human resources - aicm · social media and unfair dismissals 6 by gary woodman salary survey –...

The Publication for Credit and Financial Professionals I N A U S T R A L I A

Volume 19, No 5 July 2012

Check our website ... www.aicm.com.au

Credit Management

Consumer Credit

Collections

Special Feature: Personal Property

Securities Act

HumanResources

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“Hindsight is a useless tool”



“Hindsight is a

CW_Hindsight V2 April 12.indd 1 12/07/12 9:56 AM

July 2012 • CREDIT MANAGEMENT IN AUSTRALIA

Karl Hill

14

Gary Woodman

6

VOLUME 19, NUMBER 4 – May 2012

Presidents Report 4

AICM Promotions

2012 National Conference 3New Features on the AICM website 42012 National Conference Golf 5Credit Network promotion 7

Human ResourcesSocial Media and Unfair Dismissals 6By Gary Woodman

Salary Survey – the Trends for 2011 to 2012 8By Ruairi Flynn

Special Feature – Personal Property Securities ActBest Practice – Personal Property Securities Act 11By Nicholas Martin

Expanded Rights for Retention of Title Creditors 14PPSA and Comingled or Processed Goods.By Karl Hill

A PPSA Paradox: When Form is More Important than Function 16By David Francis

Greater Protection for Businesses Supplying Goods on Credit 18Defense against Unfair Preference ClaimsBy Daniel Turk

NSW Division: Credit Managers Panel Workshop in May. Panelists Eric Milne, Grant Morris and John Field.

QLD Division: Brian Kay (R) being presented with his ‘Fellow’ certificate by Ron Freier Qld Director.

30 34

CONTENTS

Ruairi Flynn

8

Daniel Turk

Nicholas Martin

11

18

EDITOR/PUBLISHERTerry Collins

Email: [email protected]

CONTRIBUTING EDITORSVanessa Graydon NSW

Murray Ashford QLDGail Watt SA

Christine Ashworth WAVIC/TAS

ADVERTISING MANAGERTony Paul

Association MediaTel: (02) 9460 7955

Fax: (02) 9460 8632Email:

[email protected]

EDITING & PRODUCTIONAnthea Vandertouw

Ferncliff ProductionsTel: 0408 290 440


PRINTINGJohn Fisher Printing114-118 Victoria Rd

Marrickville NSW 2204Ph: 9516 1588

THE EDITOR reserves the right to alter or omit any article or advertisement

submitted and requires idemnity from the advertisers and contributors against

damages or liabilities that may arise from material published. CREDIT MANAGEMENT

IN AUSTRALIA is published by the Australian Institute of Credit Management, Level 1, 619 Pacific Highway, St Leonards NSW 2065. The

views expressed in CREDIT MANAGEMENT IN AUSTRALIA are not necessarily those of

Australian Institute of Credit Management, which does not expect or invite any person

to act or rely on any statement, opinion or advice contained herein (whether in the

form of an advertisement or editorial) and neither the Institute or any of its employees, agents or contributors shall be liable for any

opinion contained herein. © The Australian Institute of Credit Management, 2012.

FEATURESOctober 2012

Export and Credit InsuranceMercantile Agents

A Special Edition to Coincide with the National Conference in

Surfers Paradise

December 2012AICM National

Conference ReportBusiness Information

Factoring and Discounting

EDITORIAL CONTRIBUTIONS SHOULD BE SENT TO:

The Editor, Level 1,619 Pacific Highway

St Leonards NSW 2065or Email: [email protected]

CREDIT MANAGEMENT IN AUSTRALIA • July 2012

Credit ManagementShe would sign whatever her Husband put in Front of Her 19By Michael Chapman and Michael Jacobs

Executives Signal Tough Times Ahead 20By Gareth Jones

Tell em they’re dreamin 22By Kirk Cheesman

The New Bible for Credit Advertising 23By Richard Williams

Consumer Credit750,000 Australians at risk of Falling into a Debt Spiral 24 By Matthew Strassberg

Surprising Differences in Credit Activity between Generations 26By Angus Luffman

CollectionsGetting Debtors to Talk 28By Steve Coyle

Around the StatesNew South Wales 30Queensland 34South Australia 36Western Australia/NT 38Victoria/Tasmania 40

SA Division: House Full for Debtors 101. WA/NT Division: ITSA Business Manager and Councillor Michael Miller.

36 38

Association MediaFOR ADVERTISING OPPORTUNITIES IN

Credit Management in Australia

CALL Tony PaulPhone: 02 9460 7955 Fax: 02 9460 8632


DIRECTORS

Australian President Frank Vredenbregt MICM CCE

Australian VP FinanceG.L. Morris MICM CCE

Professional DevelopmentE.R. Verge MICM

YCPA & CCER. Freier MICM CCE

Marketing & PublicationsJ. A. Neate MICM

Member ServicesJ.G. Hurst FICM CCE

CHIEF EXECUTIVE OFFICERT.J. CollinsLevel 1, 619 Pacific HighwaySt Leonards NSW 2065Tel: (02) 9906 4563Fax: (02) 9906 5686Email: [email protected]

EXECUTIVE OFFICES

Queensland DivisionToni SawyerExecutive OfficerPO Box 1169North Lakes QLD 4509Tel: (07) 3482 2111Fax: (07) 3482 4119Email: [email protected]

NSW DivisionDeborah MannersLevel 1619 Pacific HighwaySt Leonards NSW 2065Tel: (02) 9906 4563Fax: (02) 9906 5686Email: [email protected]

VIC & TAS DivisionPeter KerlinPO Box 131Wendouree VIC 3355Ph: 0417 717 015Fax: (03) 9303 8911Email: [email protected]

SA DivisionKerry HammillPO Box 2131Felixstow SA 5070Tel: (08) 8365 9021Fax: (08) 8365 9021Email: [email protected]

WA DivisionRon AdamsPO Box 8463Perth Business Centre WA 6849Tel: (08) 9427 0816Fax: (08) 9427 0817Email: [email protected]

Richard Williams

23

Gareth Jones

20

Angus Luffman

Kirk Cheesman

26

22

Visit conference.aicm.com.au for details and earlybird registrations

See you at AICM’s 2012 National Conference

Marriott Resort & Spa Surfers Paradise

10th - 12th October 2012

2012 NationalConference

2012 NationalConference

4 CREDIT MANAGEMENT IN AUSTRALIA • July 2012

aicmf rom the p res iden t

Frank VredenbregtMICM, CCEAustralian President

Another new financial year! WOW! Didn’t the last one go quick! Welcome to the rollercoaster of 2012/2013. Just when we thought the worst of the world’s financial woes were behind us, it starts again giving us more challenges to deal with. Such it the lot of the Credit professional.

Insolvencies are running at an all-time high, but there is still a lot of good business and good businesses out there, and a lot of opportunity. Onward and upward as they say.

The membership base of the AICM is continuing to grow, and the AICM is regularly asked to present papers at various seminars and make comment on proposed legislative changes. We are Australia’s pre-eminent body representing the Credit Industry and our reputation continues to grow. This is reflected in strong attendances at our seminars from both within and without the AICM.

By now most Divisions will have completed their search for their representative on the annual Young Credit Professional of the Year awards sponsored by D&B. I am not privy to the results as they are closely guarded secrets of the judging panels, but I congratulate all finalists. You are our future and the calibre of young professionals in our industry is impressive.

July is the time of the year Divisions of the AICM hold their AGMs and elect councillors. Any financial member of the AICM can sit on Council. Councillors will serve for a term of three years after which they must stand down, however they are eligible for re-election for a second three year term. Councillors seconded to Council during the year must also stand along with any other members wishing to join Council.

A Councillor enjoys a very rewarding career with long hours and a $0 annual salary (reviewed annually and increased in line with CPI). There are even travel opportunities (to and from meetings). Just kidding. Being a member of a Division Council helps you and every other member keep pace with legislative changes and workplace trends. With an active council the effort required to make it work is not onerous and I have found it very satisfying ‘doing my bit’ for the industry that has given me so much. Everyone has unique experience and something to contribute. Us old dinosaurs sometimes think we know everything, until a young credit professional comes along and drags us up to the present. So regardless of age or experience, I urge you all to consider joining your local Division Council.

NationalConference2

012

The AICM Queensland Division in conjunction with the National Conference is organising the golf day on Tuesday 9 October 2012 at the award winning Links Hope Island on the Gold Coast.

Venue

The award winning Links Hope Island is the venue for this year’s Golf Day. It is located only a short distance from the National Conference venue (Marriott Surfers Paradise). Complimentary transport will operate to and from the venue to the Links. Since opening in 1993, Links Hope Island has consistently ranked in Australia’s top ten resort courses. Further information is available at www.linkshopeisland.com.au

Supporters

We are pleased to announce that Wincollect has again secured the naming rights to the event and Veda has secured the drinks cart supporter package. We thank Wincollect Debtor Software and Veda for their support.

The format will be a team’s four ball best ball Ambrose with a shotgun start to allow players of all standards to mix and play together regardless of playing ability. In addition to a 18 holes of golf, there will be a lunch pack, use of practice facilities, post-game drinks and canapés, motorised carts and ample car parking and the all-important trophies and prize presentations.

This 2012 AICM National event promises to be an event not to be missed.

Program

10:00am Transport from Marriott (complimentary*) 11:00am Registration12:15pm Announcements 12:30pm Shotgun start – 4 ball Ambrose5:30pm Complete round and hand in score cards to registration desk.

Complimentary drinks and canapés in the dinning room. 6:30pm Presentations 7:00pm Transport to Hilton (complimentary*) *Please advise if transport is required with your registration.

For more details including hire equipment, rule, regulations and weather policy please visit www.linkshopeisland.com.au

Costs

Team (group of 4) ......................................................... $440 inclusive GST

Individual (you will be placed in a team) ............... $110 inclusive GST

The golf day must be booked and paid for prior to the conference.

Delegates who wish to be part of the golf day must complete the golf day section of the Delegates Registration Form. Partners and or guests of Delegates should complete the golf day section of the Partners and Guests Registration Form.

Rules and Regulations

The dress standard for the men consists of a collared shirt with tailored

shorts or pants. Short socks permitted. Ladies are permitted to wear neat casual golf attire. No denim or metal spikes to be worn.

Golf Day

$10,000 ‘HOLE IN ONE’ prize

Every golfer will have the opportunity to win $10,000 in a hole in one competition. And, if the prize goes o� early, it will be reinstated and capable of being won a

second time by the remaining players.

Sponsored by

GOLF DAY TUESDAY 9th OCTOBER 2012 TAX INVOICEPlease complete one form per person (please print clearly)

Title: .......................... Given name: ............................................................................................. Family name: ........................................................................................................................................

Preferred name for badge: ........................................................................................................................................................................................................................................................................................

Dietary requirements: ...................................................................................................................................................................................................................................................................................................

Bill to (name): .......................................................................................................................................... Signature: .............................................................................................................................................

Billing address: ..................................................................................................................................................................................................................................................................................................................

Registration and fees (All prices include GST) Golf Day: Tues 9 October 2012 $110 Per Person $440 Team of 4

Please find enclosed cheque of $.................................. or I authorise $.................................. to be deducted from my credit card

Cheque Mastercard Visa Amex Diners

Card No: Exp. Date: ...............................................

Card Holder’s Name: ......................................................................................................................................... Signature: ..............................................................................................................................

All credit card payments will be subjected to a 3% surcharge. EFT Bank details: Commonwealth Bank, Artarmon BSB 062 104 Account no 1003 9560. Fax this form to 02 9906 5686 to confirm your attendance. OR post to: Australian Institute of Credit Management: Level 1, 619 Pacific Highway, St Leonards NSW 2065.

ABN: 79 008 455 758

New features on the AICM website: www.aicm.com.au

Get ready to search Insolvency Notices on ASIC’s new website

http://insolvencynotices.asic.gov.au/

From 1 July 2012, you will be able search ASIC’s new insolvency notices website for almost all notices arising from a company’s external administration. The website replaces print media as the primary forum for statutory notices from liquidators and others.

The types of notices that you will be able to search on the website are: 1. notices of winding up applications filed with the courts2. notices relating to appointments of voluntary administrators

and liquidators (except court appointments – see fact sheet)3. notices of meetings of creditors4. notices of intention to disclaim property by a liquidator5. notices calling for proofs of debt and advising an intention to

declare a dividend6. company deregistration (ASIC publishes these notices)

For more information, you can direct queries to [email protected]

Australia wide Credit Management Job Vacancies

Your One-Stop Shop for Australia wide job vacanciesWelcome to AICM’s new job vacancy service. AICM has gathered in one place the Credit Management jobs currently listed Australia wide from a range of sites.

To find out more about the job you are interested in go to aicm.com.au, click on the location in the list (as shown below) and it will take you to the full job listing on the job listing website.

JOB LINKS BY REGION

- NSW & ACT - VIC & TAS - QLD - SA & NT - WA

AICM provides convenient access to credit management job vacancies listed by a range of sites and AICM is not responsible

for the accuracy or veracity of the job listings.

NationalConference2

012

The AICM Queensland Division in conjunction with the National Conference is organising the golf day on Tuesday 9 October 2012 at the award winning Links Hope Island on the Gold Coast.

Venue

The award winning Links Hope Island is the venue for this year’s Golf Day. It is located only a short distance from the National Conference venue (Marriott Surfers Paradise). Complimentary transport will operate to and from the venue to the Links. Since opening in 1993, Links Hope Island has consistently ranked in Australia’s top ten resort courses. Further information is available at www.linkshopeisland.com.au

Supporters

We are pleased to announce that Wincollect has again secured the naming rights to the event and Veda has secured the drinks cart supporter package. We thank Wincollect Debtor Software and Veda for their support.

