Bay of Plenty Business News April/May 2017

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20 BAY OF PLENTY BUSINESS NEWS April/May 2017 PROFESSIONAL SERVICES When a potential client doesn’t feel quite right After 10 years in the debt recovery game I’m seldom surprised by debtor behaviour but this week I was both shocked and impressed when I visited one of my favourite customers. I received an email from Kelly (not her real name) from a tile manufacturing company in Tauranga. She said that she had received a $50,000 order from a new prospective client in Auckland (a place with at least 10 tile importers and manufacturers) for an Aucklandbased job and that she had a gut feeling that something wasn’t right. She wanted my input. Kelly had done some homework before I got there and had discovered that the company in question had changed names twice in the previous two years. Also, when the director filled out the credit application form they put down vague and minor credit references, then got a completely unrelated party to fill out the personal guarantee. When I arrived we credit checked the guarantor and they had a Veda Score of 290 out of 1000 and had third tier finance defaults and court collections against them. Kelly sent the form back to the director and they returned it again with yet another unrelated party guarantee. At that point my advice was simple: “ If the director and major shareholder won’t back the company then why would you?” When assessing these types of situations I use a simple point system. It contains five criteria, and each fail is worth two points. The closer to 10 it ranks, the riskier it is. 1. Is the prospective client purchasing outside of their local area where there are competing suppliers? 2. Is the prospective client claiming that the transaction is time sensitive and must be done quickly? 3. Do they complete the credit application and PG (if applicable) honestly with major relevant suppliers as credit references and directors /shareholders as guarantors? 4. How stable is the company? Are there many name or industry changes, is there director attrition, are there address changes? 5. Veda credit score? In this case the prospective client scored a 10 out of 10 and Kelly saved her employers $49,970 because she listened to her gut and used her terms of trade and Veda tools perfectly. To get your own credit management system assessed or strengthened call Nick from EC Credit Control 027 713 2128 or email nick. kerr@ecccreditcontrol.co.nz Nick Kerr, Bay of Plenty area manager and debt prevention specialist, EC CREDIT CONTROL NZ LTD. 1. No clearly defined Terms and Conditions disclosed In the past it has been common for businesses to do business on a simple handshake. As consumers have become wiser, and maybe a little more cunning, business owners now face many uphill struggles. Whether it be getting paid on time, jobs cancelled at the last minute, defects being noted some 12 or 24 months after the work was completed, or being able to pass collection costs on to the customer for late payment, nothing is ever as easy as it first appears. EC Credit Controls Terms of Trade could protect you from all of the above. Without Terms of Trade in place you could be heading for disaster. 2. No formal Credit Policy One of the biggest failings in business is that after the job is completed there is no follow up for payment, and before you know it, the invoice can be three months overdue. By having a clear credit policy from the start of the relationship with your customer a lot of potential problems can be erased. There is no point you having done the job and then never get paid for it because you haven’t bothered following up payment. It can be as simple as sending an invoice, then statement and then a reminder phone call. If they still haven’t paid, then don’t be afraid to escalate. 3. Provide Credit when you state you are a Cash Business A cash business is exactly that – your customer pays cash as soon as the job is completed. If you allow the customer to pay in seven days then you provide credit which means you need to have a credit policy in place. THE 7 DEADLY CREDIT MANAGEMENT SINS 4. Have a Credit Policy but never use it How often have we spoken to clients who have paid hard earned cash for a good solid credit management program and still have it sitting in the bottom draw, or better still, have it wrapped up in the box it came in! If you have a credit policy, then use it. If you aren’t the right person to be implementing it then find someone who can, as well as someone who enjoys doing these duties. You will be surprised at how quickly your cash-flow improves when you follow a structured approach. 5. Procrastination when dealing with slow payers Too often we hear clients say: “I will just give them one last chance” when the debt is 6-12 months old. How many chances do you need to give your customers? What communication have you had with your customer over the past 6-12 months? If you are not talking to your customer then what chances do you have in collecting the money? Next to none I would suggest. If your customer has not paid you then don’t be afraid to escalate it to the experts i.e. EC Credit Control! 6. You believe everything the customer tells you If I was asked to write a book on every line or excuse we have been told when it comes to asking for payment, the book would be an extremely large novel. If someone says they will pay you, then get a date from them and the amount they will be paying as this gets a commitment (make sure you diary this date so you can follow up). You don’t have eyes and ears around the place to ensure you have up-to-date information on all your clients. There are some great products in the market which can assist you with this. With EC Credit Control you can place an alert/monitor on your customers which will alert you of anything from change of business address, credit enquiries made against them or any adverse credit placed against them. This service is very inexpensive as well as potentially saving you financial ruin as often you can be advised of customer issues prior to anyone else knowing. 