Like many I take the time between Christmas & New Year to review the last 12 months and lay out my plans for the next 12 months. Some people call making plans as resolutions, the problem with resolutions is they are hard to keep and generally by the middle of January they’ve been largely forgotten.
A number of years ago I made a profound discovery when I decided to give up smoking. Up until then every time I decided to stop I would get terrible cravings within an hour and be a short tempered rat bag within 2 hours, with everyone telling me to go have a “fag”. Logic told me that if I could manage to go to sleep for say 8 hours or stop smoking a couple of hours before I went to the gym, there had to be a way for me to stop. I decided to see how long I could go without a cigarette. My normal routine was to have one or two on my way to work, another when I got there etc. So that morning I said to myself “I’ll wait till I get to the office” and when I got there I said “wait until 10” etc and broke down the day that way. The amazing thing was that no one noticed for a couple of days, then I everyone was asking when I had quit, and I said “I haven’t, I’m just not smoking at the moment” and 20 years later I’m still a smoker, it’s just 20 years since I lit one up.
I came to the same conclusion about New Year resolutions, by making a big announcement about your intentions, you’re bound to fail. If however you do as I do, and look back at the last 12 months you will generally find a large number of things that you’ve done which are pretty cool and very few which aren’t. My advice is to concentrate on the good things and say in 2011 I’m going to do more of that.
In my case in 2009 I said to myself that in 2010 I wanted to see Deanem Collections become an established debt collection agency, and we've done that. I said I wanted to increase our turnover by a minimum of 50%, (we increased it by 75%). I took advice from friends & colleagues and asked how I was going to achieve it and was advised to carry on as I was but to start writing a blog, which as you can see I’ve done. The only goal missed was on the number of sales staff I expected to employ, I had wanted at least 3 and ended up with 2.
My goal for 2011 is to keep growing Deanem Collections and the best way forward is to take over another agency. So if you hear of one for sale let me know.
I hope that 2011 brings you good health, happiness & prosperity.
Thursday, 30 December 2010
Saturday, 4 December 2010
What does the future hold for you?
I received the following from a colleague and it should make you think.
2010 is almost over, there's just the run up to Christmas, then a few hectic days and before you know it the New Year will be here and it's 2011 . . . . . .
Here are a few sobering thoughts for you:
1,000 people are seeking some form of formal debt rescheduling every working day.
Citizen Advice Bureaus dealt with 9,000 new debt problems every day in England and Wales
381 people everyday of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 52 seconds during the working day.
1,359 Consumer County Court Judgements (CCJs) were issued every day during Quarter 2 2010 and the average judgement amount was £4,063.
103 properties were repossessed every day during Quarter 2 2010
328 people a day became unemployed for more than 12 months during the 12 months to end August 2010
£23.0m plastic card purchase transactions will be made today with a total value of £1.148bn.
In addition, it has been announced that over 1000 business are going in to liquidation every month.
As we enter 2011 it now more important than ever to remember the golden rules of business. Turnover is Vanity, Cash flow is SANTITY. Always credit check new customers and if you're not sure who can carry out a credit check visit www.deanemcollections.co.uk. To encourage prompt payment increase prices for those who ask for longer than your set terms and never be afraid to ask for your MONEY.
If you’re unsure about chasing overdue invoices, as they are owed by “your best customers” ask a third party agency.
2010 is almost over, there's just the run up to Christmas, then a few hectic days and before you know it the New Year will be here and it's 2011 . . . . . .
Here are a few sobering thoughts for you:
1,000 people are seeking some form of formal debt rescheduling every working day.
Citizen Advice Bureaus dealt with 9,000 new debt problems every day in England and Wales
381 people everyday of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 52 seconds during the working day.
1,359 Consumer County Court Judgements (CCJs) were issued every day during Quarter 2 2010 and the average judgement amount was £4,063.
103 properties were repossessed every day during Quarter 2 2010
328 people a day became unemployed for more than 12 months during the 12 months to end August 2010
£23.0m plastic card purchase transactions will be made today with a total value of £1.148bn.
In addition, it has been announced that over 1000 business are going in to liquidation every month.
As we enter 2011 it now more important than ever to remember the golden rules of business. Turnover is Vanity, Cash flow is SANTITY. Always credit check new customers and if you're not sure who can carry out a credit check visit www.deanemcollections.co.uk. To encourage prompt payment increase prices for those who ask for longer than your set terms and never be afraid to ask for your MONEY.
If you’re unsure about chasing overdue invoices, as they are owed by “your best customers” ask a third party agency.
Sunday, 14 November 2010
Being an Adult
I was drawn to writing this blog on hearing of the sad news of the death of the mother of one my previous Directors.