The format will be a team’s four ball best ball Ambrose with a shotgun start to allow players of all standards to mix and play together regardless of playing ability. In addition to a 18 holes of golf, there will be a lunch pack, use of practice facilities, post-game drinks and canapés, motorised carts and ample car parking and the all-important trophies and prize presentations.

This 2012 AICM National event promises to be an event not to be missed.

Program

10:00am Transport from Marriott (complimentary*) 11:00am Registration12:15pm Announcements 12:30pm Shotgun start – 4 ball Ambrose5:30pm Complete round and hand in score cards to registration desk.

Complimentary drinks and canapés in the dinning room. 6:30pm Presentations 7:00pm Transport to Hilton (complimentary*) *Please advise if transport is required with your registration.

For more details including hire equipment, rule, regulations and weather policy please visit www.linkshopeisland.com.au

Costs

Team (group of 4) ......................................................... $440 inclusive GST

Individual (you will be placed in a team) ............... $110 inclusive GST

The golf day must be booked and paid for prior to the conference.

Delegates who wish to be part of the golf day must complete the golf day section of the Delegates Registration Form. Partners and or guests of Delegates should complete the golf day section of the Partners and Guests Registration Form.

Rules and Regulations

The dress standard for the men consists of a collared shirt with tailored shorts or pants. Short socks permitted. Ladies are permitted to wear neat casual golf attire. No denim or metal spikes to be worn.

Golf Day

$10,000 ‘HOLE IN ONE’ prize

Every golfer will have the opportunity to win $10,000 in a hole in one competition. And, if the prize goes o� early, it will be reinstated and capable of being won a

second time by the remaining players.

Sponsored by

GOLF DAY TUESDAY 9th OCTOBER 2012 TAX INVOICEPlease complete one form per person (please print clearly)

Title: .......................... Given name: ............................................................................................. Family name: ........................................................................................................................................

Preferred name for badge: ........................................................................................................................................................................................................................................................................................

Dietary requirements: ...................................................................................................................................................................................................................................................................................................

Bill to (name): .......................................................................................................................................... Signature: .............................................................................................................................................

Billing address: ..................................................................................................................................................................................................................................................................................................................

Registration and fees (All prices include GST) Golf Day: Tues 9 October 2012 $110 Per Person $440 Team of 4

Please find enclosed cheque of $.................................. or I authorise $.................................. to be deducted from my credit card

Cheque Mastercard Visa Amex Diners

Card No: Exp. Date: ...............................................

Card Holder’s Name: ......................................................................................................................................... Signature: ..............................................................................................................................

All credit card payments will be subjected to a 3% surcharge. EFT Bank details: Commonwealth Bank, Artarmon BSB 062 104 Account no 1003 9560. Fax this form to 02 9906 5686 to confirm your attendance. OR post to: Australian Institute of Credit Management: Level 1, 619 Pacific Highway, St Leonards NSW 2065.

ABN: 79 008 455 758


Human Resources

To what extent can employers legitimately supervise or regulate an employee’s conduct on social media sites?

Will an employee’s use of social media outside work hours and away from the workplace be completely immune from an employer’s oversight or influence? Recent unfair dismissal cases have shed some light on this topic, indicating that seemingly private and personal social media use by employees can constitute fair grounds for dismissal.

It is important to remember that an employee cannot be dismissed for his or her improper conduct if it is not sufficiently connected to his or her employment. Generally, the influence

an employer has over its employees’ conduct is justifiable within the confines of the workplace and within working hours. However, this traditional view has been challenged by recent case law. Decisions from Fair Work Australia indicate that if social media is involved, improper conduct carried on outside of the workplace may be sufficiently connected with employment to warrant dismissal.

In a recent Fair Work Australia case1 an employee working for a retail electrical and white goods store posted comments on his Facebook page about his employer. The comments were read by other employees; and interpreted as a threat and a serious breach of the ‘Employees Handbook’. The

employee was dismissed for breaching a requirement that employees can ‘not use offensive language, resort to personal abuse or threaten…physical contact’.

The employee applied for unfair dismissal. He claimed his comments were not intended to be communicated to the offended employee, his Facebook webpage was set to the maximum privacy setting and only a ‘select group of friends’ (70 people) could see what he had written. Fair Work Australia found that even though the comments were made on the applicant’s home computer and out of work hours; there was a connection with what the employee published on his Facebook page and his place of work. The dismissal was considered fair and the application was dismissed.

In another Fair Work Australia case2 an employee was involved in a sexual harassment investigation at her place of employment. The method in which the investigation was carried out was criticised by the employee on her Myspace webpage. The employee’s post stated that the employer advocated corruption and that evidence was tampered with. The employer advised the employee to remove the comments. The employee did not comply and she was eventually dismissed. An application for relief on the grounds that the termination was harsh, unjust or unreasonable was made by the employee. Fair Work Australia concluded that the employee’s post was publicly accessible through a Google search, that the employee intended the comments to be read within the workplace and that publishing her comments and refusing to modify or remove them within a reasonable period, were valid reasons for the termination.

Another unfair dismissal case3 involving social media prompted a Fair

Social media and unfair dismissalBy Gary Woodman*

Gary Woodman

It is important to remember that an employee cannot be dismissed for his or her improper conduct if it is not sufficiently connected to his or her employment.

July 2012 • CREDIT MANAGEMENT IN AUSTRALIA 7

Human Resources

Work Australia Commissioner to give this warning:

Posting comments about an employer on a website (Facebook) that can be seen by an uncontrollable number of people is no longer a private matter but a public comment…A Facebook posting, while initially undertaken outside working hours, does not stop once work recommences. It remains on Facebook…for anyone with permission to access the site to see...It would be foolish of employees to think they may say as they wish on their Facebook page with total immunity from any consequences.These cases have shown that in

some circumstances (when social media is involved) workplace borders have expanded forcing employees and employers to consider new circumstances that go beyond the traditional view of

what conduct is private and removed from employment.

To minimise the risks social media presents employers should develop strategies that include educating their employees on the consequences of improper social media use and creating appropriate guidelines and polices.

If you have any employment law issues you would like to discuss please contact us.Contact: Gary Woodman, Ph: (07) 3228 [email protected]

FOOTNOTES:1 Keefe v Williams Muir’s Pty Limited T/A troy

Williams The Good Guys [2011] FWA 53112 Dover-Ray v Real Insurance Pty Ltd [2010]

FWA 85443 Fitzgerald v Dianna Smith t/as Escape Hair

Design [2010] FWA 7358

To minimise the risks social media presents employers should

develop strategies that include educating their employees on the consequences of improper social

media use and creating appropriate guidelines and polices.

Everything for the credit professional is now online in one easy location.is now online

forum resources tools events

creditnetwork.com.au

Solve problems and earn CCE points in the Forum. Now, instead of asking a handful of colleagues, you can ask the entire industry for solutions (and solve problems for others). AICM will also award 2 points per annum for active participation.

Access free resources in seconds, saving you and your team precious time. You can even contribute your own material.

Keep up to date with the latest industry trends, technology, training, events & more.

Join around 800 credit professionals already registered and access features designed to make your job easier.

Discover the growing online resource built entirely for credit professionals!

PROUDLY SPONSORED BY

E [email protected]

credit professionalin one easy location.

events

Discover the growing online resource Discover the growing online resource

forum

Discover the growing online resource Discover the growing online resource

Keep up to datetraining, events & more.

Join around 800 credit professionals already registered and access features designed to make your job easier.

Register onlinefor free

ask the entire industry for solutions (and solve problems for others).

eventsEarn CCE points


Human Resources

Salary Survey –The trends for 2011 to 2012

While we wait to see what happens in Europe and America, Australia has definitely felt the impact of a declining economic market. But the good news is, Accounting Support has remained unaffected on the whole. So much so that this year, the number of candidate placements actually increased by 16%. This makes sense when you factor in how vital Payroll and Accounts Payable are to any organisation. Credit and a strong cash flow is key to any businesses’ survival within a tight economic climate.

By Ruairi Flynn, Managing Director AccountAbility

AVERAGE SALARIES COMMANDED FOR MELBOURNE

NATIONAL CREDIT MANAGER

SME $85K - 100K MN $100K - 130K

CUSTOMER SERVICES / CLAIMS

SME $40K - 50K MN $45K - 50K

NATIONAL ACCOUNTS PAYABLE

MANAGER

SME $80K - 90K + MN $90K +

NATIONAL PAYROLL MANAGER

SME $90K - 120K MN $105K - 150K

FINANCE MANAGER

MN $55K - 58K

BOOKKEEPERS

SME $55K - 65K

CREDIT / AR OFFICER / COLLECTIONS

SME $50K - 55K

ACCOUNTS PAYABLE OFFICER

SME $47K - 52KMN $45K - 56K

PAYROLL OFFICER

SME $50K - 60KMN $55K - 68K

PQ ASSISTANT ACCOUNTANT

SME $55K - 65K MN $60K - 70K

CREDIT / AR MANAGER

SME $70K - 80KMN $80K - 100K

ACCOUNTS PAYABLE MANAGER

SME $65K - 80KMN $80K - 110K

PAYROLL MANAGER

SME $80K - 100K MN $85K - 110K

ACCOUNTS CLERK

SME $45K - 52KMN $45K - 52K

CREDIT / AR SUPERVISOR

SME $65K - 75KMN $70K - 85K

ACCOUNTS PAYABLE

SUPERVISOR

SME $65K - 75KMN $75K - 85K

PAYROLL SUPERVISOR

SME $65K - 75KMN $70K - 85K

DATA ENTRY

SME $40K - 45KMN $40K - 45K

SME - SMALL/MEDIUM ENTERPRISEMN - MULTI NATIONALPay listed is basic salary in AUS$

BOOKKEEPERS

SME $55K - 65K

AVERAGE SALARIES COMMANDED FOR MELBOURNE


SME $85K - 100K MN $100K - 130K

CREDIT / AR MANAGER

SME $70K - 80K MN $80K - 100K


SME $65K - 75K MN $70K - 85K


SME $50K - 55K MN $55K - 58K


SME $40K - 50K MN $45K - 50K


MANAGER

SME $80K - 90K + MN $90K +


SME $65K - 80K MN $80K - 110K

ACCOUNTS PAYABLE

SUPERVISOR

SME $65K - 75K MN $75K - 85K


SME $47K - 52K MN $45K - 56K


SME $90K - 120K MN $105K - 150K

FINANCE MANAGER

PAYROLL MANAGER

SME $80K - 100K MN $85K - 110K

PAYROLL SUPERVISOR

SME $65K - 75K MN $70K - 85K

PAYROLL OFFICER

SME $50K - 60K MN $55K - 68K


SME $55K - 65K MN $60K - 70K

ACCOUNTS CLERK

SME $45K - 52K MN $45K - 52K

DATA ENTRY

SME $40K - 45K MN $40K - 45K


Nothing cripples a business quicker than unpaid accounts.

Blitz Credit Management specialises in debt collection, credit information and receivables management throughout Australia. You can depend on complete transparency in every phase of the collection process. Best of all, you don’t pay a cent if we don’t collect for you.

Visit our website or call us for help with:

• DebtRecovery

• DemandNotices

• DebtorLocation

• CreditReporting

• DefaultListing

• CreditDocumentation

Do you need help with Debt Collection?

www.blitzcredit.com.auPhone: 1300 887 232


Human Resources

BOOKKEEPERS

SME $60K - 70K

AVERAGE SALARIES

COMMANDED FOR SYDNEY


SME $80K - 100K MN $100K - 140K

CREDIT / AR MANAGER

SME $70K - 80K MN $80K - 100K


SME $70K - 80K MN $85K - 95K


SME $50K - 55K MN $55K - 58K


SME $40K - 50K MN $45K - 50K


MANAGER

SME $80K- 90K + MN $90K +


SME $65K - 80K MN $90K - 120K

ACCOUNTS PAYABLE

SUPERVISOR

SME $65K - 75K MN $75K - 90K


SME $47K - 53K MN $50K - 58K


SME $90K - 120K MN $110K - 160K

FINANCE MANAGER

PAYROLL MANAGER

SME $80K - 100K MN $90K - 120K

PAYROLL SUPERVISOR

SME $65K - 75K MN $70K - 90K

PAYROLL OFFICER

SME $50K - 60K MN $60K - 70K


SME $55K - 65K MN $65K - 70K

ACCOUNTS CLERK

SME $45K - 52K MN $45K - 52K

DATA ENTRY

SME $40 - 45K MN $40 - 45K


The above graph details the variance in salaries for key credit positions over the last 3 years.

What is particularly clear is that salaries are increasing as the demand for strong credit candidates continues to far exceed supply.

While always regarded as an important part of any company’s structure, the advent of the GFC at the end of 2008 brought a new perspective on just how integral a strong credit control system is for any businesses success.

As the economy retracted, and the majority of companies put a complete freeze on hiring across most disciplines, the demand for credit candidates actually increased! Cash flow became king. Many businesses became concerned about simply surviving, let alone making profit, and as a result collecting outstanding debts became a paramount focus.

Candidates who had the ability to ensure that their company’s invoices were paid were suddenly in high demand.

The perception of a credit team focusing solely on ringing clients and demanding money has long gone. There is a much greater sophistication involved in ensuring a credit process is working well. In an environment where cash flow is essential and companies have many bills to pay, building relationships with key stakeholders is an absolutely huge part of the Credit Officer’s role to ensure your invoices are the ones addressed. As a result strong

What is particularly clear is that salaries are increasing as the demand for strong credit candidates continues to far exceed supply.

