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Avoid bad debt in easy steps

Simple measures can save a world of angst for small businesses if customers don't pay up, according to a local expert in recovering debt.

Baycorp's Rotorua representative Jeff Timmins said there were several easy steps small-to-medium enterprises (SMEs) could take to help ensure debts were easier to recover if things went wrong. Mr Timmins was joined by Baycorp New Zealand general manager Donna Cooper and business services sales manager Victor Jamieson at a roadshow in Rotorua this week aimed at turning the spotlight on credit management and recovering outstanding debt.

Mr Jamieson said Rotorua trends showed that smaller balance debts were, in some cases, double that of other North Island regions.

"People are open to getting into debt as credit providers provide credit but the debts are remaining at the low end."

But Mr Jamieson said the agency was seeing less debts in the significantly higher bracket, and that debts at that highest end of the scale had become "pretty much non existent" locally in the past 12 months.

He believed part of that was that debt was being capped at a certain level, as well as debts being referred to agencies Baycorp earlier.

Second and third tier lenders were taking a more cautious approach, he said.

Ms Cooper said that was positive for the economy.

The level of debt being recovered was strengthening, which was another positive, she said.

"This would indicate small-to-medium enterprises (SMEs) are being more cautious about allowing credit for the larger ticket items, and they are quicker at taking action when a customer falls into default," Mr Timmins said.

Part of the roadshow looked at the way technology improvements could assist SMEs.

Tablets could be used to hold terms and conditions, so a business could present them to a customer and have them click their acceptance on the spot.

The roadshow also looked at recent changes to legislation as well as pending legislation. An example of that was what the responsible lending code meant for businesses.

Ms Cooper said the roadshow emphasised the full range of services that Baycorp could offer, which extended beyond just debt recovery and included services like provide advice and guidance on businesses approaches to credit and debt.

"[Mr Timmins] who is local can sit down and help them answer some questions so they can protect themselves."
Mr Timmins said he often gave advice to businesses about how they could best manage their debt portfolios before it needed to be referred to an agency like Baycorp.

The biggest piece of advice was around the terms and conditions, and making sure they fitted the requirements so they allowed debt agencies to collect recoverable costs, he said.

It also meant making sure customers agreed to those terms and conditions before work started, something some tripped up on, he said.

Mr Timmins said some businesses just had them on the invoice, which was sent out at the end of the work being done.

Another key piece of advice was to be more upfront with talking about payment, Mr Jamieson said.

That included asking for deposits if the value exceeded a certain amount.

Source - Rotorua Daily Post (Thursday 23 October 2014)