Many years ago when I was working as the Client Services Manager for another firm of debt collectors, I wasn’t offered a contract as the Directors told me on many occasions that I was a friend and I didn’t need one. This was all well and good when I started working for them, but very quickly I discovered in business you cannot be friends with your employers. After a couple of years of being constantly being told that I was not worth the money I was being paid and constant running down of suggestions, I did what any sane person should do and found an escape route.
The Directors were not best pleased when they realised that I was moving to another agency, especially when they realised by not having a contract they could not stop me from speaking to, or visiting anyone I chose to. It upset them even more when they discovered that some preferred what was being offered by the new agency. My ex-directors tried many ways of stopping my new employers including reporting them to the OFT for not having a Consumer Credit Licence, when in fact they did.
About a year later when my then parent company decided to pull out of the UK, I decided with the approval of my current directors’ to set up Deanem Collections Ltd . One of the first things I tried to do was to hold out an olive branch to my previous employers unfortunately, all I got back from them was hostility that “I was stealing the food from my previous colleagues plates”. I also heard that they had wanted to break my legs!
I found it fascinating that one particular director has gone out of his way to avoid any form of contact including crossing the road and the silliest turning around and leaving a shop when he saw me or my family were already shopping. One day I managed to corner him & his wife in a local supermarket when I said “Hello” he ignored me, when I said “Hello” for a second time he screamed “Don’t you talk to me, you’re stealing my customers”.
Over the years since leaving their employ one of the other directors had seemed to have accepted what had happened and we had had some interesting and friendly conversations. If he ever saw my family in the street he always appeared to be genuinely happy to see them. Unfortunately, I recently lost my father and while the 2nd director sent condolences via my wife, when he saw me he totally blanked me. Just goes to show how petty and small minded some people are.
When I heard the news of the death of my previous employers’ mother, my first action was to do nothing, but on reflection I think as an adult I may send a note of condolence to his father.
Many years ago when I was working as the Client Services Manager for another firm of debt collectors, I wasn’t offered a contract as the Directors told me on many occasions that I was a friend and I didn’t need one. This was all well and good when I started working for them, but very quickly I discovered in business you cannot be friends with your employers. After a couple of years of being constantly being told that I was not worth the money I was being paid and constant running down of suggestions, I did what any sane person should do and found an escape route.
The Directors were not best pleased when they realised that I was moving to another agency, especially when they realised by not having a contract they could not stop me from speaking to, or visiting anyone I chose to. It upset them even more when they discovered that some preferred what was being offered by the new agency. My ex-directors tried many ways of stopping my new employers including reporting them to the OFT for not having a Consumer Credit Licence, when in fact they did.
About a year later when my then parent company decided to pull out of the UK, I decided with the approval of my current directors’ to set up Deanem Collections Ltd . One of the first things I tried to do was to hold out an olive branch to my previous employers unfortunately, all I got back from them was hostility that “I was stealing the food from my previous colleagues plates”. I also heard that they had wanted to break my legs!
I found it fascinating that one particular director has gone out of his way to avoid any form of contact including crossing the road and the silliest turning around and leaving a shop when he saw me or my family were already shopping. One day I managed to corner him & his wife in a local supermarket when I said “Hello” he ignored me, when I said “Hello” for a second time he screamed “Don’t you talk to me, you’re stealing my customers”.
Over the years since leaving their employ one of the other directors had seemed to have accepted what had happened and we had had some interesting and friendly conversations. If he ever saw my family in the street he always appeared to be genuinely happy to see them. Unfortunately, I recently lost my father and while the 2nd director sent condolences via my wife, when he saw me he totally blanked me. Just goes to show how petty and small minded some people are.
When I heard the news of the death of my previous employers’ mother, my first action was to do nothing, but on reflection I think as an adult I may send a note of condolence to his father.
Tracing, a case study
I thought that you would be interested in this case study of how a debt collection agency works when instructed to carry out a trace and collection
Our client in this case is a housing association the debtor being John Smith, according to the information John was born 8 May 1958 and left the property during June 2009 owing £1800. On first view John did not appear to be linked to the property or with the person shown on the electoral roll being Jane. When we carried out a name check we found that John was linked to an address in the area during 2007. When we drilled down further we found also present at this property was Jane. In addition, we found that they were married during 2005. This information confirmed John’s link to the property.
Using our data bases we identified Janes’ current address and we wrote to her. When she received the letter, Jane called in quite upset. It turned out that John had had a heart attack at our clients’ address and was pronounced dead at the scene during April 2009. What upset Jane most was not our letter, but that our client had sent her a condolence card and when she found it too distressing to continue to live there, our client offered to re-house her. She sent us a copy of John’s death certificate which we forwarded to our client on receipt. When our client investigated they agreed that John had died, more importantly there had been no arrears and the debt was written off.