Salary variations within the credit industry, 2009 – present160

140

120

100

80

60

40

20

0

000’

s

2009 2010 2011

National Credit Manager

Credit Supervisor/ Manager

Credit/ AR Officer/ Collections


Human Resources

BOOKKEEPERS

SME $55K - 65K

AVERAGE SALARIES COMMANDED FOR BRISBANE


SME $75K - 100K MN $90K - 130K

CREDIT / AR MANAGER

SME $70K - 80K MN $75K - 90K


SME $65K - 75K MN $65K - 80K


SME $45K - 55K MN $55K - 58K


SME $40K - 50K MN $45K - 50K


MANAGER

SME $80K + MN $90K +


SME $65K - 75K MN $70K - 90K

ACCOUNTS PAYABLE

SUPERVISOR

SME $65K - 70K MN $65K - 80K


SME $45K - 50K MN $45K - 55K


SME $85K - 110K MN $100K - 140K

FINANCE MANAGER

PAYROLL MANAGER

SME $75K - 85K MN $75K - 100K

PAYROLL SUPERVISOR

SME $60K - 70K MN $65K - 80K

PAYROLL OFFICER

SME $50K - 55K MN $55K - 65K


SME $55K - 65K MN $60K - 65K

ACCOUNTS CLERK

SME $45K - 52K MN $45K - 52K

DATA ENTRY

SME $40K - 45K MN $40K - 45K


interpersonal and communication skills have become prevalent when seeking such candidates. This in turn has also played a part in the increase in salaries at officer level.

Outside of simply collecting debt, and as the economy slowly began to come out of a slump, there became a greater awareness about ensuring credit systems and processes were working at an optimum. This is reflected in the increasing demand, and associated salaries, for people at a management level over the last few years. Companies have turned to experienced, talented leaders who can not only manage their staff and provide them with the necessary training and development, but who can also ensure the credit process is one that leaves the company with the minimal level of risk when dealing with their customers.

Salaries have stabilised or risen slightly – yet candidate demands and client expectations are still on a different footPayroll salaries have continued to rise (particularly at officer level) within various accounting support disciplines and locations.

Salaries within areas like credit, collections and accounts payable have stabilised. Yet there’s a shortfall between what candidates are demanding and what clients are willing to offer.

Credit still remains highly skills short, so it’s likely that there will need to be a slight shift in what the market is currently paying to draw people to this area. Especially if the aim is to attract quality, experienced candidates.

*Our analysis is based on the average salaries of the placements that AccountAbility has made during 2011.

www.accountability.com.au

Outside of simply collecting debt... there became a greater awareness about ensuring credit systems and processes were working at an optimum.


Special Feature - Personal Property Securities Act

The introduction of the PPSA creates opportunity to improve asset and credit security. Conversely, if you are not PPSA compliant you may be at risk of losing assets. Managing your securities’ interest effectively, both those held and given, will require new processes and protocols to assist manage the risk.

Some of the issues we see as having an impact on the credit function include: – bailment arrangements – related party dealings – retention of title – commercial risk – management of securities.

The PPSA now creates registrable interests over goods that are the subject of common business arrangements. If you are unaware of these changes or fail to register your security interest, you risk losing goods or equipment to other secured creditors of your customers.

Whilst it is early days for the operation of the new legislation, as well as the PPS register, it is becoming clear that the practical implications of the new system for businesses are yet to be fully understood.

What has changed?In short, ownership now means very little – without registration, possession is now the key! You are at risk of losing assets if you fail to register with the PPSR. We forgot to register is not an excuse.

Bailment arrangements are now securable and need to be registered. They include any arrangement where an asset is hired or lent to a third party for an indefinite term or longer than 12 months. The risk to the asset owner is that if the security interest is not registered they are at risk losing the asset

in the event the holder of the asset in placed into external administration.

Ownership no longer provides the unchallenged right to control and sell assets. In a formal insolvency possession and registration of security will determine the right to the assets, not ownership.

The security interest must be registered with the PPSR to protect hired/lent assets from being captured under the security interest of another creditor. If the interest is not registered and an insolvency practitioner takes possession of the assets he/she will be entitled to sell and retain the proceeds from those assets.

If you have arrangements where third parties have possession of your assets best practice will include:

document the arrangement incorporate the right to register your

security interest in your terms and conditions

register your interest.

Recognising bailment arrangementsBailment arrangements capture many dealings that historically did not require securitisation evidence to title of the goods would be sufficient to retain control. The impact for management is to understand the breadth of dealings now included in this class of securities.

Familiar arrangements which include leases, hire purchase and loans. Whilst not constituting an exhaustive or definitive listing, the type of dealings and assets that now require to be secured include:

goods supplied under promotional agreements, for example: coffee machines provided under a supply agreement, display cabinets provided

Best Practice – Personal Property Securities Act By Nicholas Martin*, Partner of PPB Advisory

Nicholas Martin



to distributors or refrigeration equipment provided by a cold/frozen goods supplier

tooling provided to a sub-contractor IP (e.g., technical drawing, software,

etc) held by a third party property lease incentives of chattels assets lent between related

companies.

Intra Group DealingsPart of your planning of corporate group structures may include customer considerations to protect assets from trade liabilities or other liabilities.

Corporate structures created to guarantee assets from trading activities may be ineffective under the new system.

Traditional structures utilised to protect assets from trading liabilities include creating entities to hold independently the ownership of the plant and equipment (Asset Owner/Holding Company) separate to the trading activities (Operating Entity/Subsidiary).

Usually the tradng entity will enter into an arrangement for the use of key assets, including IP, plant and equipment. If the arrangement is indefinite or extends longer than 12 months it becomes a registrable security.

If the Asset Owner/ Holding Company does not register its security interest, title to its assets may be lost to a secured creditor of the Operating Entity/Subsidiary.

If a secured creditor of the Operating Entity/Subsidiary enforces its security and it has possession of the assets leased from the Asset Owner a receiver may claim title to the assets if the Asset Owner/Holding Company has not registered its security.

Without registration you run the risk of your claim against the assets being deficient for lack of registration.

Selling on retention of title (ROT)It has become standard practice to incorporate terms for the retention of title for goods supplied on credit. The PPSA has a direct impact on your ability to recover assets under the ROT.

To be effective, security interests must be registered from the date of supply. Whilst there is a two year transition period for registration of securities held prior to 30 January 2012 this will not operate retrospectively for goods supplied subject to ROT after 30 January 2012.

Registration of your security interest is the first step to proving title to goods supplied on ROT. You will still be required to substantiate that the ROT is valid and enforceable. One of the benefits the PPSA provides for suppliers with registered and valid ROT is a statutory right to trace and claim a customer’s proceeds of goods supplied on ROT.

If you can trace the sale of your goods to your customer’s debtors or even its bank account you may be able to claim those proceeds. In some circumstances you may even be able to garnish your customer’s debtors.

Leveraging on your ROTIf you have a registered security interest there is now the opportunity to get accounts paid early, particularly when customers are seeking to sell their business.

A purchaser is now likely to require the removal of all security interests from

the PPSR prior to agreeing to settle. This provides an opportunity to require payment all outstanding balances prior to release of your security. Prior to PPSA, settlement generally only required on ASIC F312 with creditors unable to exert commercial leverage.

Conversely, if you are involved in a sale of business be aware of the additional time required to deal with the security interest holders.

Defeating a liquidator’s claim for preference paymentsIn certain circumstances a liquidator may seek to recover payments a creditor received from a customer on the ground the payments were unfair preferences (i.e. the creditor received payment in preference to unsecured creditors when the creditors may have had knowledge that the customer was insolvent).

If a creditor has a registered security interest for ROT it may be able to defeat the claim on the grounds that it is a secured creditor.

Commercial RiskOne of the key objectives of the PPSR is to create a central register of security interests that would provide transparency of all claims over an entity’s assets.

This transparency may also create a commercial risk for organisations reluctant to disclose their supplier relationships. Some larger organisations have resisted the registration of ROT interests as the public record of key suppliers may provide an unwanted opportunity for competitors to understand their supply chain.

Credit management Maintaining compliance with the PPSA gives rise to a new regime of credit practices to ensure you are compliant. For example, building the infra-structure to maintain security registers and

Corporate structures created to guarantee assets from trading activities may be ineffective under the new system.



completion of regular searches of the PPSR for securities registered against your interests.

The quantum of parties that now hold security interests has increased dramatically. Due to the limitations of the PPSR you will need to maintain accurate and reliable security registers to ensure you can trace securities held by you and control those securities granted by you.

There are limitations to the search functions of the PPSR. You cannot:

Search for securities held by an entity. So you cannot produce a report of securities held by your organisation.

There is no notice on expiry of your securities.Further, whilst there is a requirement

to provide notice of registration of a security, in practice you may not receive notice. Failure to provide notice does not invalidate the security or registration. Accordingly, you should track securities provided by your organisation

from inception. Systems should be established to record and monitor those securities.

To assist in decreasing the credit risk we recommend that you create and maintain a register of your security registrations, referencing key items such as: – security reference number – customer name – collateral class – expiry date of security registration – security type – security value (i.e. credit limit).

In addition, we recommend you perform regular reviews of the PPSR for securities registered against your interests and maintain a record of same is a register in the same format as listed above.

Terms and Conditions of TradeTo ensure your security is valid and to mitigate possible disputes we

recommended you review your terms of trade. We suggest, at a minimum, your terms of trade should include:

a rot clause tracing provisions of proceeds from

sale of goods supplied authorisation to register a security

interest.PPSR data on your client will assist in

your reviews of credit limits.

Seller insuranceIf your customers is required to hold a debtor insurance policy, the policy may be invalidated if you customer is not PPSA compliant.

*Nicholas Martin is a partner with PPB Advisory. He acts for financial institutions and works with company directors and their advisors to identify and implement practical restructuring solutions to improve the financial performance of businesses. Ph. (03) 9269 4000, email: [email protected]

We treat Results



New rights now exist for retention of title (RoT) creditors following the introduction of the Personal Property Securities Act 2009 (Cth) (PPSA).

In many industries, suppliers will provide goods to manufacturers subject to a RoT clause (also known as a Romalpa clause), which allows the supplier to regain possession of the goods if the buyer defaults on payment.

Previously, the rights of RoT creditors were in most instances lost when goods became comingled, processed, or an accession to other goods. The PPSA changes this and grants creditors expanded rights in enforcing their RoT agreements.

Understanding the terminologyThe PPSA refers to RoT goods that have become processed, commingled or accessions to other goods.

Processed goods are created when goods of different kinds are blended together to form a final product, such as when a cake is baked using butter, flour and sugar.

Commingling occurs when goods of the same kind are mixed, for example, where wheat purchased from two different suppliers is mixed together in storage.

In contrast, a good becomes an accession when it is attached to other items, but retains its original identity separate from the larger product. For example, a steering wheel is an accession to a car.

Previous positionPrior to the PPSA, the position of the common law was that a RoT security interest would not survive if the goods lost their original identity. If the

supplied goods became processed or commingled, ownership in the goods would automatically pass to the owner of the greater product.

Whilst the common law did recognise that RoT clauses could continue over goods which became an accession, their enforcement was dependant upon whether the goods could be easily removed from the larger item.

Expanded rights under the PPSAThe key change brought by the PPSA is that a security interest in goods will continue in a processed or commingled final product.

The interest automatically continues in the final product, so long as it would be commercially impractical to restore the goods to their original state. This means that RoT creditors are able to enforce their interest against a manufactured product containing their goods. Similarly, a security interest will continue in goods that have become an accession, thus allowing a supplier to remove the accession from the larger product if the buyer default on payment.1

Enforcing your rightsRegistration is key, otherwise RoT creditors may be left empty handed if the buyer runs into financial trouble. The PPSA has expressly deemed a RoT transaction to give rise to a security interest, which means that it must be registered on the Personal Property Securities Register to be perfected. If a supplier neglects to register their security interest and the buyer becomes insolvent, the supplier’s interest will automatically be lost.2

A security interest based on a RoT clause qualifies as a personal money security interest (PMSI) under the PPSA.3

Expanded rights for Retention of Title Creditors

Karl Hill

The key change brought by the PPSA is that a security interest in goods will continue in a processed or commingled final product.

By Karl Hill*



This gives a supplier ‘super priority’ over both secured and unsecured creditors. However, to gain this advantage, suppliers must register their interest as a PMSI before the buyer obtains possession of the goods if the goods will become inventory in the hands of the customer.4 If the goods are successfully registered as a PMSI, the ‘super priority’ interest will also apply to the final manufactured goods.5

Priority disputes – multiple suppliers of goods, one manufactured productAs in the example scenario, it may happen that a manufacturer will create a product using multiple categories of raw goods which are each subject to a RoT clause. This could mean that multiple security interests continue in the one final product. The PPSA provides specific rules governing which parties will gain priority to the collateral if the purchaser defaults.

A perfected (registered) security interest gains priority over an unperfected (unregistered) interest.6

A PMSI gains priority over a non-PMSI.7

If the security interests in the final product are all equal in nature, then each supplier is entitled to share in the product based on a ratio between the amount they are owed and the total sum owed to all other suppliers.8 That is, if all interests are unsecured, all are secured non-PMSI, or all are secured PMSI, then the ratio formula will apply.This means that a supplier who has

registered their RoT interest as a PMSI

is in a very strong position. They will gain priority to the final product over all other creditors except other PMSI holders, in which case they will have equal priority.

