I recently had a meeting in Burwood assisting a local liquor wholesaler, to set up their Terms of Trade documentation and a membership with Veda, Australia’s largest credit reporting agency. The reason Sarah and her father are using our services is to implement a solid credit management process to protect their cash flow.
They have experienced issues with slow payers and recently had a client became insolvent. The result of the insolvency was the liquidator subjected them to clawback of a preferential payment they had received. This is where a liquidator has the ability under the Corporations Act to recover money paid to unsecured creditors in the 6 month lead up to a company entering liquidation. Yes, it’s real, and yes, it can hurt a small business severely.
As a result of this they wanted to eliminate such risks moving forward. We have now positioned them as a secured creditor on the PPSR with correctly worded Terms of Trade that allow them to do these PPS Registrations and recover money efficiently with the debtor liable for collection costs. They are also now in the habit of using Veda to perform credit checks on any new customers before giving them an account and monitoring their existing customers base so they will be alerted when an adverse event occurs – if it’s good enough for the banks who extend credit, they believe it’s good enough for them.
After 26 years in business they now feel confident with the credit management process we have helped them establish to protect their cash flow and allow them to move forward with expanding their business to take on new account customers with confidence.