We then suggested to our client that as Jane was quite distressed and while we would send Jane a letter of apology, they should also send one. I was delighted to learn from Jane that she also received a bunch of flowers.
If you would like to find out if we can find your missing debtor, please visit our website www.deanemcollections.co.uk
Our client in this case is a housing association the debtor being John Smith, according to the information John was born 8 May 1958 and left the property during June 2009 owing £1800. On first view John did not appear to be linked to the property or with the person shown on the electoral roll being Jane. When we carried out a name check we found that John was linked to an address in the area during 2007. When we drilled down further we found also present at this property was Jane. In addition, we found that they were married during 2005. This information confirmed John’s link to the property.
Using our data bases we identified Janes’ current address and we wrote to her. When she received the letter, Jane called in quite upset. It turned out that John had had a heart attack at our clients’ address and was pronounced dead at the scene during April 2009. What upset Jane most was not our letter, but that our client had sent her a condolence card and when she found it too distressing to continue to live there, our client offered to re-house her. She sent us a copy of John’s death certificate which we forwarded to our client on receipt. When our client investigated they agreed that John had died, more importantly there had been no arrears and the debt was written off.
We then suggested to our client that as Jane was quite distressed and while we would send Jane a letter of apology, they should also send one. I was delighted to learn from Jane that she also received a bunch of flowers.
If you would like to find out if we can find your missing debtor, please visit our website www.deanemcollections.co.uk
Does being short listed for an award improve business?
I was delighted when my company was recently shortlisted for the 2nd year running for the prestigious award Tracing Team of the Year at this years’ Debt Collection awards. The ceremony is being held on 18 November at Nottingham Belfry Hotel.
The short listing has prompted a number of people to ask if just being shortlisted is sufficient as there can only be one winner. I have been advised by a friend who is on panel of another trade award, that awards are generally won by companies meeting & satisfying quite stringent requirements.
The first is has the nominee have a good reputation? The judges will only considered you worthy if this confirmed by testimonials provided by your clients. Secondly, what effort has been made by the nominee to improve the level of service provided or the level of staff training.
In our case in addition to some amazing testamonials, our nomination papers showed that in the last year we had increased the level of training that the tracing team undertook from quarterly to weekly case review sessions.
While not expecting to win this year, by being short listed I’ve been told by our existing clients that it has confirmed that they were right in their decision to use our services. Another wonderful by-product of being short listed is that it makes companies who are considering utilising your services feel more comfortable to try you out. This has been borne out by the fact that last year we attracted 4 new clients on the strength of being short listed and this year we have been approached by a further 5.
So my answer to the question is yes. Yes being short listed has a beneficial effect on your business.
For more information about our tracing service, please visit www.deanemcollections.co.uk.
The short listing has prompted a number of people to ask if just being shortlisted is sufficient as there can only be one winner. I have been advised by a friend who is on panel of another trade award, that awards are generally won by companies meeting & satisfying quite stringent requirements.
The first is has the nominee have a good reputation? The judges will only considered you worthy if this confirmed by testimonials provided by your clients. Secondly, what effort has been made by the nominee to improve the level of service provided or the level of staff training.
In our case in addition to some amazing testamonials, our nomination papers showed that in the last year we had increased the level of training that the tracing team undertook from quarterly to weekly case review sessions.
While not expecting to win this year, by being short listed I’ve been told by our existing clients that it has confirmed that they were right in their decision to use our services. Another wonderful by-product of being short listed is that it makes companies who are considering utilising your services feel more comfortable to try you out. This has been borne out by the fact that last year we attracted 4 new clients on the strength of being short listed and this year we have been approached by a further 5.
So my answer to the question is yes. Yes being short listed has a beneficial effect on your business.
For more information about our tracing service, please visit www.deanemcollections.co.uk.
Thursday, 12 August 2010
The 80 - 20 Rules
Being in business today it is vital that we remember the 80/20 rule. For those that have never heard of this rule it is that 80% of your business will be carried out with 20% of your clients. For those of you who think I’m wrong, analyze your order book.
The other 80/20 rule is that on average 80% of your clients will pay their invoices on or before the due date, 20% will not. It’s these that you should be worried about.
As a Debtologist I am often asked to explain how just 20% slow paying accounts can help to ruin a business. When I do ,I like to use a fictitious company called Bloggs & Co which produces widgets. Bloggs have 100 regular customers who on average spend £1000 per order, the widgets cost £200 which gives Bloggs a gross profit of £800 per order.