Determining your entitlementIf there is a priority dispute, the PPSA will not allow the ‘winning’ party to gain a profit windfall by claiming entitlement to the entire value of the final product, if the value of the final product exceeds the debt owing in respect of the initial supplied goods. The ROT creditor’s claim will be limited to the value of the goods on the day on which they became part of the processed product.9

ConclusionWhile the PPSA has imposed significant obligations on RoT creditors, there is a silver lining. The PPSA legislation has operated to extend the rights of RoT creditors in certain circumstances, namely where RoT claims arise in respect of goods which have become processed, comingled or an accession. To gain the benefit of these extended rights it is, of course, essential for RoT creditors to register their security interests.

*Karl Hill is Managing Director, Results Legal Solutions. Email: [email protected]

FOOTNOTES1 Ss 88 & 123 of the PPSA.2 s267 of the PPSA.3 s14 of the PPSA.4 s62(b)(i) of the PPSA.5 s100 of the PPSA.6 s102(1) of the PPSA.7 s103 of the PPSA.8 s102(2),(3) of the PPSA.9 s101.

Practical exampleThe recent administration of a prominent Australian biscuit manufacturer almost provided an interesting case example of the new PPSA provisions. Had the administration proceeded, the suppliers of raw goods on a RoT basis – such as flour and sugar – may have been able to enforce their security interests against the stock of processed biscuits held by the manufacturer. As it would be commercially impossible to restore the flour and sugar to their original states, the PPSA would automatically extend the security interests of the suppliers over the biscuits containing their goods.

Priority disputeThe suppliers of the flour and sugar would both have security interests in the same biscuits. If both suppliers had registered their interests with the Personal Property Securities Register they would hold PMSI’s and have ‘super priority’ over other creditors. However, as between themselves, their interests would be equal in nature, so their entitlement to the biscuits would be determined based on a ratio between the monetary amount owed to each supplier.

Limit on entitlementIf the supplier of sugar had failed to register their interest, the supplier of flour would gain priority to the stock of biscuits. However, owing to the priority dispute between the two parties, the PPSA would bar the flour supplier from gaining entitlement to all of the stock containing their goods, if that value would exceed the worth of the flour prior to processing.



The PPSA is said to apply to transactions which have the effect of securing a payment or other obligation, regardless of the form of the transaction. This is described as a functional approach. However, I suggest that in the critical area of credit applications there are circumstances where the form of words used are so important that they will have the result that the commercial and legal advantages enjoyed before the commencement of PPSA using a retention of title (RoT) clause (i.e., they fulfil the same function) are no longer available after PPSA commenced on 30 January 2012.

To illustrate my point I ask you to assume the following facts as the background to the 3 scenarios:

You have a credit application with comprehensive terms and conditions, which state that each order from a customer which is accepted by delivery gives rise to a new contract which incorporates the terms and conditions.

The terms and conditions include an all monies clause RoT clause which extends to proceeds.

Before the PPSA commenced you had enjoyed considerable success with this RoT clause in getting paid by voluntary administrators, liquidators and receivers when other unsecured creditors were not getting paid.

When you learned about PPSA coming in you informed yourself about this new development by going to a few seminars, speaking to your colleagues at a couple of the industry credit bureaux you attend and consulting your lawyers.

You decide that your company will rely on the transitional provisions and only register existing customers on the PPSR during the transitional period when you think it’s appropriate.

You also asked your lawyer to update the credit application for PPSA. This has been done by adding PPSA-specific clauses without otherwise changing the structure of the credit application. The new PPSA credit application has been used for all new customers after 31 October 2011. However, for all new customers on and after 30 January 2012 you will register them on the PPSR using new PPSA credit application.

Scenario 1You deliver product on 24, 25, 27, 30 and 31 January 2012 to a customer with a 1 December 2010 credit application. None of this stock has been paid for. A receiver and manager was appointed on 4 February 2012 pursuant to a bank’s fixed and floating charge which was registered with ASIC on 30 June 2011. That afternoon you faxed and emailed your usual information package to the receiver’s representative with copies of the signed credit application, your terms and conditions and demand, requiring a stocktake and delivery up of the goods or payment.

The receiver and manager responded by saying she will pay the invoice value of the product delivered on 24, 25 and 27 January 2012. She goes on to say, however, that she will not be paying for the product delivered on 30 and 31 January 2012 as her legal advice is that the RoT clause in the old credit

A PPSA paradox: When form is more important than function!Will your pre-PPSA credit application work under PPSA?

By David Francis*

David Francis



No-one wants to be registering every transaction, however, if you don’t it will be a windfall for banks

and insolvency practitioners.

application does not give rise to a transitional security interest. That being the case the bank’s fixed and floating charge (which has been migrated to the PPSR) is a perfected transitional security interest which has priority over your company’s unperfected security interest created by the RoT clause.

Scenario 2You are still puzzling over this when you learn that a liquidator was appointed on 6 February 2012 to another company to which you also delivered product on 24, 25, 27, 30 and 31 January 2012. None of this stock has been paid for. The customer signed the (new PPSA) credit application on 30 November 2011 and is a company which you intended to register against, however, since it’s still early days in the PPSR regime you have not yet done so. There is no fixed and floating charge. That afternoon you fax and email your usual information package to the liquidator’s representative with copies of the signed credit application, your terms and conditions and demand, requiring a stocktake and delivery up of the goods or payment.

The liquidator responds by saying he will pay the invoice value of the product delivered on 24, 25 and 27 January 2012. He goes on to say, however, that he will not be paying for the product delivered on 30 and 31 January 2012 as his legal advice is that as your company’s security interest created by the RoT clause was unperfected at the date of his appointment, that security interest has vested in your customer and the liquidator as agent of your customer has control of it without regard to your company’s security interest.

Scenario 3It’s now Friday 10 February 2012. You are cursing your bad luck in having 2 customer failures so early in the year and the fact that your lawyer is still on annual holidays (but you accept that when she booked it a year ago, she wasn’t to know the commencement date would be put off so often and so late). You’re also still puzzling over what the receiver and liquidator have said when you learn that a voluntary administrator was appointed this morning to a company you only started dealing with last week.

You are feeling more comfortable about the outcome of this as you know that as soon as the salesperson submitted the credit application for approval on 30 January 2012 you registered it on the PPSR as a purchase money security interest (PMSI) that evening. There was an initial low value order which was fulfilled by product delivered on 3 February 2012. A much larger value order came in on Monday 6 February 2012 which was 90% delivered yesterday, 9 February 2012. None of this stock has been paid for. There is no fixed and floating charge. On the afternoon of 10 February you fax and email your usual information package to the administrator’s representative with copies of the signed credit application, your terms and conditions and demand, requiring a stocktake and delivery up of the goods or payment.

The administrator responds by saying he will pay the invoice value of the product delivered on 3 February 2012 as it is covered by your PMSI registration. He goes on to say, however, that he will not be paying for the product delivered on 9 February 2012 as his legal advice is that the product delivered on 9 February 2012 is not covered by your PMSI registration. Accordingly, as your company’s security interest in the product delivered on 9 February 2012 (created by the PPSA clause in the new credit application) was unperfected at the date of his appointment, that security interest has vested in your customer and the administrator as agent of your customer has control of it without regard to your company’s security interest.

What’s going on here?The problem is not with the PPSA, but the way the language of the terms and conditions structures the transactions between the credit grantor and its customers in the new PPSA legal

environment. If the credit application is structured so that the terms and conditions (including the creation of a PPSA security interest) are incorporated into each contract which only arises when the customer’s order is accepted, it means that the security interest doesn’t arise until there is a subsequent transaction. That didn’t matter with pre-PPSA RoT because registration was not necessary to have an effective security interest. However, if the security interest doesn’t arise until there is a subsequent transaction, in order to prevent a claim by a liquidator or voluntary administrator where the grantor (customer) becomes formally insolvent, every transaction will need to be registered.

The moral of the story?No-one wants to be registering every transaction, however, if you don’t it will be a windfall for banks and insolvency practitioners. My observations of the credit applications I have seen are that the structure I have described above is very common. If that is the case with your organisation’s credit application all that PPSA language and registration will probably achieve is only to get the PMSI super priority for the first transaction unless every subsequent transaction is registered on the PPSR before delivery. If the benefits of RoT have historically been important for your business I suggest you get advice on the structure of your credit application and, if necessary, get it fixed.

*David Francis – Life Member AICM, Solicitor/Director of Francis Commercial Lawyers Pty Ltd, Accredited Specialist in Advocacy & Commercial Litigation, Nationally Accredited Mediator. Tel: (02) 9587 9002, Fax: (02) 9587 9003, email: [email protected]



Businesses supplying goods on credit to customers in financial difficulty can protect themselves from the risk that payments received may be clawed back by liquidators, if they take steps to register their terms of trade under the new Personal Property Securities Act (PPSA), says a commercial law expert.

According to Daniel Turk, a corporate and commercial partner with TurksLegal, the uncertain economic climate and rise in corporate insolvencies may have caused some businesses to take a ‘go slow’ approach in extending trade credit to customers. But provisions in the PPSA that give creditors a new defence against liquidators seeking to unwind payments made by insolvent debtors in the final months before liquidation, may help renew their confidence.

“Trade credit is one of the riskier forms of credit, with data from the Insolvency and Trustee Service of Australia indicating that trade creditors bear a far higher share of losses from bankruptcies compared to other creditors such as banks and finance companies. Suppliers who in recent times may have become nervous about offering this form of financing to their customers can take comfort in this new defence”, Turk said.

“It’s important to understand, however that the defence is only available if goods are supplied on credit terms subject to retention of title (ROT) clauses and the supplier has registered their interest in the goods under the PPSA. ROT clauses are common contractual provisions preventing ownership of goods from passing to purchasers until the supplier is paid in full.

“Registration under the PPSA elevates the supplier from an ‘unsecured’ to a ‘secured creditor’ and it is on this basis they become entitled to resist

a liquidator’s attempts to unwind any payments made while the debtor is insolvent”.

Turk added that an important qualification to the defence was that it would be limited to the amount of the security. In the case of a supplier trading under a ROT clause, the security would most likely be the value of its ROT goods held by the purchaser at the time payment was received.

“It’s still early days since the introduction of the PPSA and the effect of this defence has not yet been tested by the courts. Nevertheless, goods suppliers should take steps to shore up their position by ensuring they include ‘all monies’ ROT clauses in their terms of trade and ensure that they have registered their interests against their customers under the PPSA. If possible, suppliers should also try to keep tabs on any ROT stock held by their customers or at the very least, ensure their customers keep regular stock records,” Turk said.

The Corporations Act 2001 allows liquidators of a debtor company to bring ‘unfair preference’ claims against a creditor. A transaction constitutes an ‘unfair preference’ if it occurs when the company in liquidation and the creditor are parties to a transaction which results in the creditor receiving from the company in respect of an unsecured debt, more than the creditor would receive if they were required to ‘prove’ for the debt in the winding up of the company. Unfair preference claims can accordingly only be made against creditors in respect of unsecured debts.

Daniel Turk is a partner at Turks Legal. Ph: (02) 8257 5727, email: [email protected]

Greater protection for businesses supplying goods on credit

Daniel Turk

By Daniel Turk


Credit Management

FactsIn Abdul, a wife guaranteed facilities totalling $18 million relating to a number of entities which collectively operated aged care facilities. Although she had a stake in a partnership and was a shareholder and director of one company, her husband controlled management and financial affairs, whereas she played a token role only.

DecisionThe decision is notable for the comments by the Court about the procedures surrounding the wife’s execution of documents, which it described as “somewhat disturbing, having regard to the magnitude of the sums secured.”

The Court found the wife held an administrative role and would effectively sign anything put in front of her. It found the Bank did not ensure she had time to read the documents, much less that she understood them; or that the documents were sent to her directly; that she obtained independent legal or financial advice; and more generally ignored safeguards that should have been in place. The process was determined to be at odds with the Code of Banking Practice, even though the Code did not apply in the circumstances.

This decision is a timely reminder that a prudent creditor should actively take steps to ensure that all parties to lending arrangements have received independent legal and financial advice and not, for instance as in Abdul, rely on declarations from parties that they have done so. In Abdul the Court discounted the wife’s written declaration on the basis it was found she would sign anything her husband requested her to: her declaration did not have the substantive effect of demonstrating she considered obtaining legal and financial advice in such circumstances.

In a relatively straightforward application of applicable principles, the Court accepted that at its highest, she understood that the “pile of documents” she signed related to refinancing various entities, but she did not understand the purport and effect of the

transactions. Despite having made statutory declarations she had received independent legal and financial advice prior to signing the guarantees, the Court found it was contrary to good policy to allow the Bank to defeat the otherwise equitable position by adding a waiver to the “pile of documents”. It did not assist the Bank’s cause that the statutory declarations were dated 6 days prior to the execution of the guarantee in making reference to having signed it.

The Court further considered whether the previously developed guarantee principles could be applied to documentation relating to a facility, in relation to which the wife was a joint account holder. Against previous authority, the Court found the guarantee principles extended to non-guarantee documentation.

Before deciding the guarantee principles applied to facility documentation, which was executed in much the same fashion as the guarantees, the Court considered whether the wife had a special disability in dealing with the Bank due to a limited understanding of business and financial matters; dependency on her husband; and a lack of independent advice, all of which the Court found was, or should have been apparent to the Bank. It found all these elements were present and that it would be unconscionable for the Bank to enforce the facility against her. The decision is therefore not conclusive as to whether the application of guarantee principles by themselves would have made the facility unenforceable without the additional disadvantage element.

ConclusionThe lessons for bankers from Abdul are to know the profiles of all parties to lending arrangements, and in all but exceptional cases, ensure it has substantive evidence parties have obtained legal and financial advice.

