Even as businesses across Australia and New Zealand brace for rising interest rates and costs in the months ahead, protecting one’s cash flow has never been more crucial. Unfortunately, payment delays, along with supply chain issues and labour shortages, continue to be a major pinch point.
“Cash flow is the lifeblood of a business. Without it, a whole heap of problems can arise,” observed Matthew Gannaway, Chief Executive Officer at EC Credit Control.
“From paying suppliers and staff to buying materials, there’s probably nothing more important than a healthy cash flow. Without it, they could face additional pressure from their creditors, and it can take a toll.”
Unfortunately, many businesses can struggle with putting structures in place to ensure smooth, punctual payment cycles when it’s not their core business.
As timelines extend between payments, the true cost of not getting paid extends beyond pending invoices. For the average unpaid amount of around $5,000 offering a $250 profit margin on the job, the true cost of the debt is almost 20 times that amount – it lies in the more than $90,000 revenue required to pay back the money lost.
Mr Gannaway elaborated, “It probably starts with their onboarding process and not having an adequate process to clearly understand who it is that they’re dealing with. Short of sending a couple of emails, nothing tangible happens.”
He estimates around 20 to 30 per cent of such payment delays end up translating into strong legal action, which can further affect business activities.
“You wouldn’t do that for a couple of thousand dollars but for larger amounts like $20,000 or $50,000, the debt makes a real difference to a small business,” he noted.
Exploring debt management and resolution
Perhaps the best way for businesses to keep up their credibility and relationships while still resolving debt lies in using leading specialists in the industry. With over 80,000 businesses assisted in its three decades of operation, EC Credit Control proudly provides friendly, approachable services to help improve the financial well-being of businesses.
“We really try and maintain the relationship between both parties while seeking resolution on their accounts,” Mr Gannaway explained. “Depending on the reasons, the process could go a few different ways, but we really see ourselves as a support service.”
Upon registration, their simple six-step debt resolution process begins with just a two-minute initial stage to load unpaid invoices.
Leveraging data-driven solutions like automated phone data systems and seamless linking to Xero, EC Credit Control has achieved impressive results through its resolution-based approach. In Australia alone, their more than 40,000 clients range from small businesses to large corporations.
“A part of our process is asking for feedback from the businesses that we’ve resolved debt from, like a customer survey. We’re currently sitting at 4.2 out of 5 stars, which goes to show that we’re really trying to work with everyone involved to get the desired result.”
Debt resolution doesn’t have to be an antagonistic process, he adds.
“That doesn’t really get anybody anywhere. We don’t want to have that type of confrontation. Instead, the questions we ask are, ‘what’s the best way to resolve this account with you today?’” Mr Gannaway said.
Delivering business documents
Apart from specialising in drafting contracts and privacy policies, a crucial part of their successful process has been ensuring appropriate Terms and Conditions of Trade are in place. Not only does it clearly state obligations and consequences, but it outlines all the duties, timelines, and details involved for both parties.
Malcolm Gay, Australia Sales Manager at EC Credit Control, noted: “It’s a document that establishes the clear relationship with your customer from the beginning, so there’s no ifs or maybes. These terms can vary between industries and between businesses within the same industry. There’s no one size fits all.
“It’s best practice to have some custom terms and conditions in place that are specific to a business and its operation. It’s also important to review them every couple of years or so when legislation changes because it’s likely business operations have changed over time as well.”
As businesses prepare for uncertain times ahead, ensuring processes are kept in writing offers a crucial layer of protection.
“While it may not have been on a business’s agenda to have something like terms and conditions in place, it’s an important step to protect the business in today’s economic climate,” Mr Gay said.
To explore EC Credit Control’s debt resolution systems, click here or call their friendly customer service team on 1300 361 070.
To contact an Area Manager, click here.