In the last week EC Credit Control has had several meetings with clients in the Liverpool and Macarthur regions of Sydney, in a wide range of industries. Across the board all have tried to create their own Terms Of Trade and upon review, or in some cases a painful bad debt experience, have found their current business documentation wanting. Don’t risk the health of your business and yourself in this manner. Let an expert like EC Credit Control draft you something watertight to help improve your cash flow and combat bad debtors. 

In one instance we were asked to advise a business based in the Hoxton Park area, with clients right across the Hoxton Park, Prestons, Liverpool and Macarthur Regions of Sydney. This business had been unable to recover a $28,000 debt. Their lawyer had spent a further $4,000 before handing it back as unwinnable. The reason was his Terms of Trade did not assist him in the recovery of his debt. He had no consequences he could impose on his debtor to enforce payment and nothing outlines the rules and boundaries of doing business with him. 

On meeting the Business owner and probing a little further it was also discovered that he was not only at risk as far as Debt recovery, but being a hire business he had a far greater risk his existing Terms of Trade did not allow for him to register his dry hire equipment on the PPS Register!

In the case of this Hoxton Park Hire company it would have meant that if any one of his clients went into liquidation, in possession of his equipment, he was at sever risk of losing this expensive equipment to the Liquidator. The loss of equipment valued in excess of $200,000 is something not many businesses would survive!  

EC Credit Control has since been able to help him implement the correct Terms of Trade, as well as register on the PPSR to secure his equipment on hire to clients. 

Another week and EC Credit Control have had several meetings with a variety of trade’s across the Campbelltown, Ingleburn, Picton, Camden & Liverpool areas of South Western Sydney. The stories are almost always the same – a small business community in South Western Sydney that believe Terms & Conditions of Trade can be copied from similar businesses in the same industry group. Rarely are they any good, in most they leave the business totally exposed.

Terms & Conditions of Trade is as important to your business as your industry licence or your ABN. We saw businesses in each of the Campbelltown, Ingleburn, Picton, Camden & Liverpool area’s that in some cases had been trading for more than 7 years with little or in some instances no Terms & Conditions of Trade. The good news is that they have survived and are still in business. The bad news is that in most cases they have lost out on hard earned profit to various degrees.

In one case a local earthmoving company in Ingleburn doing wet hire, had lost over $30,000 in bad debts over the past year. They have managed to survive but realise that it’s cost their business much more to recover that $30K loss, more like $90K to replace what’s been lost on one or two job’s. More importantly, they now realized that they have been exposed to potentially losing their capital equipment and or stock left on secured sites in certain circumstances, by not having proper Terms & Conditions of Trade in place.

How many hits like that can your own business afford to withstand?

If you are in business for even a short time you can suffer the experience of a bad debt. Most businesses incur at least one bad debt, if not many more. Successful debt recovery is not beyond you, it depends on your actions and priorities. The Campbelltown, Ingleburn, Picton, Camden, & Liverpool areas are all experiencing major growth, and along with that a higher risk of doing business on credit terms. Having watertight Terms & Conditions of Trade in place and a good Debt recovery process to follow is the key.

I had a Creditors Report come across my desk today, which is not that unusual, but what was unusual is the number and types of businesses I saw listed as Secured Creditors, having obviously registered themselves as Credit Providers on the PPSR. (Personal Property Securities Register)

Now whilst there were 262 Unsecured Creditors totaling a massive 6.5 million in unsecured credit, against only 44 Secured Creditors, I found myself really paying attention to the names of those secured creditors and the businesses they operate. Whilst I did recognise a couple of our clients on the Secured Creditor list there were quite a number of varied and smaller businesses which you don’t normally tend to see on a Creditors Report.

Which leads me to ask the question, Are Businesses Finally Learning How to Protect their Cash Flow with the PPSA? (Personal Property Securities Act)

What most businesses, and their professional advisors for that matter fail to realise is that no matter if you provide goods or services on credit the PPSA is there to protect their cash flow.

I would encourage all businesses owners to do a little investigation and find out for themselves how they can move from the list of 262 Unsecured Creditors to the list of 44 Secured Creditors.

“It’s your Business and Your Money”