Michael Chapman, Lawyer. Ph: (03) 8600 [email protected]

Michael Jacobs, Special Counsel.Ph: (03) 8600 5025, [email protected]

She would sign whatever her husband put in front of her

Michael Jacobs

Michael Chapman

IntroductionThe recent decision of the Supreme Court of Victoria in Bank of Western Australia (“the Bank”) v Abdul & Anor [2012] VSC 222 (“Abdul”) has renewed emphasis upon and expanded principles previously developed specifically in relation to guarantees, to other contractual arrangements. It serves as a reminder that a prudent creditor will ensure all parties to lending arrangements receive independent legal and financial advice.

Who does this impact?Lenders.

What action should be taken?Know the profiles of all borrowing parties and ensure they have the real and practical opportunity to obtain legal and financial advice.


Credit Management

Australian executives are expecting a particularly challenging September quarter.

The subdued outlook reveals the extent of uncertainty among Australian businesses, with continued global economic turbulence and slowing local demand hitting the confidence and performance of local firms. While some sectors are feeling the pain more than others, there is no doubt that a significant number of executives are preparing themselves for a tough second half of the year.

Sales expectations are now at the lowest point in three years, following a fall of 14 index points against June quarter figures. A similar decline in profits expectations has the index in negative territory, according to our latest National Business Expectations Survey.

The lack of confidence regarding profits and sales is having a knock-on effect to other key business indicators. One in five firms is indicating they will not replenish inventory levels in the coming quarter and 15 per cent are signalling they will need to discount to move stock.

Executives are also halting investment plans, by lowering intentions to spend on capital or take on new staff. The number of businesses expecting to increase staff numbers fell three points to an index of two, while anticipated capital expenditure decreased by two points to an index of seven. While the approach is congruent with the downbeat assessment executives are putting on the quarter ahead, it has the potential to hinder

productivity gains and consequently GDP growth over the longer term.

Adding to the challenge is that fact that business payments continue to lag standard terms. This means that even when a business makes a sale, it may be forced to wait around three weeks longer than standard terms to receive payment. At a time when sales are down, the extra delay in receiving payment can put substantial pressure on firm cash flow, particularly for SMEs.

These reasons, combined with March quarter actual performance data for non-mining industries, make the sober forecast and conservative investment strategy unsurprising. Businesses recorded a seven index point fall in profits quarter-on-quarter and an equally dramatic drop in sales performance. In addition, firms reported flat capital investment and a greater number of businesses shed staff.

The extent of pessimism is also unsurprising given sentiment has been on a downward trend throughout 2012, with only a brief rebound during February. Since then however, businesses have remained downbeat, expressing particular concern over factors including interest rates, the high Australian dollar and wages growth.

The retail sector has been a key driver of the decline in sentiment over recent months, with sales and profit expectations plunging most dramatically among this group. The sales and profit outlook is impacting retailer’s intentions in other areas, with expectations for new staff and capital investment now in negative territory. Two-thirds of retail executives now also anticipate that demand will slow in the year ahead.

Concern over online competition is further dampening the sector’s outlook, as the number of budget-conscious consumers tapping into online shopping to compare prices and take advantage of

Executives signal tough times aheadA lack of optimism in the non-resource sectors has driven executives’ expectations to the lowest point since the peak of the global financial crisis, writes Gareth Jones*, CEO, Dun & Bradstreet.

The lack of confidence regarding profits and sales is having a knock-on effect to other key business indicators.

Gareth Jones


Credit Management

cheaper alternatives overseas continues to grow. Fifty-eight cent of retail executives express apprehension about competition from online sellers, up 15 percentage points in just one month.

However, the changing nature of spending is prompting retailers that have traditionally been anchored to bricks and mortar operations to rethink their approach, with a number of firms seeking to create a bricks and clicks company. This approach has the potential to provide a growth platform for retailers however it takes a particular kind of expertise to successfully run both types of trade successfully.

Digital commerce is not the only barrier currently confronting retailers. Falling consumer spending and an increasingly conservative approach to household finances is also adding pressure. Our latest Consumer credit Expectations Survey reveals that one in five Australian households is extremely concerned about their financial situation and, that more than half are less likely to engage in discretionary spending than they were 12 months ago.

This trend is also showing through in data from the Australian Bureau of Statistics (ABS), which reveals a 0.2 per cent slump in retail sales during April. D&B analysis of this data highlights that the main casualty of the conservative consumer is household goods, including electrical and electronic goods, hardware, furniture, floor coverings and housewares. Trend sales for this group peaked last October and has fallen every month since then at an annual rate of -4.7 percent.

The analysis also found that some retailers are experiencing moderate growth. Stand-out groups include cafes, restaurants and takeaways (+9.9% pa), and clothing, footwear and personal accessories (+8.5% pa). However the annual trend growth for all retail sales for the six months to April was only 3.3 percent, a figure that is barely ahead of the rate of inflation.

It is for all of these reasons that retailers continue to closely monitor interest rate movements, hopeful that downward movements may get consumers back into the stores and spending. Half of retail executives believe interest rates will have the biggest influence on operations in the quarter ahead.

Yet while persistent gloom among retailers has dominated the outlook for some time, the sector is not alone in its expectation that the back half of the year will be difficult. Durables manufacturers have also recorded a notable drop in projected sales and profit over recent months and close to half expect slow growth in demand to have the biggest impact on operations.

A dollar that continues to be high by historical standards is also hurting this group.

Recent national accounts figures further highlight our two-speed economy. West Australian-based resource projects drove the country’s economic growth during the March quarter, while manufacturing heavy states saw more modest expansion and Tasmania recorded a contraction of 0.8 per cent.

The two-speed economy is a persistent theme and it isn’t one that is going to go away. The nation is experiencing a structural shift and for that reason, certain sectors will continue to face greater challenges than others. The situation in Europe and China’s slowing economy are only adding to executive concerns about what lies ahead in the latter half of 2012. Importantly, despite the downbeat outlook, Australia is faring well compared to other developed nations at a time of significant, ongoing global turbulence.

*Gareth Jones is CEO, Dun & Bradstreet. www.dnb.com.au

One in five firms is indicating they will not replenish inventory levels in the coming quarter and 15 per

cent are signalling they will need to discount to move stock.

If only businesses were this upfront. Fortunately, there’s Dun & Bradstreet. No matter how big or small your customer or prospect is, we’ll give you the complete view of their risk profile with a comprehensive credit check. To see how we can help you visit our website www.dnb.com.au or call 13 23 33.

“Before we do business, I should point out my company is about to go into liquidation”


Credit Management

In 1997 the Australian comedy film “The Castle” was released and created a classic line “tell ‘em they’re dreamin”.

It would seem many credit managers who are being asked to improve ‘DSO’s’, could turn to their finance departments and quote this famous line.

Not many businesses in the current environment are living the dream of hassle free collections and improving DSO’s.

So what would it be like to live in a perfect world where debtors always pay on time and debts are always paid?

Unfortunately current economic conditions, especially in the building, construction, electrical and retail industries, are extremely tough. Particularly with the likes of recent insolvencies such as St Hilliers Construction, Kell & Rigby, Hastie Group and Retravision Southern.

These insolvencies alone will leave tens of millions of debt owing to suppliers. Fortunately for many of these suppliers, they have assessed their credit risk exposures and purchased credit insurance. Over the coming months, many claims will be assessed and up to 90% of an insured’s debt will be repaid.

It still surprises me how little credit insurance, as a risk minimisation tool, is used or understood by businesses in Australia and New Zealand. Some sectors are highly credit insured, yet others decide to take a risk that their debtors will ‘eventually’ pay. So much effort goes in to making a sale, yet the focus on collecting outstanding monies for that sale receives very little attention.

In many recent insolvencies, the ability to see an insolvency occurring has reduced. Many “nonvisible” factors occur behind the scenes within a business, which are simply not available at the coalface.

5 TOP REASONS WHY BUSINESSES FAIL:In researching the top reasons why businesses fail, I found the following five reasons to be the common theme across recent insolvencies:1. Poor capital structure/financing

arrangements2. Over expansion (too quickly and/or

with expensive acquisitions)

3. Poor/dysfunctional management 4. Failure to react quickly to market

conditions5. Poor internal control/business model

In a recent survey of New Zealand CFO’s, it highlighted “protecting businesses financial risks” as the second most important issue CFO’s will need to deal with over the next 12 months. Credit risks and managing debtor payments form part of financial risks. CFO’s should be asking a key question – what would happen to my business if one of our largest clients did not pay?

So, how could credit insurance make you sleep better and dream about the perfect world of client collections? 1. Preserve profit – a debtor ledger is

normally a large asset that should be protected. A bad debt directly eats away at your profit.

2. Protect your liquidity and cash flow – the proceeds from a credit insurance claim inject liquid funds back into your business.

3. Confidence to expand – imagine targeting new business and new sales which you know in the event of a payment default, will be covered.

4. Strengthen your credit management – whilst many credit departments already have effective credit control procedures, further enhance the quality of your decisions by having access to exclusive information databases.

5. Add security – by protecting your debtor’s ledger, you may be able to access more efficient financing. Shareholders will appreciate that assets are being well protected and financial corporate and risk obligations are being met. It is clear global financial conditions

are heading into another rocky period. So whether you are Darryl Kerrigan of Bonnie Doon or a credit manager in your office, take the stress and worry out of protecting your “castle”, by reviewing your credit risks and where your business may be exposed.

Kirk Cheesman* is Managing Director National Credit Insurance (Brokers) Pty Ltd. www.nci.com.au, Ph: (02) 9458 2600.

Tell ‘em they’re dreaminBy Kirk Cheesman*

Kirk Cheesman

So much effort goes in to making a sale, yet the focus on collecting outstanding monies for that sale receives very little attention.


Credit Management

By Richard Williams*

On 5 June 2012 ASIC released a consultation paper (CP178) dealing with advertising credit products and credit services.

This consultation paper builds on Regulatory Guide 234 which deals generally with advertising financial products and advice services.

Once the consultation process has been completed and Regulatory Guide 234 updated, that guide is likely to be the bible for advertisers of credit products and services.

It is not coincidental that issue of this consultation paper follows on recent action taken by ASIC against some lenders for misleading advertising about credit limit increases and home loan discounts. Comments on the consultation paper and draft updated regulatory guide are due by 6 August 2012.

ASIC commissioner Peter Kell is quoted as saying the following on release of the consultation paper:

“ASIC wants to help industry understand their obligations. However, we will also take action against financial institutions who engage in misleading marketing. We have a greater range of penalties that we can seek in such cases compared to the past.”The idea is that after the consultation period, regulatory guide

234 (which deals generally with advertising financial products and advice services) will be updated to make more specific

reference to and give examples in relation to advertising credit products and credit services. A draft of the proposed updates to Regulatory Guide 234 is attached to the consultation paper.

The consultation paper proposes guidance and additional examples in relation to:

How to give a balanced message about the credit product or credit service;

How to properly advertise Interest rates; How comparison rates should be

presented to prevent a situation arising where the comparison rate is less prominent than the advertised interest rate;

Restrictions on using certain terms and phrases, such as “independent”, “impartial”, “unbiased”, “financial counseling”, “reverse mortgage”, etc;

Exercising caution in relation to advertisements which imply product suitability;

Preventing advertisements creating unrealistic expectations about what a credit assistance service can achieve.While the updated regulatory guide 234 will still only be a

guidance document, it will be an essential tool for the credit industry to use when advertising credit.

Consultation Paper 178 can be viewed here (http://tinyurl.com/7egxujo) and the ASIC Press Release is available here (http://tinyurl.com/7vmmt5q)

*Richard Williams is Partner, Banking Services, MacGillivrays Solicitors. Ph: (03) 8622 2711, email: [email protected]. www.macgillivrays.com.au

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Consumer Credit

Around 750,000 Australian consumers risk falling into a debt spiral if the country experiences an economic downturn, according to Veda’s bi-annual Australian Debt Study* released on 31 May 2012.

Findings show that 21% of Australians are struggling to pay their current credit commitments. Despite this, a quarter also admitted they will apply for yet more credit to help them cope with an economic downturn.

Veda’s analysis of consumer behaviours if there is a period of economic stress shows:

Most (66%) Australians would draw on household savings.

One in four (25%) would increase their credit card limit, mortgage or loan.

One in three, or almost 5.5 million, would borrow from family.

Over 3.6 million (21%) would draw on their superannuation.The findings come as the

Government prepares to introduce long awaited legislation allowing for better information on consumer credit reports, as recommended by the Australian Law Reform Commission in 2008.

“Credit reports do not show a person’s credit limit, or if they are failing to make the minimum payment on their credit cards or loans.

“It makes it easier for someone already in trouble to get yet more credit – pushing further into a downward debt spiral.

“More worryingly, if a consumer does default, the black mark stays on a credit report for five years, with no other

information to show if they are back on their feet.

“However, the changes to credit reporting will make credit reports fairer and more accurate for consumers looking to borrow. The new information will include a person’s current credit limit, number of credit cards and if someone has failed to make the minimum payment on a credit card or loan on time,” Mr Strassberg said.

People can download their current credit file to check their details are up to date by downloading a free copy from www.mycreditfile.com.au.

Veda’s analysis also highlights differences in debt stress across the states.

Findings show Queenslanders (43%) and South Australians (50%) are experiencing the most strain in meeting repayments and Western Australia the least (34%).

Veda’s findings indicate that the overall number of Australians already having difficulty paying their debts as they fall due remains high, with that just over half (57%) of the population feeling their debt is within their budget.

The numbers of Australians experiencing financial stress has risen since 2007 when the Veda Australian Debt Study began.

