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Austral Mercantile
August 2014
“How late payments affect your business”
Background on Austral Mercantile What debt collection means to you Strategies you can implement immediately to promote business growth How you can improve cash flow and forecasting The effects and risks to your business today
•Austral Mercantile Collections Pty Ltd (Austral) was formed in 1998 and is a fully integrated division of QBE Insurance (Australia) Ltd
•Over 15 years of experience in the debt recovery industry.
•Highly experienced and skilled people acting for a range of industries across every state QLD, Victoria, NSW, SA and WA
•Austral currently employs over 100 staff members across Australia
•Austral currently acts on behalf of over 250 clients nationally.
Background
Commercial Consumer
Construction Agricultural Insurance Retail Membership based
organisations
Health Care Education Local Government Utilities Service providers
•Through our experience our staff understand a range of industries and the best strategies to work with your business
Our expertise and Knowledge
Offices New South Wales NSW / ACT Sydney. Level 2, 60 Station Street Parramatta NSW 2150. Tel (02) 8258 8500 Queensland 14/133 Mary St, Brisbane QLD 4000 (07) 3031 8400 WA & NT WA / NT Perth. Level 15, 200 St. Georges Terrace Perth WA 6000. Tel (08) 6467 3000 South Australia 400 King William St, Adelaide SA 5000 1800 083 052 Victoria Level 7, 628 Bourke street Melbourne VIC 3000 Tel: (03) 9937 5800
Understanding and utilising debt collection to promote business growth
What is debt collection?
What industries can utilise a collection agency?
Any company with trading terms
Any supplier who provides a service or goods
No industries are excluded from the use of debt collection
A “debt” is any payment overdue outside the terms of trade
A debt isn't just when: A client no longer returns your calls Can no longer be located Has not made full payment for an extensive amount of time
Collection activity should be an every day occurrence to grow a successful company Collection activity should begin with you A Collection process should not be threatening or a last resort, it should be communicated to your clients as your process for non-payment Ensure your agreements are written to protect you against non payment Gives your company a competitive advantage in the market in terms of pricing
How debt collection applies to you
How do you implement the strategy and change the culture
to get paid on time
Strategies you can implement today to help your cash flow
Choose the correct collection process inline with your client base Decide on an internal process and stick to it Ensure your clients are aware of the process when new agreements are signed Critical factor that your Terms and Conditions protect you from non payment Don’t doubt your process as it will encourage non payment
Strategies
All of the above strategies can be implemented easily today
Agreements
Agreements
Clauses
Clauses
Benefits to your company Once a process is in place and followed, an increase in payments on time will be visible Increase your Cash Flow You can accurately forecast your budgets and future Growth It will strengthen your brand in the market, not weaken it Creates opportunity to compete on price as you have fewer overdue accounts Retain clients that are profitable and pay on time Decrease your risk of Liquidation
Risks
Issues with cash flow Negative impact on your paying customers Unable to forecast accurately Danger of Liquidation Depreciation on every sale made Decrease in client retention
$8,500.00
$9,000.00
$9,500.00
$10,000.00
Series 1
The impact of non payments on your Active sales?
Facts A sample of clients that engage debt collection highlighted the result that 61% sent debts older than 120 days 76% of clients commenced very little activity to collect under 60 days 41% was not protected for late payment in their Terms and Conditions 20% of the sample had a higher rate of write off than other companies in similar industries
Results of debt collection not being a priority
Decreasing the value of each sale Hard to enforce due to length of time outstanding Increased annual write offs Unclear position of how your company is performing Negative impact on your internal resources
Next steps to change the culture Implement a in house process that is inline with your business Get your terms and conditions reviewed to ensure you are protected against delayed payments and non payment Get correct details for all new signings Understanding the impacts on your business due to delayed payments is crucial Do not accept late payments as the norm
“A debt is any payment out of the terms
agreed “
Contact Details Emily Ponniah State Commercial Collections Manager Austral Mercantile Collections Pty Ltd Phone: +61 2 82588520 Mobile: 0478 305 212 Email: [email protected] Stephanie Barlow National Sales Manager Austral Mercantile Collections Pty Ltd Phone: +61 8 64673079 Mobile: 0423 843 732 Email: [email protected]
