Sadly that is generally not the case, but there’s a couple of things that you can do right now to help reduce the anxiety, and give your cash flow a quick shot in the arm before the holiday season kicks in.

We’ve put together our favourite tips to make sure you get paid on time over the Christmas and New Year break, even though it might be tools down for some of your customers:

1. In the weeks leading up to Christmas, focus on getting your invoices out as soon as the job is complete or the order is filled, and make sure your payment terms are clearly stated on the invoice. Even better, include a “Payment Due Date” field so your customers know exactly when you expect payment.
2. Review your debtors today, and don’t rely on automated email reminder systems that are built into so many accounting packages now.  Your customers are so conditioned to reading those emails that they’re like water of a reindeer’s back (see what we did there)!  Pick up the phone, ring your customers and ask them for payment. And even though it’s not our preferred method, at the very least send them a personalised SMS reminder.
3. Create urgency, make sure you’ve done the most you possibly can, to get paid by 16 December, because Santa knows that no-one pays during the week leading up to Christmas, and this year many businesses are indicating that 16 December will be their last working day until at least 09 January next year.
4. Resolve any outstanding reconciliation or dispute items now. Set aside a block of time, with a glass of Christmas cheer, and get those niggling issues cleared up.  By taking away the reason for payment delays right now, you still stand a chance of getting paid the balance before everyone does a runner this year.
5. Okay, so there was only 4 tips, this last one is just our favourite recipe for a Christmas baked ham. Everyone has their family favourite, and this one is ours:

Glazed Apricot Christmas Ham
Ingredients

8-9 kg cooked leg of ham
2 heaped tablespoons of brown sugar
10-12 whole cloves
250g apricot jam
3 tablespoons Grand Marnier or Cointreau

Cooking instructions

Step 1. Preheat oven to 180 degrees C.
Step 2. Remove skin from ham by cutting through the skin at the knuckle end of the ham, and loosening the skin at the broad end of the ham and pulling it gently away with fingertips. There will still be some fat left on the surface. Score the surface in diamonds or your own fancy pattern.
Step 3. Rub ham well with brown sugar and stud with cloves in each diamond, or however it works with the pattern you’ve made. Cook uncovered in a large baking tray for 30 minutes.
Step 4. While it is cooking, melt the apricot jam and the Grand Marnier together over a low heat in a small pot.
Step 5. Remove ham from the oven after 30 minutes and brush with the apricot glaze, then place the tray back in the oven for another 1 ½ hours.   Brush the ham every 30 minutes (or thereabouts).

Enjoy your Christmas ham and stay on top of those outstanding customer invoices throughout December.

The post Five Tips for Christmas appeared first on Nexus Collections.

CreditorWatch’s monthly Business Risk Index for October 2021 shows that the likelihood of a businesses defaulting on payments is at 5.78%, very slightly up from the September period. The default rates are generally closely connected with business failure and insolvency.

The potential for businesses in the food and beverage industry to default is somewhat higher than the national average at 5.97%, closely followed by the arts and recreational services (4.03%), and the education and training sector (3.99%).

Hospitality businesses on the Gold Coast are considered the most at risk of insolvency, given that the sector is almost entirely driven by tourism – an area that has been hardest hit during the COVID-19 crisis.

At present, the construction industry is rated worst for overdue payments to suppliers. It’s an industry that has been hit hard by lockdowns in NSW and Victoria, but also a global shortage of materials has created never before seen delays in completing even the most straight forward projects, both in the consumer and commercial markets. Right now, the construction sector is showing overdue payments at record highs of 12.6%.

The transport sector is not far behind building and construction for late payments, at 11.1% – with postal and warehousing-related businesses at 10.7%.

We have noticed a shift in the way credit reporting agencies are “scoring” businesses in the sectors mentioned above; the algorithms that score a credit report seem to be increasing the risk-rating to those sectors when there is no other reasons apparent for a reduction in their score when reviewing the credit data in the report.

What are creditors doing with their delinquent clients ?

Insolvency rates have been trending downward since the start of the pandemic, and there will come a point soon when the momentum will shift.

Insolvencies have been held off by record levels of government support, including the suppression of payments and payment holidays from landlords and banks. In addition, the ATO has taken a very lenient approach to overdue tax debt, and a number of legislative changes have given “safe harbour” to businesses that have prevented creditors from taking wind-up action. With a fall of 4.00% in company insolvencies for October 2021 compared with the same period last year, it seems that the trend to not take action may now be bottoming out.

We didn’t see the forecast “tsunami of insolvencies” in 2021, but the latitude shown by suppliers, financiers, banks and other trading partners will come to an end. While no-one seems to have been able to accurately forecast much at all during the pandemic, there’s a growing consensus that the early part of 2022 will see an increase in defaults and a reversal in the trends of the past 18 months.

What do I need to do ?

As a general rule, the Christmas period (extending into January and February) sees a slowdown in payments – the “cash flow crunch” usually hits hardest during that period.

