward to seeing these reforms being passed soon. It will give us more avenues to pursue outstanding debt, and it’s just high time that company directors are held more accountable.
Help your staff look after themselves
As employers, we know that healthy, happy staff are essential! We’ve all heard of the health and financial impacts of workplace injuries in higher risk situations, but we were surprised to learn recently that the incidence of computer-station fatigue can cost companies, and their employees, dearly. Neck and eye strain, wrist issues such as carpal tunnel, and ongoing aches and pains are all common injuries sustained from computer-based work.
As part of our risk mitigation policy, Optimum engages Paul Knotts at Total Injury Prevention Specialists (TIPS). Every new staff member undertakes an ergo assessment and education session with Paul, who ensures their desk is correctly set up and teaches them simple ways to minimise fatigue and strain injuries.
We highly recommend Paul and TIPS. If you’re looking for an expert to help your staff remain injury free, contact Paul on 0411 244 909.
What’s happening around town
As an Industry Expert with Queensland Leaders, Angela has been holding workshops for members around the current state of play for small businesses in Australia. In one recent workshop, she discussed whether small businesses – as supposedly Australia’s economic lifeblood – are actually given the support they need to thrive, or if they are being thrown to the wolves. She shared some thought-provoking and alarming stats in this extremely well received discussion, such as payment times for an average invoice, how many times a creditor had to ask before payment was made, increases in insolvency in key areas around the country, and the impacts of all these on business survival. If you’d like a copy of the paper, contact Angela.
Tim and Angela were thrilled to attend the Australian Institute of Credit Management’s Young Credit Professional Awards QLD Dinner on July 26. We congratulate all of the participants and look forward to seeing who will be named the national winner at the AICM 2019 Conference on the Gold Coast in October. Angela was delighted to be recognised at the Young Credit Professionals event as well, receiving her 15-year pin and proving that she is young at heart.