Veda’s analysis indicates that despite 21% of the population saying they are having difficulty coping or are unsure how they will make the next payment, only one in five had sought professional financial counselling:

Those most likely to seek advice

VEDA DEBT STUDY: 750,000 Australians at risk of falling into a debt spiral in an economic downturn

Survey finds a quarter of people already struggling will borrow yet more credit

Queensland and South Australia under most stress

Few who struggle seek professional advice

By Matthew Strassberg*

Matthew Strassberg


Consumer Credit

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“People having trouble repaying

should seek help from a financial

professional before it’s too

late...”

(28%) were those earning more than $70K;

White collar (30%) were twice as likely as blue collar (14%) to seek help;

Gen Y was much more likely (28%) than those age 50+ (19%) to seek advice.The results remain relatively

unchanged since March 2008 (22% in March 2012 v 20% in March 2008). This is despite growing consumer anxiety about the ability to meet credit repayments.

Mr Strassberg added: “People having trouble repaying should seek help from a financial professional before it’s too late,

particularly lower income earners with competing debt repayments.”

*Matthew Strassberg is Senior Advisor – External Relations, Veda. www.veda.com.au

DISCLAIMERVeda releases are intended as a contemporary contribution to data and commentary in relation to credit activity in the Australian economy. The information in this release does not constitute legal, accounting or other professional financial advice. The information may change and Veda does not guarantee its currency or accuracy. To the extent permitted by law, Veda specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.

Difficulty in paying debts as they fall due – State Comparisons

Total NSW VIC QLD WA SA

Currently within budget 57% 58% 57% 53% 66% 48%

Repayments use a lot of my income 20% 17% 22% 24% 16% 22%

Finding it difficult to repay but can cope 20% 20% 18% 19% 18% 28%

Unsure how I will make the next payment 1% 2% NA 2% NA 2%

% Australians having difficulty in paying debts as they fall due

March 2012

March 2011

March 2010

March 2009

March 2008

Sept2007

Currently within budget 57% 57% 57% 64% 62% 61%

Repayments use a lot of my income 20% 19% 21% 17% 16% 18%

Finding it difficult to repay but can cope 20% 19% 17% 16% 16% 13%

Unsure how I will make the next payment 1% 2% 2% 2% 1% 2%


Consumer Credit

Veda has released data showing generational trends in credit activity over the past ten years which shows some surprising results.

One of the most compelling findings is the volume of financial defaults within the older generation (65 years and above), which have increased by 200% over the last ten years. This trend shows that Australia’s older generation have become more reliant on credit which is leading to more defaults as a bigger proportion of this age group struggle to meet financial obligations.

The data also shows that credit cards are falling out of favour with Australia’s younger generation, with the volume of applications reducing significantly in the last four years, with the decrease most prominent among 18-20 year olds. This decrease is narrowing the gap between the younger generation and baby boomers, who are increasingly showing similar appetites for credit as their older counterparts.

Despite a reduced appetite for credit cards, younger generations are not immune to credit defaults, as they are still more like to default than any other age group. Veda’s data shows this to be particularly evident in the first quarter of the year as the effects of overspending during the holiday period start begin to hit home.

Veda’s Head of Consumer Risk Angus Luffman said that education is needed within all age groups on the risks of being enticed into credit as a result of factors like low introductory interest rates.

“The fact is that consumers of all ages still fail to realise that missed monthly mobile phone, utilities, and credit card or loan repayments can all affect their credit rating. It is vitally important that consumers consider and understand the difficulties they could face when they take on credit commitments that they can’t meet,” said Luffman.

While there has been a marked

New data from Veda shows surprising differences in credit activity between generations

Older generations are taking out more credit than ever before, causing an increase in the volume of defaults

Younger age groups are more likely to default than any other age group

By Angus Luffman*

Angus Luffman

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002

300%

250%

200%

150%

100%

50%

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-50%2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Finance Default Volume

18-24 25-34 35-44 45-54 55-64 65-74 75+


Consumer Credit

increase in overall credit demand from older generations over the last ten years, demand among younger generations (18-24) peaked in 2008 and have now returned to similar levels as in 2002. Whilst they’re still the largest age group to apply for credit this is further evidence that Australia’s younger generation has a vastly differing attitude to credit than older age groups, or, the need for credit is being met through an alternative method- such as debit cards or PayPal options.

“It could be that young generations are opting for loans from family members as opposed to choosing credit cards. The data also shows that younger generations are waiting for a longer amount of time before they apply for large investments such as mortgages and car loans, which is contrary to the stereotype of them being a generation that is reliant on instant gratification,” added Luffman.

Naturally, young people are less likely to make credit card enquiries whilst still

living at home, yet when they move out to areas of urban development it can be seen that credit card applications once again rise, as do enquiries from areas where a lot of young professionals live in highly populated areas.

*Angus Luffman is Head of Consumer Risk.www.veda.com.au

DISCLAIMER: Veda media releases are intended as a contemporary contribution to data and commentary in relation to credit activity in the Australian economy. The information in this release does not constitute legal, accounting or other professional financial advice. The information may change and Veda does not guarantee its currency or accuracy. To the extent permitted by law, Veda specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.

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Default Rates by Age

% o

f Peo

ple

wit

h D

efau

lts

2010 Q2 2020 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

18-24 25-34 35-44 45-54 55-64 65-74 75-84 85+


Collections

Getting debtors to open up and share their RFDs (reason for default) is an art. Instead, many debtors us excuses and broken promises so to cover up any payment inadequecy. In the meantime, our time is wasted when we could have been working together with the debtor to create a doable payment plan. Getting debtors’ to share their RFDs will help us save time and collect more money.

Many years ago I collected a telephone bill on an professional NFL football player. The bill was only about $1,000, and the customer earned $800,000 per year (at that time). The customer was a nice fellow who would give me all kinds of “No problems” about paying the bill. Unfortunately, he was a habitual broken promise customer. After about the fourth time calling, I finally got the wife. She informed me her husband just got kicked off the team due to cocaine usage. They were about to lose their house. Their phone bill was the last thing on their minds to pay.

Of course I felt sad for the woman, and for my chance of getting paid, but I was grateful to have finally received the true RFD. I expressed appreciation for her telling me the truth, then I advised her that if their situation improves, to call us quickly to stop the legal action that I would be starting. It made no sense continually calling this customer. Legal action made more sense. I could transfer the account out of my worklist and then concentrate on those accounts with a higher chance of paying.

Some collectors are better than others getting RFDs. Robot collectors, those collectors who simply go through their worklist asking customers ‘when?’ and ‘how much?’, will not get many RFDs. But collectors who sound like humans and ask “Why?” get more RFDs and stronger promises to pay.

Many collection trainers recommend

avoiding asking debtors ‘why?’ because it can open up many long-winded stories. I agree to a point. If I’m calling low or mid balance, early stage accounts on an auto-dialer; I’m probably not going to ask a lot of ‘Whys?” But if I’m calling big balance accounts and seriously delinquent accounts, then ‘Why?’ will be asked nearly every call.

I would like to share some ways to get debtors talking to get their true RFDs:

1) Ask Why? ‘Why?’ gets all kinds of information from debtors. I cannot think of a better question to ask debtors. If I feel uncomfortable asking this sensitive question, especially if I don’t know the debtor well, I will say, “What’s the reason?” e.g. “Mr. Customer, what’s the reason the account isn’t getting paid every month?”

2) Use your authority and/or experiencePeople are more open to sharing their problems if you sound like an expert. How to do this?

Speak with confidence. Speak like a man or woman, not like a mouse. No one will share their personal issues if you sound like you have plenty issues yourself.

Sell your experience. E.g. “Mr. Customer, I’m sure I can work with you on a reasonable payment plan. I am a (use a creative job title) and I have been doing this now for X years.” Please don’t call yourself a ‘bill collector’ or other lowly title. I like ‘Account Supervisor’, ‘Workout Specialist’, ‘Account Manager’, ‘Debt Adviser’, or any creative title.

Sell the number of accounts you have handled if you don’t have a lot of experience. New collectors don’t want to say, “Mr. Customer, I’m sure I can work with you as I’ve

Getting debtors to talk

Some collectors are better than others getting RFDs. Robot collectors, those collectors who simply go through their worklist asking customers ‘when?’ and ‘how much?’, will not get many RFDs.

Steven Coyle


Collections

been doing this for three months. Now please share with me your current financial situation.” Three-month’s of experience doesn’t exactly inspire confidence. Instead, new collectors can explain the number of accounts they have handled. E.g. “Mr. Customer, I’m sure I can work with you as I have helped thousands of customers just like you once they tell me their financial situation.” Some writers believe that the ‘tipping

point’ where we reach expert status in a skill is after 10,000 hours. In collections, assuming a 50 hour work week, that would take over 16 years! I don’t believe it. Though I do believe we can reach expert status after handling 10,000 accounts. A collector on an auto-dialer with a target of 150 calls a day will hit that number after about three months. In those three months you will hear so many stories that you will be hard-pressed to hear many new ones afterwards.

3) Use examples to get people to talkThis is also called ‘peer pressure’. The examples can be either positive or negative. This technique is useful when the debtor is older than the collector. I try to keep the examples as similar to the debtor as possible. Let’s say I have a debtor named Mr. Chong. He refuses to pay and wants me to proceed with legal action. Of course my first response will be to ask why? E.g. “Mr. Chong, why do you want us to proceed with legal action?” If he refuses to explain, then I’ll try the example technique. E.g.

“Mr. Chong, I had another customer, his name was Mr. Wong. He said the same as you and he owed about the same amount as you. Once I explained the consequences of legal action, he decided it was in his best interest to work with me and get his account current. We created a payment plan and he was able to get his account current, save money in legal charges, and prevent his name from being blacklisted. Now I’d like to work with you to enjoy the same as Mr. Wong.”The above example was a positive

example, you can also use negative examples to explain a customer who

didn’t want to work with you and now regrets it. Some collectors think I’m lying when I use this technique, but not me. As a collector, each day I would receive calls from written off accounts calling me to ‘clean’ their credit record, but unfortunately it was too late. The account was now controlled by an agency or a debt buyer. The customer’s silly refusal to pay that small past due bill haunts them way into the future. It’s simply not worth it.

4) Use the ‘Good Cop’/‘Bad Cop’ technique

Of course you will be the ‘Good Cop’. The ‘Bad Cop’ will be everyone else. E.g. your organisation, your boss, legal department, extra fees, external agents, the recovery collectors, etc. You are simply trying to help stop this from happening. E.g. “Mr. Customer, you need to pay $_____ because I’m trying to help stop (bad cop).”

Another ‘Good Cop’/‘Bad Cop’ example, but with more drama,

“Mr. Customer, you need to pay $_____ because I’m trying to help stop your account from going to the ……..(pause)……….(voice deepens) debt collection agencies. (Voice rises) By paying $______, you will be able to keep your account with me.”

5) Name the Game This technique simply asks the debtor ‘what’s going on?’ Let’s say you have a customer who has been a good customer for several months, then suddenly tells you to go to hell and refuses to pay. E.g. “Mr. Customer, what’s going on? You have been paying fine for the last three months, now you are telling me to ‘go ahead and sue me’. What’s going on?”

6) Be seen as a partnerWe earlier saw that some people will explain their RFDs if they view you as an authority or expert. Others will share their RFDs if they view you as a partner. In contrast, if they view you as an enemy, little sharing will happen. I want the

debtors to like me a little as I usually have a better chance of them explaining to me their financial situation. So how can you be seen as a partner?

Use their name. Plus use your name. Don’t speak to the customer like a robot. Humans share information with other humans, not robots. Oprah Winfrey is a pro at this.

Show empathy such as saying ‘sorry’ when you hear people’s problems.

Use the word ‘help’. E.g. “Mr. Customer, I want to help you avoid legal action.” This sounds a whole lot better than, “Mr. Customer, if you don’t pay; we will proceed with legal action.”

7) The final tipThis tips involves all the previous ones. When you finally do get debtors to open up and share their RFDs, appreciate it. Whatever you do don’t attack their reasons. Let’s say the debtor has finally admitted that he can’t pay you because he wants to take his family on an expensive vacation. Don’t say something like, “Are you crazy? How are you going to pay this invoice?” Instead, bite your tongue and welcome the truth. E.g. “Mr. Customer, I appreciate you telling me that.” Or, “Mr. Customer, I appreciate you sharing that with me.” I much prefer an ugly truth over a beautiful lie. We need to resist our gut instinct to attack and instead reward customers for telling us their true RFDs. The words I use to welcome the truth are ‘appreciate’ or ‘thank you’.

Not many collectors can get customers to share their true RFDs. If you hear many debtor payment stories, some very strange, while maintaining below average broken promise rates; than it’s likely you are good at getting true RFDs. Congratulations.

Steven Coyle, CCE is based in Malaysia where he is trains throughout the region ([email protected]). He is the author of “Debt Collections: Stir-Fried or Deep-Fried? Available at Amazon.com and Kindle.

‘Why?’ gets all kinds of information from debtors. I cannot think of a better question to ask debtors.

aicma r o u n d t h e s t a t e s


new south wales

From the PresidentI take this opportunity to introduce myself and your Councillors in NSW. In addition to being the NSW AICM President I also have a few other roles including CCE, Credit Manager at Ricoh Finance, Australian Credit Forum Member, Husband, Dad of 1 at the time of writing and 2 by the time you read this, Rugby Union Tragic and Student studying for my CPA.

Yes I have a number of hats! Like all Credit Managers I have a busy and pressured role managing the approvals and collections departments of Ricoh Finance, the internal leasing business of Ricoh Australia. In addition to my role I am also a member on the Ricoh Superannuation Committee, Department Social committees and various management projects.