If we apply the 80/20 rule, then 80 customers will settle within the agreed settlement terms & 20 obviously will not. Of these 20, 80% will pay when pushed during the month 20% (4) will not. At the end of month 1 Bloggs will have issued 100 invoices worth £100,000 (£80,000 gross profit) however they will find that they have £20,000 outstanding. If they are sensible they will employ a credit controller, let’s call her Flossy and no mater how good Flossy is by the end of month 2, £4,000 will be outstanding.
The problem comes that at the end of month 2 while the turnover will be £200,000 they will not have 4 outstanding customers they will have 8 debtors and not owed £4000 but £8000. Month 3 will see turnover grow to £300,000 their bad debts however will have grown to £12,000 and so on. If things were to carry on this way at the end of the year the company will have a turn over of £1.2M (£960,000 gross profit) and with a bad debt provision of £48,000 and this figure could represent a smaller overdraft, a new member of staff or even a new car!
Generally what happens next is that Flossy is then asked to concentrate on the bad debt that the company has accrued. However, Flossy will also be expected at the same time to ensure that the current invoices are paid. In reality, however good Flossy is, a number of the invoices will eventually have to be written off as uncollected.
So how can you insure that you minimise your bad debt exposure. There are 3 things you should consider. The first thing is to recognise is that you can’t expect Flossy to act as a credit controller and debt collector so you can either employ another Flossy or 2 you can speak to a reputable debt collection agency. The agency will be able to advise you what your best options would be, it could be to outsource the debt collection to them or they may have systems in place that will allow Flossy to reduce the 4 bad payers to one or two. The only way to find out is to make contact with a debt collection agency. The 3rd option is to divorce those who do not pay their bills, remember they are not customers they are debtors.
For more information about Deanem Collections and our services please visit our website www.deanemcollections.co.uk
As a Debtologist I am often asked to explain how just 20% slow paying accounts can help to ruin a business. When I do ,I like to use a fictitious company called Bloggs & Co which produces widgets. Bloggs have 100 regular customers who on average spend £1000 per order, the widgets cost £200 which gives Bloggs a gross profit of £800 per order.
If we apply the 80/20 rule, then 80 customers will settle within the agreed settlement terms & 20 obviously will not. Of these 20, 80% will pay when pushed during the month 20% (4) will not. At the end of month 1 Bloggs will have issued 100 invoices worth £100,000 (£80,000 gross profit) however they will find that they have £20,000 outstanding. If they are sensible they will employ a credit controller, let’s call her Flossy and no mater how good Flossy is by the end of month 2, £4,000 will be outstanding.
The problem comes that at the end of month 2 while the turnover will be £200,000 they will not have 4 outstanding customers they will have 8 debtors and not owed £4000 but £8000. Month 3 will see turnover grow to £300,000 their bad debts however will have grown to £12,000 and so on. If things were to carry on this way at the end of the year the company will have a turn over of £1.2M (£960,000 gross profit) and with a bad debt provision of £48,000 and this figure could represent a smaller overdraft, a new member of staff or even a new car!
Generally what happens next is that Flossy is then asked to concentrate on the bad debt that the company has accrued. However, Flossy will also be expected at the same time to ensure that the current invoices are paid. In reality, however good Flossy is, a number of the invoices will eventually have to be written off as uncollected.
So how can you insure that you minimise your bad debt exposure. There are 3 things you should consider. The first thing is to recognise is that you can’t expect Flossy to act as a credit controller and debt collector so you can either employ another Flossy or 2 you can speak to a reputable debt collection agency. The agency will be able to advise you what your best options would be, it could be to outsource the debt collection to them or they may have systems in place that will allow Flossy to reduce the 4 bad payers to one or two. The only way to find out is to make contact with a debt collection agency. The 3rd option is to divorce those who do not pay their bills, remember they are not customers they are debtors.
For more information about Deanem Collections and our services please visit our website www.deanemcollections.co.uk
Saturday, 7 August 2010
What’s the connection between losing your virginity and becoming a Credit Controller?
What’s the connection between losing your virginity and becoming a Credit Controller?
As a Debtologist, I’m often asked to provide coaching to new and inexperienced credit controllers. I recently met a lovely lady called Sarah* who had just been asked to take over as her companies’ credit controller. Sarah was in her mid to late 30’s and had been by training, a conveyancing solicitor. When she married, she stopped working unfortunately due to very messy divorce she had to return to work & the only job she was able to get, was as an office administrator. Her brief was to bring the companies' debtor days down from 120+ to nearer 30.
I met Sarah during her first week and she was still working up the nerve to pick up the phone to call her late paying customer. When we spoke Sarah explained thather problem was as she had had no training, she was concerned about what should she say & act, what happens if the customer was rude, slammed the phone down etc and as much as I tried to reassure her and take her through credit control procedures, she was still unsure.