If you have customers that are now significantly outside your trading terms, or who you have extended lenience to out of sheer generosity, then now is the time to act. Notify those customers that you require payment without further delay.

That old saying “it isn’t a sale until it’s paid for” has never been more true, so don’t put your own business at risk out of loyalty or generosity – and remember that we are here to help you any time with all things debt recovery and debtor management.

The post Industries Facing Insolvency| Safeguarding Against Financial Pitfalls appeared first on Nexus Collections.

While we’re seeing the sparks of business recovery, there are warning signs that the coming months will still be challenging for SMEs – especially those with debtors that have been reluctant to pay up on time.

THE ECONOMY.
Assistance from the federal and state governments, as well as landlords, has been terrific for most businesses and workers. The stimulus measures and concessions have put cash into the system to maintain economic momentum.

However, as some of these measures begin to scale back, the Reserve Bank has predicted that up to 25% of all SMEs will fail.

Likewise, CreditorWatch figures indicate that there has been a 23% increase in business defaults in September. This is the first increase since May, an indication that the stimulus-driven “good times” are about to end.

The much-discussed “hibernation” or “safe harbour” period for debtors is also coming to an end on 31 December, so one of the more effective debt recovery tools (statutory demands) will be back on the table.

This will bring to an end the notion that Directors and their companies are largely untouchable when it comes the ramifications of not paying their suppliers.

We absolutely accept that many businesses have been genuinely affected by COVID-19, but we have also seen examples of businesses who are thriving during COVID-19 and taking advantage of the notion that they are “protected” by these safe harbour provisions, and often at their suppliers expense, payment has been delayed or entirely withheld.

This hasn’t stopped us constantly communicating with our clients and their debtors – putting in place appropriate repayment agreements for outstanding debts to be paid down.

Extended repayment arrangements are not our “go to” solution, but in the current climate, we have to take the view that for some businesses it’s better that we collect what we can right now, before those companies become a statistic amongst the 25% failures.

THE FUTURE.
We monitor payment histories, available credit and industry sentiment (along with other leading indicators) and we think most SMEs will want to continue trading through to the Christmas period, even if they’re not eligible for JobKeeper 2.0. However, the viability of many of those SMEs will need to be assessed in the New Year.

Even now we are seeing staff redundancies across many industries as business’ eligibility for JobKeeper 2.0 is put the to the test.

There is a clear consensus that January next year will likely see Administrators or Liquidators appointed to many of those companies who are just hanging on right now, and there will be little chance of any further recoveries of any substance once these companies are wound up.

We’re encouraging our clients to make sure they have their ducks in a row now, credit policies in order and action plans in place for non-paying debtors. We believe now is the time to engage with debtors and get payment plans in place.

As always we freely offer advice on how you can also navigate these unprecedented times by taking steps now to secure your hard earned money.

The post Sparking local business recovery appeared first on Nexus Collections.

Did you know that a trust is not a legal entity for the purpose of enforcing a debt? This means it can be incredibly difficult, and sometimes simply impossible, to enforce a debt unless you know the name of the trustee of the trust.

When you receive a credit application, or signed terms and conditions, you will often see the business name as something like “The ABC Family Trust” or “The ABC Family Trust Trading As ABC Widget Supplies” and your new customer will often provide an ABN that matches the trust (when you do a free ABN Lookup).

While a trust is a perfectly legitimate structure for accounting purposes, its is not a legal entity that can be readily sued if they don’t pay you at some point into the future.

Whenever you are doing business with a trust, it is critical that you find out the name/s of the trustee/s of the trust. The trustee can be either a company “ABC Pty Ltd As Trustee for the ABC Family Trust” (known as a corporate trustee) or it can be one or more individuals, something like “Allan Smith & Bonnie Smith As Trustee for the ABC Family Trust” (known as individual trustees). It can even be a combination of both a corporate and an individual trustee (but that’s quite rare).

There is no “searchable” register of trustees, unlike incorporated entities where you can do an ASIC search to identify the Directors and Shareholders of company. If your customer decides to not pay you, and you have neglected to get the trustee details from the outset, it can be a complex and expensive exercise to recover your debt if you are forced to take legal action.

GET THE INFORMATION WITH THE CREDIT APPLICATION

The only sure-fire way to confirm the name/s of the trustee/s, is to ask for a copy the customer’s Trust Deed, which will clearly define those important details.

You might be able to simply ask the customer for the trustee details, but we’ve seen many cases where the customer (or the person you are dealing with) doesn’t understand their own trust structure, so they inadvertently give you the wrong information – or even argue that you don’t need the information. If in doubt, ask for a copy of the Trust Deed.

If you’re in doubt about how a credit application, or terms and conditions should be executed, or if you are concerned that you may not have the correct information, feel free to drop me a line, often a 2 minute chat will save you a world of pain if you have to enforce that contract at some point.

Lastly, the bottom line is this: whenever you are selling your goods or services to a trust, be sure to fully understand their structure first.