When I am at home I spread my time between my Beautiful Girls (my wife Sarah, 2 1/2 year old Daughter Chloe and will shortly welcome our 2nd daughter, name TBA), Studying for my CPA trying to keep fit to play Rugby for Forest Rugby Club and other family and social activities. Amongst all of this I find time to contribute to my other passion the Credit Industry by doing what I can as the NSW President.

This story is not particularly unique - in fact many councillors would consider this to be a quiet week - as you will see from the snap shot below of some current NSW Councillors.

Grant Morris – National Credit Manager at Coates Hire, AICM – NSW Councillor and Director, AICM Board Finance Portfolio and Australian Vice President, Title holder AICM Veda Credit Team of the Year 2011/12, CCE, Australian Credit Forum Education Committee Member, Six Sigma Green Belt and completing Certificate IV in Financial Services (Credit Management), Husband, Father of 2 and passionate supporter of the Sydney Swans. Motor cycle (Ducati) enthusiast.

Vanessa Graydon – Partner in a recruitment company, Owner Manager/Chef of a busy cafe, owner of a soon to be launched Serviced Office, Mum to two fabulous kids (one in the Army, one just about to start high school!), also Mum to 3 cats, two dogs and three fish tanks! NSW AICM Vice President, Functions portfolio, NSW Credit Team of the year portfolio.

Gregg Odlum – Husband, Shared services manager Ecolab, integration leader, Ecolab social coordinator, Lean Six Sigma project

manager, Director of a watersports company, volunteer on youth camps, leader of a church music group, Oz tag player

Ian Smallman – Manager of Client Services at an ASX listed recruitment services group. National Account Manager for some of our key accounts, Married with two kids, dog, fish and frogs, manager of kids soccer team & volunteer surf lifesaver.

Arthur Tchetchenian – NSW AICM Treasurer & Delegate, CCE, Credit Manager Baxter Healthcare Aust & NZ, Baxter SFLT member, Husband and father of 1.

Christina Aleksoska – Credit Manager at Pfizer Pharmaceuticals, business model change committees. Engaged (no plans to marry yet), Family and Friend social coordinator, travel enthusiast.

The reason I am writing about how busy we are is that the NSW AGM will be held in July and this is the best time for you to step up and volunteer to assist the NSW Councillors promote and shape the credit industry.

Whether or not you have enough time in the day, as long as you have a passion for the credit industry your involvement in the NSW Council will make a difference. Contact the office, myself or one of the councillors for more information.

– Nick Pilavidis MICM CCE – President NSW Division

June networking event.Credit Managers Panel Workshop in May. Panelists Eric Milne, Grant Morris and John Field.

June networking event.

Become the NSW Credit Team of the Year

By nominating your credit team you will be in the running to win:

• $2000 in AICM services• $1000 cash prize• Professional development training during 2012

(available to all shortlisted nominations)• Invitations to exclusive relevant industry and networking events• An invitation to present at the 2012 AICM conference• Increased professional and company profile via AICM and Veda• 12 months AICM membership for each winning team member

AICM members will be notified when nominations open electronically.For more information call the AICM national o ce.

Proudly sponsored by Veda.

Recognising NSW credit excellence in 2012. This award will go national in 2013. Nominations opening soon!

“ Winning this award has seen the team gain the respect and acknowledgement from within, that their efforts so dearly deserve.”

Grant Morris, National Credit Manager at Coates Hire (representative from the 2011 winning team).

Become the NSW Credit Team of the Year

By nominating your credit team you will be in the running to win:

• $2000 in AICM services• $1000 cash prize• Professional development training during 2012

(available to all shortlisted nominations)• Invitations to exclusive relevant industry and networking events• An invitation to present at the 2012 AICM conference• Increased professional and company profile via AICM and Veda• 12 months AICM membership for each winning team member

AICM members will be notified when nominations open electronically.For more information call the AICM national o ce.

Proudly sponsored by Veda.

Recognising NSW credit excellence in 2012. This award will go national in 2013. Nominations opening soon!

“ Winning this award has seen the team gain the respect and acknowledgement from within, that their efforts so dearly deserve.”

Grant Morris, National Credit Manager at Coates Hire (representative from the 2011 winning team).



Trivia night team – “Uncredited”.

new south wales

Trivia night team – “The View”.

Trivia night champions – “Quicksilver”.

EAT The Industry

Healthy Breakfast PancakesBy Gillian Taylor – AICM Training Administration Officer

Ingredients: 2 bananas 3 eggs 2 teaspoons of vanilla essence 1 tablespoon of almond meal Butter Icing sugar and fresh fruit to serve

Directions:Mash the bananaWisk the eggs then add to the bananaAdd the vanilla essence, almond meal and mix well Heat butter in fry pan and add mixture in 1 tablespoon portionsFry until golden on one side, then flip and fry lightlyRemove from heat and lightly cover with icing sugar

Serve with seasonal fruits

To contribute to this column please send submissions to [email protected]

Young Credit Professional ProgramAt the time of writing this selection and judging for the NSW Young Credit Professional of the year was underway. This year we had a fantastic response to the program and ten finalists were selected:

Brook Wright - Global Transport and Automotive Insurance Joey Tupaea - Global Transport and Automotive Insurance Ashley Short - Sony DADC Tasha Armstrong - Sony DADC Emma-Jane Jordan - Tyco Flow Control Pacific Pty Ltd Melinda Wilmot - Kennards Hire Laura McCulloch - Kennards Hire Katherine Byrne - Kennards Hire Aryan Amin - SNP Security Baz Sleiman - Publicis Groupe

Congratulations to all the finalists. The application and judging process will be a very beneficial experience for all of them. The winner will be announced at the NSW YCP Awards Dinner on 18 July 2012 and will go on to represent NSW in the National competition at the Conference in October.

Also thank you to Dun and Bradstreet for their continued support and the Judges who all gave up a full day to take part in the Judging:

Richard Gannon of Dun & Bradstreet John Field Simon Holloway - Fosters Group Arthur Tchetchenian - Baxter Healthcare Aust & NZ

– Nick Pilavidis MICM CCE – President NSW Division



new south wales

MEMBERSHIP MILESTONE

Robert BrissettWOW, I cannot believe it is 20 years since I joined the AICM that means I must now be classified as old! Thanks must go to the AICM for the opportunity to be included in their magazine to acknowledge my 20-year membership. When I first joined the AICM back in 1992 I was working for the TNT Group at Mascot including Ansett, Comet, NQX, Kwikasair, TNT Domestic & International etc .

I spent 14 years at TNT from 1987 to 2000 of which 5 years were spent looking after a portfolio of accounts as a Credit officer and then as the NSW Credit Supervisor. The buzzword “Quality Assurance” was introduced in the early to mid 90’s and I spent 2 years developing and implementing the companies Quality Assurance Standards. I then spent 7 years in the capacity of National Credit Manager responsible for 37,000 accounts and 55 staff members.

Like most Credit Managers I encountered numerous changes including restructures, introduction of new systems, and sale of the business to overseas owners, “Centralised” Vs “Decentralised” Credit Departments and finally outsourcing of the Credit function.

In 2000 after TNT had decided to outsource the credit department I decided to make a career change, after 14 years I left TNT. Amazingly In 1987 there were over 50 credit managers when I left I was one of two that was remaining.

Trivia night team – “Top Gun”.

Trivia night team – “Quicksilver”.Trivia night team – “Max’s Mates”.

It was not long after leaving TNT before I moved into a role as Credit Collections Manager at Integral Energy, if I was looking for a new challenge well I definitely found one. I took on the task and responsibility of looking after the Credit Department and 32 staff with 730,000 consumer accounts. Integral had never had a Credit Manager before and I spent 6 months implementing the Credit Collection Process and Procedures, systems and setting up the Credit Department structure. Having responsibility for high volume accounts required a different thought process in being able to manage high transactional processing via multiple payment streams. This was a challenging but very rewarding experience, I spent 6 months in this role.

An opportunity presented itself at Ingham’s Enterprises for a National Credit Managers role which was very similar to the role I had at TNT. Working for another iconic brand name business was a major factor in my decision making to take on the role and for a secure future. I started at Ingham’s in July 2001 and now look after both Australia & New Zealand debtors portfolio, in July this year I will have achieved 11 years service with the company.

Being a Credit Manager has its many benefits, you get to know how the whole company works and liaise with most people within the organisation. But over and above the work are the lifelong friendships you make along the way and part of that is made possible by being part of groups like the AICM and the FMCG Industry Groups.

I look forward to the next 20 years (maybe less if I can win lotto!) and all the challenges the Credit Industry will bring with it.

The Australian Institute of Credit Management New South Wales

welcomes the following organisations as our sponsors for 2012

The Australian Institute of Credit Management and our Sponsors benefit from a cooperative and supportive relationship that provides high profile branding opportunities to sponsoring organisations and gives the credit industry greater recognition and the opportunity to work together to promote best practice in the credit industry and in so doing provide professional development opportunities for credit

practitioners in Australia.



Brian Kay (R) being presented with his ‘Fellow’ certificate by Ron Freier Qld Director.

queensland

From the PresidentOur president, David Maczek, has decided to step aside from the presidency early and I would like to sincerely thank David for his time and dedication to the AICM QLD council. It has been a privilege to work with David, as his VP, and his work with the QLD Division has seen progressive steps forward. The entire QLD Division Council has expressed gratitude for all the work David has done while in the role. As I temporarily step into the role, until the elections in July, it dawns on me just how big this role is and my appreciation of all previous Presidents grows.

In April a social event was staged at Victoria Park Golf Complex and many of us took advantage of their new million dollar 18 hole mini golf course, it was so much harder than any of us thought and there was lots of laughing on the night.

In May Peter Mills presented “Entities and the effect of recoveries to litigation and included the effects of PPS”. The event was very well attended and Peter was able to answer many questions regarding the impact of this new legislation.

Moving into July the QLD division held a credit focus night on 11th which was a dual session covering a panel of 3 experts/specialists who answered questions and a guest speaker who helped guide us on how to handle the generation gaps and on 25th the Young Credit Professional Awards Dinner sponsored by Dunn & Bradstreet will be held. The 4 applicants are of a high calibre and the process of choosing a winner is going to be a difficult one for the panel. On the same night we will also present the education awards and a special surprise award for the evening.

The June breakfast attracted a good crowd.

Another good rollup of delegates to the Credit Network Night in March.

President Carla Seirlis and Steven Staatz, Senior Manager, Vincents Insolvency Unit, presenting on ‘Understanding Voluntary Administration through to Liquidation.



March Credit Network night presenters Daniel Hains of Vincents Chartered Accountants with Shane Wilson of BICB and Tomas Souter of Veda.

queensland

Kellie Frahm and Zoey Suthers of Hyne & Son (Maryborough) with Amy Maczek at the AICM Strike Bowling event in June.

Kevin De Beer and Tomas Souter of Veda with presenters for March CNN, Daniel Hains of Vincents Chartered Accountants and Shane Wilson of BICB.

Strike bowling event supporter Shaniece Iafeta of Patane Lawyers and Carla Seirlis QLD Division President.

The Australian Institute of Credit Management Queensland welcomes the following organisations as our sponsors

for 2012



In August we will be presenting a split session on the sustainability of KPI’s and Credit for tomorrow. Then in September we will be having a Mock Creditors Meeting which will be presented by Vincents Chartered Accountants and this will assist credit professionals in understanding the process of a Creditors Meeting and what they can do or expect at a meeting. So the next few months will be jam packed and I look forward to seeing you at the next event.

– Carla Seirlis MICM CCE, President – Queensland Division

New Sponsor in Queensland DivisionThe Queensland Division welcomes Rostron Carlyle Solicitors as a sponsor in 2012.



south australia

Presidents Report As we commence the second half of 2012 I am happy to report all is going well with the SA Division. A number of new members have been welcomed into the Institute, while a number of existing members will be presented with Years of Service Pins at the Annual Awards Night.

Talking of the Awards night, I am pleased that 6 young credit professionals have nominated for this years’ Young Credit Professional title sponsored by D&B. We continue to encourage our younger members to develop their networking and educational opportunities as they are the future of the credit profession and the Institute. I also pass on my thanks to the interview panel for their time spent in interviewing the YCP candidates.

Also at the Awards night three new Certified Credit Executives will receive their Certificates. Congratulations to Catherine Goedecke, Rachel Coomblas and Adrian Stewart for successfully completing the CCE.

In other news our Credit Focus sessions continue to be well patronised and we thank the presenters who give their time freely to present at these workshops. These sessions are a great education avenue for people in the development of their career, and also for experienced credit practitioners to brush up on their knowledge and skills.

The National Conference will be held in October and I hope to see as many South Australian members as possible attend. This year the Conference is being held on the Gold Coast at the Marriott Hotel.

I look forward to the remainder of 2012 and catching up with many of you at our workshops and functions.

– Trevor Goodwin, President SA Division

Adelaide YCP Networking Night April 2012What a buzz!! Adelaide held their YCP Networking Night at The Oriental on Friday 20th April. The venue is one of the busy night spots in the metro area. There was a great deal of networking to be done and from the constant chatter everyone shared their day’s experiences - it was in

full flight! Come on young credit professionals! We are here to support and encourage you – we look forward to seeing you at future events….

While on the subject of the Young Credit Professional of the Year Awards, by the time this edition is released South Australia will have announced its winner from a very strong field (at least six at the time of writing). Thank you to all the candidates – your keenness to participate clearly shows a bright future for the Institute.