Sarah had also mentioned that the only thing she missed about her husband was the sex! She explained that he had been her “first” but she didn’t miss the bullying or her interfering mother in law. Once she had told me this, I was able to coach her in the art of credit control.
I explained that being a novice credit controller was very much like having sex for the very first time as most people don’t really enjoy it but wanted to get it over with, she said she could relate to that. However, I carried on the more you made love the better it becomes. I explained that it was exactly the same with credit control as the first time you pick up the phone to ask your debtor to settle their account is nerve racking and not something you really enjoy. But like sex the more times you “do it” the more credit control becomes enjoyable. However, unlike sex where you could get accidentally pregnant or worse, with credit control the pleasure is reduced debtor days, a swollen bank account and no nasty social diseases.
When I last spoke to Sarah, following my advice and utilising Deanem's collection services she had managed to get her debtor days down to 45 and was delighted to be told by a slow payer that he dreaded her telephone call.
If you would like more details of our unique approach to credit control training, please visit our website www.deanemcollections.co.uk
*Sarah is not the real name of the person concerned.
I met Sarah during her first week and she was still working up the nerve to pick up the phone to call her late paying customer. When we spoke Sarah explained thather problem was as she had had no training, she was concerned about what should she say & act, what happens if the customer was rude, slammed the phone down etc and as much as I tried to reassure her and take her through credit control procedures, she was still unsure.
Sarah had also mentioned that the only thing she missed about her husband was the sex! She explained that he had been her “first” but she didn’t miss the bullying or her interfering mother in law. Once she had told me this, I was able to coach her in the art of credit control.
I explained that being a novice credit controller was very much like having sex for the very first time as most people don’t really enjoy it but wanted to get it over with, she said she could relate to that. However, I carried on the more you made love the better it becomes. I explained that it was exactly the same with credit control as the first time you pick up the phone to ask your debtor to settle their account is nerve racking and not something you really enjoy. But like sex the more times you “do it” the more credit control becomes enjoyable. However, unlike sex where you could get accidentally pregnant or worse, with credit control the pleasure is reduced debtor days, a swollen bank account and no nasty social diseases.
When I last spoke to Sarah, following my advice and utilising Deanem's collection services she had managed to get her debtor days down to 45 and was delighted to be told by a slow payer that he dreaded her telephone call.
If you would like more details of our unique approach to credit control training, please visit our website www.deanemcollections.co.uk
*Sarah is not the real name of the person concerned.
Saturday, 24 July 2010
What's better in house credit control or outsourced credit control
I’m often asked what is the best type of credit control, is it better to increase the size of a companies credit control department, or would it be best to outsource the task to a third party.
For me the best will always be to keep credit control in-house and working with a third party for those cases that slip over. I hope the following helps you make your mind up.
Years ago companies no matter how large or small they were always had at least 1 dedicated credit controller and even then they would often need additional help. Now days in the age of 1 man bands, the owner has to also chase overdue accounts. So the first thing that has be decided is can you appoint a person to handle your credit control. If you can then much will depend on how many accounts that person will be chasing, what else will they be doing? If you take the 70 – 30 rule as a guide in other words out of 100 account clients, 30 will be late & generally of these 8-10 will still be overdue at the end of the following month.
If this is your scenario and you can’t afford to bring in another credit controller you may wish to outsource the overdue accounts to an independent agency.
How does this work, is usually the next question I’m asked. Like everything else with debt collection and credit control setting out the collection parameters is vital, during this period you will need to decide if the agency is to be your credit control department or acting on behalf of the agency. Either way you should be able to dictate that your client pays you directly. You will also need to agree a reporting system is it real time or daily, weekly or monthly. The agency will need to know how they will receive the information, will you be providing copies of invoices or supplying the details in an excel spreadsheet or via a CRM or SAP system. Cost will depend on how the agency wants to be paid some will agree on a flat fee others on a % of the total ledger and some will work for a % of monies collected. The choice will need to be decided as there is no standard fee structure.
For more information please visit our website: www.deanemcollections.co.uk
For me the best will always be to keep credit control in-house and working with a third party for those cases that slip over. I hope the following helps you make your mind up.
Years ago companies no matter how large or small they were always had at least 1 dedicated credit controller and even then they would often need additional help. Now days in the age of 1 man bands, the owner has to also chase overdue accounts. So the first thing that has be decided is can you appoint a person to handle your credit control. If you can then much will depend on how many accounts that person will be chasing, what else will they be doing? If you take the 70 – 30 rule as a guide in other words out of 100 account clients, 30 will be late & generally of these 8-10 will still be overdue at the end of the following month.
If this is your scenario and you can’t afford to bring in another credit controller you may wish to outsource the overdue accounts to an independent agency.