The post Doing business with a trust entity appeared first on Nexus Collections.

It seems like we’ve been in something of a time warp over the past 3 months, but let’s not forget that legislation introduced by the Morrison government, effectively offering a safe harbour for struggling business will be over in less than 90 days.

The statutory demand and insolvency safe harbour measures will end on 24^th September 2020, and when it does, those businesses who have been treading water this past three months could well go under.

Figures from CreditorWatch suggest that there will be a sharp rise in insolvencies shortly after September 2020, and the AFR has suggested that the insolvency sector is not properly equipped to deal with the likely tsunami of businesses falling into Voluntary Administration and indeed into Liquidation.

Interestingly, CreditorWatch data suggests that there was a sharp decline in defaults reported in March and into April, and this may have been a case of businesses showing great lenience toward their customers, a kind of “we’re all in this together” type of attitude. However, figures coming through from May and now into June suggest that that holiday is over, and businesses are now expecting payment, with a sharp increase in defaults being reported.

For the next three months, company directors remain exempt from personal liability for insolvent trading, and statutory demands issued during that time still give companies six months to respond to the demand.   However, we think it’s a no brainer that creditors are now biding their time, sitting on those statutory demands, trigger fingers at the ready, waiting to launch them on September 25^th.  Challenging times may have only just begun if this plays out the way it seems to be heading.

Now is not the time to take your foot off the gas when it comes to collecting your overdue accounts, in fact now is the time to get cracking.  Debt Collection in times like this requires a strategic approach, and after more than 25 years in the industry, there are few agencies as skilled and strategically aware as Nexus.

The post Post September 2020 – Are you ready ? appeared first on Nexus Collections.

The Coronavirus pandemic has presented businesses with all sorts of challenges, not the least of which is maintaining cash flow.

While you might think of it as a last resort, engaging a debt recovery specialist like Nexus Collections to help you get paid could make a big difference in these difficult times – like keeping staff on, maintaining supply levels, investing in the future and more.

Debt recovery has changed.
Encouraging as they are for the economy, the Government’s stimulus measures have had an impact on the debt recovery landscape, so it’s also important to work with a collections agency that is up-to-date with what can and cannot be done when it comes to recovering your debts.

At Nexus Collections

► We approach every project with professionalism and discretion to keep supplier and customer relationships intact.

► We’re empathetic towards your situation and fully aware of the environment your business is operating in right now.

► We make direct telephone contact with your debtors to get action, rather than sending repeated letters.

► We listen and we adapt our collection approach to suit the circumstances.

Comparing apples and oranges
Some businesses are struggling at the moment, that’s a fact.

But incentives like the JobKeeper payment, PAYG payment deferrals and other government and financial institution concessions are allowing many businesses to trade as normal – in fact some have more cash than before, so claiming they can’t pay their debts might not be true.

Let’s get your invoices paid
As doors re-open and demand increases, now is the ideal time to be first in line to get your outstanding debts paid.

We’re working with a number of clients on scheduled repayment systems right now. Remember, some cash flow is always better than none – so now is not the time to be shy about raising the issue of your outstanding debt.

Let’s get your invoices paid – it can start with a simple phone call or email us directly at info@nexuscollect.com.au with the details of your outstanding debts.

The post Debt Collection Amid COVID-19| Embracing the Expectation of Payment appeared first on Nexus Collections.

The proposed reforms include a range of measures to both deter and disrupt illegal phoenixing and more harshly punish those who engage in  and facilitate this illegal activity.

The exposure draft legislation includes reforms to:

• introduce new phoenix offences that target those who conduct and those who facilitate illegal phoenix transactions;
  • It will now be an offence for company directors to engage in creditor‑defeating transfers of company assets that prevent, hinder or significantly delay creditors’ access to those assets.
  • Pre-insolvency advisers and other facilitators of illegal phoenix activities will also be liable, as there will be a separate offence for any person who procures, incites, induces or encourages a company to make creditor‑defeating transfers of company assets.
  • These will be both criminal and civil offences, attaching the highest penalties available under the law.
  • The offences will be supported by an extension of the existing liquidator asset clawback avenues to cover illegal phoenix transactions.  ASIC will also receive a new regulatory tool to recover property that has been transferred under an illegal phoenix transaction.
• prevent directors from backdating their resignations to avoid personal liability;
• prevent a sole director from resigning and leaving a company as an empty corporate shell with no director;
• extend the director penalty provisions to make directors personally liable for their company’s GST and related liabilities;
• expand the Australian Taxation Office’s existing power to retain refunds where there are tax lodgments outstanding;
• restrict the voting rights of related creditors of the phoenix operator at meetings regarding the appointment or removal and replacement of an external administrator.

The legislation is tightly targeted at those who misuse the corporate form, while minimising any unintended impacts on legitimate businesses and restructuring.

The post Reforming the Illegal Phoenix| Essential Changes on the Horizon appeared first on Nexus Collections.

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