Thanks also to the interview panel for very kindly giving their time in ensuring the very best candidate goes forward to represent South Australia on the Gold Coast, to our Functions Committee for organising a successful Annual Awards Dinner and Young Credit Professional of the Year Awards Sponsor D&B.

The time given to us by a wholly volunteer group is greatly appreciated.

Spotlight on a Credit ManagerDivision Publications Chairperson Gail Watt recently interviewed well known South Australian credit identity Peter Brewer LICM who reflected on his 42 years in the industry.

How did you find yourself in credit? I was a cashier clerk and the credit manager was about to take early retirement. He was a successful SP Bookmaker (aren’t they all?) Gary recommended me as suitable candidate as I had assisted him occasionally. Moral of the story? Don’t

House Full for Debtors 101.



south australia

resent being given extra work; it may just open the door to a great career opportunity. I have worked as a Credit Manager with many companies over the years: John E Hadden Pty Ltd, Yellow Pages (SA, VIC & NT) and Hills Industries Ltd. Currently I am Group Manager - Credit at Hills Holdings Ltd.

How has credit changed over the years? When I started in Credit women in credit were all but non-existent. In 1981 I met Irene Hailey and Mary Silins, the first and only female Credit Managers I encountered. They were exceptional people and very accomplished. Today, there are more female managers than males and I think it demonstrates the particular skills that only women can bring to this industry. Debt collection agencies have proliferated over the years. Insolvency law has changed and we saw the advent of Administrations. The Privacy Act became law, and more recently the introduction of the PPSR.

What issues do you identify as being the challenges facing the credit professional? I think the new PPSR legislation will keep everyone on their toes. It will take a while for everyone to get it right. Dealing with the Insolvency fraternity on conflicting interpretations as to the validity of transitional registrations. Money has been harder to collect over the last 18 months and taking into account the current state of the world economies and our own economy it suggests to me that it will take many years before some stability returns to business generally. There will be plenty of work for Credit Managers for the foreseeable future.

What advice would you give someone starting or building a career in credit? The best way to find your way in credit is to network. Make a point of meeting people whether they are young Credit Professionals, Credit Managers, and Collection Agency staff, Solicitors, Administrators, Liquidators, Receiver Managers or Trustees in Bankruptcy. Anyone involved in the industry can be of enormous help in building your career. Get involved in the AICM and attending their training sessions and completing the Certificate’s and Diploma courses.

What role do you think AICM plays in the industry and particularly has played in your career? The AICM is an investment in your career; apart from the networking opportunities the AICM is the single most valuable knowledge resource that you can have. The AICM has certainly been instrumental in shaping my career, which I freely acknowledge. Many initiatives that I have introduced into my work place over the last 28 years at Hills have been as a direct result of knowledge gained from the AICM and the people I have met within the Credit Industry generally.

Jeff Phillips and Suzi O’Connor. Melanie Bird, Maree Kairl and Gail Watt.

What would you say have been the highlights of your career to date?Joining the AICM in 1981 and then becoming a Councillor for the AICM (SA) spanning 9 years. I was Vice-President AICM (SA) division 1992/3. I was an Anti-Fraud Liaison board member in 1995.Being presented with the AICM Laurie Ellis Award 1997Also, in 1997, being elevated to AICM Fellow Status.The standout of my career in credit has undoubtedly been all the people that I have met and worked with over the years. I consider myself so very fortunate to have had the opportunity to be associated with this industry and to be associated with such interesting and inspiring people. I love my job as a result and certainly my close association with the AICM.

New Sponsor in South AustraliaThe SA Division welcomes Sinclair Consulting as a sponsor in 2012.

The Australian Institute of Credit Management South Australia welcomes

the following organisations as our sponsors for 2012





western australia/nt

From the PresidentBy the time you start reading this report (I hope you do read it!) Each State will have completed their YCPA process for 2012 and a State winner will have emerged. Congratulations to each winner and congratulations to all who competed. The industry is proud of every participant, your peers and colleagues are proud of you and I am proud of you. I hope you have enjoyed competing and trust you have learnt a lot more about the ‘Credit’ industry and learnt a bit more about yourself along the way.

For those State winners…Good luck for the National finals in October.Continuing with my theme from previous reports I would like to

welcome all members to the 2012/2013 year. Set your sights high and take aim on making it the best year possible. We all know that Western Australia (WA) is unique, however, with uniqueness comes scrutiny…everyone wants to know what West Australians are doing and why! Perhaps there is some secret formula?. Sorry to say there isn’t…of course the State is “booming”, who couldn’t on the back of one of the most rich, naturally resourced, pieces of earth on the planet.

But not all is what it seems. Why do I see an ever increasing rate of business failures happening year after year; why, when I walk down the main street of Perth , St Georges Terrace, I see people, our fellow Aussies, begging, sleeping in doorways and generally doing it very tough. The answers to these questions are as far reaching as they are difficult, to explain. Far too deep to attempt an answer in this report.

Suffice to say for now….and if you are still reading this report….”Set your sights high and take aim on making it the best year possible, both personally and professionally”.

I look forward to catching up with as many of you as I can, at our upcoming functions…check the events calendar!!

Colin Phillis MICM, President – WA Division

Kristy Shrigley – Young Credit Professional WA 2011SALES VS CREDITWith the next round of the Young Credit Professional approaching, thanks again to AICM and the sponsor D&B, I thought I would give a breakdown of my presentation last year. The topic itself is also relevant to almost anyone reading this magazine, so I hope I can provoke some thought on the topic.

So aside from the state and national interview, state winners did a 10 minute presentation to a panel of judges on a credit topic of their choice. Last year I chose to do it on Sales vs Credit titled ‘Two Sides of the Same Coin’. This is because before entering the credit industry in debt collection I was in consumer and corporate sales, and felt that this was a subject I really had some good experience with, had seen many issues

with, and could see a lot of value in trying to improve relations between these two departments in any organisation.

I started with a bit of music and a fun video to wake the judges up, and then commenced by outlining my basic career, the roles I have had, and what I observed in this. This largely detailed the conflict I have seen between the two departments, such as credit staff being perceived by sales as focussed on details that may delay or even destroy a sale. On the flip side of the coin, the issues I have now seen that us credit people face when sales neglect to consider the quality of the client or the collectability of the account, and do not get all the required details.

From there I talked about the similarities between the two departments – that they generally have the same set of skills requirements, similar regulations and laws they must abide by, and the same objectives of cash turnover.

Basically put forward some suggestions that I believe could improve co-operation and understanding between the two departments, such as improving awareness and communication between the two areas, integrating them more through shared training and development sessions, sharing resources such as information and databases, and having integrated targets and incentives.

I would recommend any organisation to look at this, and my actual presentation is available on the Credit Network Unfortunately I was not the winner, but I did get some great feedback and was on the right track!! Just be confident, know your topic, and enjoy the challenge! Good luck everyone.

TOP COLLECTION EXCUSES THIS MONTHThere are some professional non payers out there that will try some great excuses to get out of their debts. I am sure we have all heard some doosies, but just last month I had the below.1. I have been in a coma for 2 years2. My wife was shot in the head 3 times yesterday3. Inbound call – “he died yesterday.” Could not provide proof, and

months later he was still listed on white pages and still no death certificate.

– Kristy Shrigley MICM, AICM Young Credit Professional of the Year – 2011 WA Division

WA Membership ReportComing up to the end of the Financial year is sometimes a relief for some. For many, they can’t wait to get the previous year behind them. With a fresh approach outlined for the new financial year ahead, this is an opportune time to look at AICM membership and how it can benefit credit people. WA has had a constant growth in membership over the past 12 months and this is particularly due to the fact that members are

Attendees at Personal Insolvency Breakfast.ITSA Business Manager and Councillor Michael Miller.



western australia/nt

enjoying the current benefits. These include seminars and breakfasts that are discounted with highly acclaimed guest speakers, giving you the knowledge you need to equip yourself with, in the day to day running and managing of your business. These events and functions also allow you to network with other credit professionals and discover what works for other companies within your industry as well as understanding their current appetite for risk, in WA, nationally and internationally. In addition, the AICM holds workshops throughout the entire year on various Credit topics giving you crucial insight into change of legislation and what’s new and happening in the credit fraternity. As a member you have access to a member’s only recruitment service through the AICM web page. You can maintain and update your knowledge and skills through the extensive range of professional development opportunities offered by AICM. Participation in professional development programs will contribute to you gaining your CCE qualification. For tomorrows credit leaders AICM offers events and functions designed to address the needs of young credit professionals. As a national registered training organisation AICM is able to offer nationally recognised qualifications through a variety of pathways. Currently AICM offers Certificate III and IV and Diploma of Financial Services. These programs are available in workshop style face to face delivery as well as online.

For more information about these programs or becoming a member please contact AICM WA Division

– David Sinton, AICM Sponsorship and Membership Portfolio

Personal Insolvency Breakfast June 2012Personal insolvency in Australia is regulated by the Bankruptcy Act 1966 (Cth) . A person is insolvent when they can’t pay all their debts at the time those debts are due for payment. In that situation, the person may need to consider some legal arrangement to deal with their insolvency. This breakfast topic looked into personal insolvency focusing on bankruptcy:

What does Bankruptcy Mean? What is a Personal Insolvency Agreement? What you need to do Liaising with ITSA

GUESTSPEAKER: ITSA Business Manager – PerthThe seminar was very informative and our speaker had every one in

attendance listening to every word and there was many questions on this important subject to us as individuals but also in doing our jobs in credit.

The Matilda Bay Restaurant put on another excellent breakfast which was enjoyed by all.

– Warren Myers MICM, Media and Publications Portfolio

ITSA Business Manager presenting at the breakfast.

More Attendees at Personal Insolvency breakfast.Steve Thomas – NCI presenting door prize to Geoff Godden – Bunnings.

The Australian Institute of Credit Management Western Australia/NT

welcomes the following organisations as our sponsors for 2012





victoria/tasmania

From the PresidentWelcome and I would like to introduce myself, Lou Caldararo. I have become the new Victorian and Tasmanian State President. I would like to take this opportunity to thank Colin Prosser, who has retired as our Director, for his contribution and effort as state Councillor and Director. This has created a new opportunity within our state council. Jeff Hurst our former State President has taken on the role of our new Director, we wish Jeff all the best in the new role.

Just a few things about me so you can get to know me. I am the National Credit Manager for PaperlinX Australia and have been with the company for almost 16 years. I have had various senior credit management roles in different industries, yes I fell into credit and never looked back. I enjoy the challenges credit management brings. I have, over the years, become a bush lawyer and accountant a passing HR manager, a mentor and a friend and a good listener too many people and this is why I love what I do.

I have met many interesting and fantastic people in my travels as a Credit Manager and as an AICM State councillor. I encourage all our members who would like to participate on our council to nominate themselves and come on-board and help grow our membership and help the young and the young at heart to flourish in this ever demanding roll as a credit professional. I would like to wish all the YPCA’s the best of luck and hopefully a Victorian/Tasmanian will bring home the trophy at the National Conference in October.

I encourage all our members and non-members to attend our Network and social events. We have had some great speakers and the events have been well attended. We are trying new and different sessions, moving away from the traditional evening session. We have introduced morning and afternoon session for your convenience. The calendar of events can be downloaded from the AICM website and I look forward to meeting our members and non-members at monthly upcoming events.

Lastly, we are always welcome feedback and suggestions as we are always looking for news ideas and opinions. Please feel free send an email to [email protected] for any further comments.

Lou Caldararo FICM.CCE. President, Victoria/Tasmania

AICM ‘in house’ training for Veolia Environmental Services (Australia)Veolia Environmental Services (Australia), based in Keysborough, Victoria contracted AICM to conduct ‘in-house’ training for 13 of the Accounts Receivables staff in May 2012. David Clough, Credit Manager, Victoria and

David Clough, Credit Manager, Victoria, Veolia Environmental Services (Australia), sitting bottom right and Harold Shugg, AICM Trainer, top right.

Frank Gambera, McMahon Fearnley Solicitors presenting at the May network meeting.

AICM Trainer, Harold Shugg discussed needs of both the organisation and staff and agreed on the Certificate IV component ‘Manage overdue customer accounts’ (FNSCRD405A). The following is David’s review of AICM’S training program.

The training course went really well. The instructor Harold Shrugg was excellent, he has a wealth of knowledge, and was able to hold everybody’s undivided attention in the room all day. He presented in a way that made the learning relevant and interesting with a hint of humour. We covered a lot in one day from:* Establishing contact with the customer and attempt to resolve

payment issues* Privacy Act* Communication and rapport building skills* Understanding the customers situation* Making a successful call* Responding to common excuses and overcoming objections* Difficult situations* Legal action

Another pleasing outcome from the day was – all the subjects covered went over best practices, and were in line with our procedures. It was also great that we were able to share this with our Tasmanian counterparts. To obtain our Certificate IV in credit management we all need to complete an online assessments. We all have received a learner resource folder to reference, help and assist with the online assessment. I would like thank the AICM and Harold for a great day that will benefit all who attended.

The Australian Institute of Credit Management Victoria/Tasmania welcomes

the following organisations as our sponsors for 2012



Rob Nicholls, National Head of Sales at GE, presenter at the June network meeting.

Optimizing working capital by creating a better insight.

Insight into the relationship with your client is vital

and will lead to tangible results in reducing the costs

of your working capital. Customer intimacy results

in mutual understanding and better financial and

operational results. A better result is just a matter of the

right approach: get closer to your customer and optimize

your working capital. When will you start getting new

insights? OnGuard. A decent way of doing business.W W W. O N G U A R D . C O M

Adv 210 x 297_Kijkertje_UK.indd 1 21-06-12 14:20

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