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Thread: A culture of non-payment

  1. #11
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    I have to confess that our company operates on a Pre-authorisation form, but this hardly has any "credit" information, other than contact details, and names of contact person for accounts. It is more a "provision of information" regarding the correct identification and instructing us to carry out the work.

    We have discussed a specific "credit information" form taking all the requirements of the credit act into account, but so far have not done anything.
    Due to the type of business we operate it is not feasible to do a credit check on a one off payment of approx R4,000. Where possible we attempt to get paid on completion. I was discussing this with our directors over the weekend, and came to the conclusion that we might be forced to make use of a credit bureau. I was told that they charge as much as 5% of total accounts receivable?
    We don't clear that much profit on turnover as it is, and a price increase to cover any additional costs is not feasible.
    So perhaps we have to accept the financial exposure! at this point we are not sure of the best course of action.

    Yvonne Symons

  2. #12
    Site Caretaker Dave A's Avatar
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    I think many of us are in the same position. My thoughts of what needs to be covered at this point are:

    Identification
    Full name and ID number of person signing
    Registered name and registration number of legal entity if representing another entity (company/cc)
    Nominated domicilium citandi et executandi (need English translation)

    Authorisation
    Signatory confirms authority to sign on behalf of legal entity

    Debt recovery issues
    Proof of debt
    Service of notices
    Consent to summary judgement in the event of debtor failing to make payment as per agreed terms
    (hints).
    Interest on overdue amounts
    Debtor liable for all legal and collection costs on an attorney client scale.

    From a process point of view, I have an instruction form that must be completed by the client before we commence any work. I just want to fix the fine print so that legal collection after failure to pay is a really simple process.

  3. #13
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    Small business owners frequently “fly by the seat of their pants” when it comes to credit control, and yet this is one of the most likely reasons for a small business’s financial failure.

    We are in a niche market and generally our total monthly exposure is spread across a wide range of clients, we have been able to manage our bad debt risk by controlling 30 days from invoice terms.

    There has been a slow change in our client base to a higher exposure, and we now feel that we need to be more professional in our handling of our credit control.

    I have been told that it is possible to obtain a report when a credit application is originally considered, but the real requirement is notification if a company has “changes” in its financial affairs.

    Is it worth paying for credit reports? Are they accurate? is fair warning given timeously?

    How do the majority of small business owners handle their credit control?

    Yvonne

  4. #14
    Platinum Member Marq's Avatar
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    I found in the past that credit reports were just confirmation of stuff that one already knows. The information is usually old and the quality dubious.

    The best info usually comes from references and keeping your ears to the ground. Keeping close contact and going with gut feel is still the best.

    Make sure your risk is spread and you are not open in any one area. Any large deals should have some homework done. Besides getting more refs, check the company's details at cipro. I am not sure if one can still get a bank report worth anything still and a check at the credit bureaus for judgements and legal stuff should be obtained.

    The best deal of course is cash up front, but if you can get a large deposit or some form of guarantee then thats good.
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    For such a tiny part time business that I run I only see cash and hardly have any contract. I admit however that I once rendered my services to EThekwini Municipality and I was afraid to wait for payment but nonetheless there was no deliquency on that.

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    Silver Member Frankincense's Avatar
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    ....technological involvement....

    Identification
    RFID Bio Chip Implant - only means to transact

    Authorisation
    Authority to be Truth, and not Truth to be Authority

    Debt recovery issues
    None - Chip De-activation - Transactional Incapacitation

    ....roll out....


  7. #17
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    New idea for debt control?

    A youngster here in the US purchased a second hand vehicle and had insufficient deposit for the entire amount to be financed, he was permitted to have a three month "double" payment for the "deposit" directly to the car dealership! provided he agreed to have a device installed by them in his vehicle which would have stalled the vehicle should he not pay the additional deposit amount in time!

    The device reminded him - with a very loud noise when the payment was due! (Even when he was not yet in default!).

    This is not an urban legion, we know the young man personally!

    Just goes to prove that the idiom "the squeaky wheel gets oiled first!" has some validity.

    Yvonne

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    The tone of this post is quite concerning. In our business' frame of reference we have our terms and conditions printed on the bottom of every job sheet. Now the idea is to have the client sign the job sheet therefore accepting the terms of service. However most of the smaller clients seem to ignore this agreement. The maximum we allow for payment is 30 days in terms of credit. The concerning thing is that 3/4 of our clients defer payment upto 120 days in some cases. ... Legal threat doesn't seem to make a difference. We have one client that has consistently refused to pay for services rendered for over 2 years now. She's costing me a fortune just in phone calls. Turns out she's already under administration and refusing to furnish us with the administrator's contact details...

    I agree pre-warned is pre-armed...

  9. #19
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Spencer View Post
    We have one client that has consistently refused to pay for services rendered for over 2 years now. She's costing me a fortune just in phone calls. Turns out she's already under administration and refusing to furnish us with the administrator's contact details...
    Write it off on your books, hand it over for collection, and sue only if it's worth enough money.

    I'm afraid those are the ones you have to sniff out in advance somehow.

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