How does this work, is usually the next question I’m asked. Like everything else with debt collection and credit control setting out the collection parameters is vital, during this period you will need to decide if the agency is to be your credit control department or acting on behalf of the agency. Either way you should be able to dictate that your client pays you directly. You will also need to agree a reporting system is it real time or daily, weekly or monthly. The agency will need to know how they will receive the information, will you be providing copies of invoices or supplying the details in an excel spreadsheet or via a CRM or SAP system. Cost will depend on how the agency wants to be paid some will agree on a flat fee others on a % of the total ledger and some will work for a % of monies collected. The choice will need to be decided as there is no standard fee structure.
For more information please visit our website: www.deanemcollections.co.uk
Saturday, 10 July 2010
As a Debtologist I’m often asked:
"What’s the point of Bankruptcy?"
When someone owes more than £750 bankruptcy action can be considered as an option, likewise if a company owes the money you can issue a winding up notice. The pro’s & con’s make interesting reading and the reasons behind taking or not taking action should be considered along with the consequences.
The first thing that should be realised is that taking the ultimate action against your debtor is that bankruptcy/winding up does not mean you will receive any money and all that you may actually achieve is satisfaction.
Before you take any legal action consider consider both the positive and negative results of your actions. The positive side is that by taking action you may collect the money you are owed. The negative is that you may not. More important it could cost many thousands of pounds to stop your debtor owing money to any other business.
So how do you make someone bankrupt or in the case of a business issue a Winding Up notice. Well it is relatively simple and it is something a debt collection agency can do or you can do yourself, in fact a court officer would be able to help you fill in the forms. The first thing you should do, once all possibility of settlement has been exhausted is write to your debtor giving them a final warning that unless they settle you will take legal action against them. Provided that the debt is not disputed and they owe more than £750 then action can be started.
Regardless of the status of the debtor (company or individual) a Statutory Demand has to be issued. Once issued, the defendant will have 21 days to respond or you can start either the bankruptcy procedures or Wind-Up the company.
When writing to a company notify them that a Winding-Up notice would be issued pursuant to section 122(1) (F) of The Insolvency Act, 1986, due to the company’s inability to pay its debts as they fall due.
However, you should be aware that by issuing a Statutory Demand you are leaving yourself open to a myriad of possible implications and costs as well as disappointment. The first thing you should be aware of is if your debtor is based in a different area of the country and the debtor issues a defence, the case will be heard in the defendants nearest court. Secondly, if your debtor issues a defence or disputes the debt, you will need to a) answer any defence & b) attend the appointed court, even if the debtor doesn’t.
So far this action is no different from issuing a County Court Summons. However there are some differences, the first is you pay for a summons prior to it being served. In the case of a Statutory Demand you are entitled to issue the Demand but you will only have to pay if the debtor enters a dispute. The fees for all legal actions are given out on the HM Courts website. As I have pointed out, winning a court case does not mean that your debtor will be declared Bankrupt or Wound-Up as they will still be able to appeal to have any decision set aside. If you are still determined to take action, the forms are available from www.hmcourts-service.gov.uk. My advice would be before taking any legal action take advice from either a debt collector or lawyer.
For further information please visit our website: www.deanemcollections.co.uk
Sunday, 11 April 2010
The Golden rules of Credit Control
I’m often asked as a consultant Debtologist just what are the golden rules for good credit control?
How can you avoid debtors?
The answer is You can’t but if you:-
A) Carry out due diligence on each and every order.
B) Have a firm credit control policy.
You can minimise your risks.
So what is a Due Diligence Check List?
Terms & Conditions of Trade – Are your Terms & Conditions adequate? Who designed them? What are your settlement terms: 7, 14, 21, 30 days?
Can you claim interest on overdue accounts?
Can you charge your late payer for costs incurred in the collection of the overdue invoice?
Are you protected against damage caused in the fulfilment of your duties?
If the answer to these simple questions is NO, contact a specialist agency.
Account opening forms:
Do you know who is legally responsible for settling your invoice?
Is your client a sole trader, a partnership, a single ltd company or part of a group? Where should you send your invoice? If you don’t have a working account opening form, contact a specialist firm.
Simple 30 day credit control rules:
If your terms are 30 days, on day 14 phone the client and ask two questions.
Question 1: were they happy with the order. If they say they weren’t, you have time to put it right. If they are happy, ask Question 2: When am I going to receive the payment?
Slow paying Accounts.
Never be afraid to ask for your money. A non payer is not a customer, they are a drain on your bank account.
Day 21 Call the client and confirm that the account will be settled, or if not why not? If the client moans, just say “Mary” in accounts is nagging you. If no call is made send a final demand. If your client calls and moans about receiving a letter blame “Mary” in accounts!