7. Reliance on Trade References rather than an independent robust credit checking So many times a business will phone the trade references written down on the credit application form and funnily enough receive a glowing reference. Well of course you will as the customer is not really going to put down someone who will say negative experiences are they! Unless you can control who they write down as a referee, relying on trade references can be very dangerous. To ensure you receive a robust and independent picture on your new customer, EC Credit Control can provide you with the ability to gather information through a credit bureau. This will provide you with important data i.e. identification of your customer, credit history (enquiries and any adverse data), on companies you will receive the correct legal entity of your customer, who the directors are, whether company forms have been lodged on time, as well as any adverse credit the company may have had in the past. But just remember that to enable you to complete such reports you will need to have your terms of trade in place and up to date to ensure you comply with current Privacy requirements. TERMS OF TRADE CREDIT CHECKING / MONITORING DEBT COLLECTION Nick from EC Credit Control is the Bay of Plentys leading debt prevention expert. CREDIT MANAGEMENT TRAINING FOR A NO OBLIGATION MEETING CALL OR EMAIL NICK TODAY nick.kerr@eccreditcontrol.co.nz | P: 027 713 2128 0800 EC GROUP | www.eccreditcontrol.co.nz
PROFESSIONAL SERVICES BAY OF PLENTY BUSINESS NEWS April/May 2017 21 Legal expertise without the jargon When buying or selling a business, or getting personal affairs in order, you may need specialist legal advice. Getting this service from a knowledgeable, no-nonsense solicitor who speaks in everyday terms can make the process so much easier. That’s what Paula Lines and the all-female team at The Law Shop are all about, and the firm has just opened premises at Mount Maunganui with a second office due to open shortly in Tauranga. I expect to be working more with franchises and commercial property, and a wider range of businesses and business owners, which is exciting “The Law Shop’s main point of difference is that we bring a holistic approach to legal matters. Every situation is different, so we carefully listen to the people behind the business, ask lots of questions, and then look at what it is they need,” Paula explains. “We pride ourselves in offering individuals and businesses with personable advice and take people’s whole life circumstances into account. Our culture is down to earth, informal, and friendly. The team genuinely cares about their clients, and it’s important to us to provide timely and accurate legal advice without the jargon, and at a fair price,” she says. For the team at The Law Shop, it’s important to communicate well. They work with businesses, families and retirees and bring a friendly, easy to understand approach to legal matters. Paula took over the Rotoruabased legal firm in September 2008 and since then she has expanded the services from mainly residential property transactions to include trusts, relationship property, subdivisions and all business legal matters. Stephanie Northey joined Paula in partnership in 2014 and added court services to the mix, including family and mental health. Stephanie will keep working from the Rotorua office. Paula, who moved to Tauranga last year, will operate primarily from new premises at Mount Maunganui where the recently purchased practice Stratagem Lawyers was based. A third office closer to Greerton will be managed by Sarsha Tyrrell, who has recently returned from living and working in London. Sarsha specialises in family law, and she will also offer family crisis management and assist Tauranga Women’s Refuge whose office is based in Greerton. Paula says she won’t miss the commute to Rotorua, and she’s looking forward to a greater variety of clients while working from the new Mount Maunganui branch. “I expect to be working more with franchises and commercial property, and a wider range of businesses and business owners, which is exciting,” she says. “We can meet in person at our offices in Rotorua, Greerton or Mount Maunganui, or we can come to your home or business. We can also Skype, talk on the phone, message on Facebook, email or text. Whatever is easiest. Feel free to make contact any time.” For more information about THE LAW SHOP service check out the website www.thelawshop.co.nz or contact Paula direct at paula@thelawshop.co.nz or call 0800 LAW SHOP. Paula Lines (L) and Stephanie Northey (R). Friendly legal advice that won’t leave you drowning in jargon For over 30 years, The Law Shop has been giving clear advice for a fair price to individuals, small and medium businesses in the Bay of Plenty. If your business needs advice on Agreements, Buying and Selling, Terms of Trade, Structure and Succession Planning, Banking, Leasing, Debt Collection, Franchising and Employment Services then we’re the team for you. STEPHANIE NORTHEY, LL.B Director PAULA LINES, LL.B Director Proudly bringing our strong reputation for legal expertise to Tauranga and Mount Maunganui. ROTORUA 1268 Arawa Street Rotorua MOUNT MAUNGANUI 65a Girven Road Mount Maunganui TAURANGA Coming soon Call us on 0800 LAW SHOP or visit www.thelawshop.co.nz Lawyers for everyday people
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Bay of Plenty Business News April/May 2017

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