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Credit Management

“A defined set of processes that your business follows to ensure that, as often as possible, payment is received in full and on time for the goods & services that you supply” This includes: Terms & Conditions of Trade Documents Personal Property & Securities Registrations Overdue Debt Management Credit Reporting

Terms & Conditions of Trade Document

Do you supply goods and services to your clients and get paid later? If so, then you are defined under the law as a Credit Provider, just like a bank….and you are entitled to the same rights when it comes to recovering your goods or getting your money. Do you have a Terms & Conditions of Trade document that protects you as a ‘Credit Provider’ and do you ask your customers to acknowledge agreement?  If not, you are potentially leaving your business exposed and its’ cash flow vulnerable….. How can you ensure that your business gets paid?  The answer is simple…..make sure you have a properly written Terms & Conditions of Trade document tailored to the goods & services your business supplies Did you know?  Terms & Conditions of Trade documents include everything relating to the conditions under which your customers agree to trade with you. This includes rules relating to price, delivery, ownership of goods or services, risk and insurance, defects & warranties, payment terms, compliance with important legislation such as; the Privacy Act, Competition & Consumer Act and the new Personal Property & Securities Act and more…… Putting your Terms & Conditions of Trade on the back of your invoice DOES NOT bind the customer to them. Terms MUST be agreed to before you commence a job or supply your goods If you have the correct Terms & Conditions of Trade in place, and understand the easy hassle free way to use them then, among other things, you are legally allowed to do the following: Charge interest on debts that go over your payment terms (7 days, 30 days etc) On charge ALL costs associated with Debt Collection including: o ALL costs you incur with using a debt collector o Legal costs you incur; if any o Cheque dishonour fees o Administration costs you incur that are justifiable Default your customers with Veda or Dun & Bradstreet to affect their credit rating   for the next 5 years  Use the new government Personal Property Securities Register (www.ppsr.gov.au) to register a security interest against your debtors so that you enjoy the protection of being a SECURED CREDITOR in the event that they go into liquidation

Personal Property & Securities Act 2009 

“To register a security interest over personal property in Australia” Registering your interest in goods and services supplied on credit, or equipment hired to other entities, can help you claim them back if your customer doesn’t pay or goes into liquidation. The Personal Property & Securities Register (PPSR) is a national online register for consumers, businesses and the finance industry. The PPSR is available for many uses including: Business operators who supply goods on credit, consignment or on a retention of title arrangement can now register their interest in the property on the PPSR Finance companies can register security interests in an item of personal property on the PPSR Consumers who are about to purchase valuable second-hand goods can search the register before buying to make sure that the property is free of registered security interests   As a provider of credit ie you supply goods & services to your customers and they pay you later, you are entitled to enjoy the protection of being a Secured Creditor in the event that they default on paying for those goods & services or go into liquidation / insolvency. Almost every business owner I speak to has either been burnt or knows someone who has been burnt by a company going into liquidation. This new legislation provides ALL business owners with a way that they can now protect themselves against this happening in the future. And it is not just for reclaiming physical property such as goods supplied or equipment hired. You can register a general financial interest against your customers for the $$$ that you are owed.

Overdue Debt Management 

Inevitably there will still be a small percentage of business debtors who will try to get out of paying their accounts. It is important to implement internal processes to handle overdue accounts. Your business is NOT a bank and the money that you are owed for providing your goods and services is better served being in your business bank account. There is a fine line to walk between maintaining a business relationship with customers who have overdue accounts and enforcing credit management policies that utilise leverage to insist upon payment. That is why it is important to create internal processes that are right for your business and that staff are trained on how to implement them. Escalating overdue accounts to a third party is part of this process and can lead to quick recovery of outstanding money. The longer that an invoice is overdue the less it is worth to your company.

Credit Reporting

The Credit Bureau in Australia is operated by Veda Advantage Information Services & Solutions Ltd As a business owner you can: Access and report on credit information about your customers Receive automatic updates on changes or credit applications Login 24/7 online with business login & password So what does this mean? If your business has a legitimate claim that there is an intention to enter into trade with another entity, you have a legal right to access the Credit History of that entity. There are provisions as to the paperwork that you must have in place to do this - Terms & Conditions of Trade document. There are literally millions upon millions of companies, businesses and individuals listed on VEDA with millions upon millions of payment default recordings, court rulings and credit applications. Have you ever been in a situation where you wish you had of known about someone's credit history or past dealings before you agreed to that big job, or to supply all of that material on credit!!!  Well you can....
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