Day 37: If payment has not been made, PHONE the client, say “Mary in accounts wants to send the account to the collection agency but you wanted check what the problem was”
Day 40: If payment still has not been made, write to the DEBTOR stating that if payment is not made within 7 days the account will be passed to your preferred collection agency. The letter should be sent by “Mary”
Day 45 send a third party debt collection letter.
Day 55 send a final demand
Day 65 send the account to a firm of debt collectors
For more information please visit our website www.deanemcollections.co.uk
How can you avoid debtors?
The answer is You can’t but if you:-
A) Carry out due diligence on each and every order.
B) Have a firm credit control policy.
You can minimise your risks.
So what is a Due Diligence Check List?
Terms & Conditions of Trade – Are your Terms & Conditions adequate? Who designed them? What are your settlement terms: 7, 14, 21, 30 days?
Can you claim interest on overdue accounts?
Can you charge your late payer for costs incurred in the collection of the overdue invoice?
Are you protected against damage caused in the fulfilment of your duties?
If the answer to these simple questions is NO, contact a specialist agency.
Account opening forms:
Do you know who is legally responsible for settling your invoice?
Is your client a sole trader, a partnership, a single ltd company or part of a group? Where should you send your invoice? If you don’t have a working account opening form, contact a specialist firm.
Simple 30 day credit control rules:
If your terms are 30 days, on day 14 phone the client and ask two questions.
Question 1: were they happy with the order. If they say they weren’t, you have time to put it right. If they are happy, ask Question 2: When am I going to receive the payment?
Slow paying Accounts.
Never be afraid to ask for your money. A non payer is not a customer, they are a drain on your bank account.
Day 21 Call the client and confirm that the account will be settled, or if not why not? If the client moans, just say “Mary” in accounts is nagging you. If no call is made send a final demand. If your client calls and moans about receiving a letter blame “Mary” in accounts!
Day 37: If payment has not been made, PHONE the client, say “Mary in accounts wants to send the account to the collection agency but you wanted check what the problem was”
Day 40: If payment still has not been made, write to the DEBTOR stating that if payment is not made within 7 days the account will be passed to your preferred collection agency. The letter should be sent by “Mary”
Day 45 send a third party debt collection letter.
Day 55 send a final demand
Day 65 send the account to a firm of debt collectors
For more information please visit our website www.deanemcollections.co.uk
Tuesday, 6 April 2010
How The Titanic is the story of today's SME.
Are you Jack or Rose?
or
How the Titanic is the story of today's S.M.E
As a public speaker on debt collection I often try to relate credit control & debt collection to the ill fated liner The Titanic as there are numerous similarities between the launch of The Titanic and most S.M.E's.
According to history when they designed the Titanic, the brief was to create the most luxurious and fastest liner of it's age. However, the designers were so intent on following the brief they forgot to check if the watertight doors shut, a mistake they were to regret when the boat met an iceberg. The rest as they say is history.
or
How the Titanic is the story of today's S.M.E
As a public speaker on debt collection I often try to relate credit control & debt collection to the ill fated liner The Titanic as there are numerous similarities between the launch of The Titanic and most S.M.E's.
According to history when they designed the Titanic, the brief was to create the most luxurious and fastest liner of it's age. However, the designers were so intent on following the brief they forgot to check if the watertight doors shut, a mistake they were to regret when the boat met an iceberg. The rest as they say is history.
Unfortunately, most businesses today have the same deign faults. When we launch a business the intention is to launch the best. Their business like Titanic is going to break records unfortunately, like Titanic they often have a flaw in the blueprint. In the case of the Titanic it was those watertight doors in business it’s called poor credit control.
If you don’t batten down the hatches and ensure that your customers pay their invoices within the agreed terms your business, like the Titanic will sink to the bottom of the ocean. However, unlike Titanic there will be no romance about your business sinking.
A further analogy can be found in the film of Titanic and only you can decide which character you are. You can either be like Jack, who despite being very brave & heroic ultimately ends up, like the Titanic at the bottom of the ocean. Or you can be like Rose who clings on to a piece of drift wood and was finally rescued by a passing life raft. In real life a debt collection agency should be seen as the life raft.
To find out more about Debt Collection visit our website at:
www.deanemcollections.co.uk
If you don’t batten down the hatches and ensure that your customers pay their invoices within the agreed terms your business, like the Titanic will sink to the bottom of the ocean. However, unlike Titanic there will be no romance about your business sinking.
A further analogy can be found in the film of Titanic and only you can decide which character you are. You can either be like Jack, who despite being very brave & heroic ultimately ends up, like the Titanic at the bottom of the ocean. Or you can be like Rose who clings on to a piece of drift wood and was finally rescued by a passing life raft. In real life a debt collection agency should be seen as the life raft.
To find out more about Debt Collection visit our website at:
www.deanemcollections.co.uk
The Three Stages of a Debtor
I am always being asked if there are any warning signals that you should be aware of when offering credit to your customers. With this information you should be able to avoid the need to instruct a debt collection agency.
Stage 1: The owner has the best of intentions.
The company is starting to experience some hard times but genuinely thinks it is only temporary. At this stage, the owner still has a positive outlook and wants to try to do the right thing when it comes to paying his creditors. Unfortunately, he cannot pay everyone in full so he works out a partial payment arrangement with most of his suppliers.
When a debtor is in Stage 1 they begin to act a little different as the signs of poor cash flow start to show.
Stage 1: Some Warning Signs
Your customer wants to make partial payments in an effort to get you paid. It takes you two or three calls before someone will call you back about your invoice. They say “the cheque in the post” when it isn’t.
Remember, during this stage the debtor thinks everything is going to be ok so his attitude is usually good and his excuses sound genuine.
Unfortunately, Stage 2 is looming:
Stage 2: Warning Signs
Cash flow is worse and the bills are getting out of control. Things go from bad to worse and he simply can’t afford to keep up with his payment plans. He hasn’t given up though, so his excuses still sound genuine; but they are getting more and more creative every day.
Now he has to prioritize. When he finishes a job or gets paid from one of his customers he sits down with all of his bills and simply puts them in priority from MUST PAY to NEED TO PAY then down to WON’T PAY. He is now officially in survival mode. Some of the bills that fall into each pile are:
Where do you think you fall on his priority list?
Stage 3:
The debtor’s situation is hopeless. He can’t afford to pay anyone anything at all. No longer do even his preferred suppliers receive payment. When he arrives at stage 3, the company will be closing its doors shortly and is going to file for bankruptcy/insolvency. Right before he enters this stage, the warning signs are clear and easy to read:
Stage 3 Warning signs
Stops returning calls, all partial payments cease. No more excuses, just states, “I can’t pay you” Since the company doesn’t have any cash flow, the time to use a collection agency has long passed.
Simply put, this debt is generally uncollectable now is the time to call a Debt Collector.
To find out more about Debt Collection visit our website at:
www.deanemcollections.co.uk
Stage 1: The owner has the best of intentions.
The company is starting to experience some hard times but genuinely thinks it is only temporary. At this stage, the owner still has a positive outlook and wants to try to do the right thing when it comes to paying his creditors. Unfortunately, he cannot pay everyone in full so he works out a partial payment arrangement with most of his suppliers.
When a debtor is in Stage 1 they begin to act a little different as the signs of poor cash flow start to show.
Stage 1: Some Warning Signs
Your customer wants to make partial payments in an effort to get you paid. It takes you two or three calls before someone will call you back about your invoice. They say “the cheque in the post” when it isn’t.
Remember, during this stage the debtor thinks everything is going to be ok so his attitude is usually good and his excuses sound genuine.
Unfortunately, Stage 2 is looming:
Stage 2: Warning Signs
Cash flow is worse and the bills are getting out of control. Things go from bad to worse and he simply can’t afford to keep up with his payment plans. He hasn’t given up though, so his excuses still sound genuine; but they are getting more and more creative every day.
Now he has to prioritize. When he finishes a job or gets paid from one of his customers he sits down with all of his bills and simply puts them in priority from MUST PAY to NEED TO PAY then down to WON’T PAY. He is now officially in survival mode. Some of the bills that fall into each pile are:
- Need to pay (Unlikely to pay). Rent, payroll, utility bills, top suppliers that they cannot do without.
- Should pay (But will not). Advertising invoices, office supplies, middle range suppliers of products that they can get elsewhere.
- Will never pay. Memberships, subscriptions, low tier suppliers they do not need, suppliers with toothless collection policies, small balances that they know no one will ever pursue.
Where do you think you fall on his priority list?
Stage 3:
The debtor’s situation is hopeless. He can’t afford to pay anyone anything at all. No longer do even his preferred suppliers receive payment. When he arrives at stage 3, the company will be closing its doors shortly and is going to file for bankruptcy/insolvency. Right before he enters this stage, the warning signs are clear and easy to read:
Stage 3 Warning signs
Stops returning calls, all partial payments cease. No more excuses, just states, “I can’t pay you” Since the company doesn’t have any cash flow, the time to use a collection agency has long passed.
Simply put, this debt is generally uncollectable now is the time to call a Debt Collector.
To find out more about Debt Collection visit our website at:
www.deanemcollections.co.uk
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