Credit Management in Australia - October 2016 by AICM

Volume 24, No 1 October 2016

2016 Conference speakers:  Patrick Cavanagh pg 10  Dr John Hewson pg 11  Prof Helen Anderson pg 18 And lots more…

Payment times on the rise Experts including Dr Hewson look at trends and impacts

Contents DIRECTORS Australian President – G.L. Morris MICM CCE Australian VP, Legal Affairs – J.A. Neate MICM Professional Development – B.J. McCallum MICM YCPA & CCE – G.C. Young MICM CCE Member Services – J.G. Hurst FICM CCE Finance – G. Odlum MICM CCE

Volume 24, Number 1 – October 2016

Message From the President

Human Resources

Arriving at the ‘new normal’ and tapping the talent within

CHIEF EXECUTIVE OFFICER N. Pilavidis MICM CCE Level 3, Suite 303, 1-9 Chandos Street, St Leonards NSW 2065 PO Box 64, St Leonards NSW 1590 Tel: 1300 560 996, Fax: (02) 9906 5686 Email: nick@aicm.com.au

By Joshua Rutland

EDITOR/PUBLISHER Nick Pilavidis | Email: nick@aicm.com.au

Credit Management

Doing more with less: Credit management’s great challenge By Alexandra Cain

We’re all in the conflict business

Big business lags small business payment times CONTRIBUTING EDITORS Colin Magee NSW Stacey Woodward Qld Gail Crowder SA Lisa Marr WA Donna Smith Vic/Tas

By Alexandra Cain

ADVERTISING MANAGER John Field FICM, CCE, ACPM, Ph: 1300 560 996, Mob: 0412 732 831 Email: johnfield.aicmq@aicm.com.au

By David Jackson

EDITING and PRODUCTION Anthea Vandertouw | Ferncliff Productions Tel: 0408 290 440 | Email: ferncliff1@bigpond.com 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 3, Suite 303, 1-9 Chandos Street, 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, 2016.

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CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Tentative signs of improvement but corporate insolvencies remain at elevated levels

By Kelly Trenfield

ATO pledges tougher action By Georgina Wilkins

QLD Division: YCP finalists with Mark Russell.

NSW Division: Golf Day winning team â&#x20AC;&#x201C; Wise McGrath.

48 SA Division: Michael Seychell, D&B and YCP winner George Vahaviolos.

Vic/Tas Division: Tasmanian network event.

Software SAP software tips for credit management

By Beth Gray

Technology Equating the link between financial document delivery and better cash flow

55 WA/NT Division: Almin Uzicann, Natalie Batten, Jo Western,

AICM Training news

Cindy Louis, Jason Louis, Debra Allen and Kevin Allen.

38 40

Getting the mix right Training Calendar

YCPA National Finalists

Joshua Rutland

Around the States New South Wales Queensland South Australia Victoria/Tasmania Western Australia/Northern Territory New Members

42 45 49 52 55 57

20 Nick Cooper

10 Patrick Cavanagh

30 Mark Hoppe

16 David Jackson

32 Kelly Trenfield

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From the President

Grant Morris CCE Australian President

his issue is our only hard copy magazine

and we have widened our appeal to all with the

of the year which I know is preferred

popular Women in Credit events (WinC).

by a small number of our members who like to flick through the pages on the

with record numbers of members completing the

train, the couch or wherever, however unlike the

newly introduced exam paper to confirm their

soft copy editions issued throughout the year it

professionalism and standing.

has a much longer lead time. This means it is less

We have established a solid financial base for

current and misses very recent events (at the time

future growth and are starting to grow our influence

of writing I know the Swans are into the Preliminary

by striving to be the voice of the credit profession

Final against Geelong and when you read this I really

through lobbying of Parliament and Government

hope I am still singing “Cheer, Cheer the red and the

Departments for positive change in the credit arena.

white” and they are the Premiers). The hard copy is

Many of you have heard me talk about genuinely arms

much more costly to produce, does not provide links

length creditors receiving preference claims, claims

to reference material and other articles, cannot be

being made 3 years after a debt was written off and

forwarded to your colleagues around the country

refunding preference payments to Liquidators and

and is not accessible anywhere in the world 24/7

no funds being distributed to creditors. We need this

like the soft copy.

current practice improved and are working earnestly

The introduction of the soft copy magazine was an important change for us if we were to maintain

to do so. Change must occur at all levels of an organisation

our relevance and meaning to our members and

and I am very pleased we were able to secure Nick

the wider credit profession. Change is good and

Pilavidis as our CEO when Terry Collins retired 2 years

necessary to ensure we remain current and to

ago. Nick is a former National Credit Manager and

ensure new doors are opened and other avenues

Young Credit Professional of the Year winner. He has

explored.

lived the industry and combined these experiences

The AICM has undergone much change in the last few years including the widening of the Credit Team of the Year Award, the introduction of the

with his enthusiasm to continue to improve our service offerings. My maximum 4 year term is up and after 10 years

Division based Pinnacle Awards where we recognise

on the Board I must step down. A new President will

our Credit Officers, Team Leaders and Managers and

be elected before the publication of our next issue in

particularly our comrades in crime in the Insolvency,

December.

Legal, Recruitment and Mercantile areas. There has been big growth in group membership

There has been significant growth in CCE’s

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

I have relished my time as President and the changes that have been initiated. I will be excited

From the President

aicm

to watch our new President along with Nick and

At the conference we will be announcing the

the Board move the AICM further forward as a

Credit Team of the Year supported by Veda and the

viable educator, trainer and voice of the credit

Young Credit Professional of the Year Award winner

profession.

supported by Dun & Bradstreet.

The Board is a beaut positive bunch of men

November is a big month on the credit calendar

(we are working towards wider gender representation

with the new unfair contract terms legislation kicking

and hopefully have the opportunity in October when

in. It will apply to all standard form contracts entered

an alternate Director is appointed from the incoming

into or renewed on or after 12 November 2016, where:

President’s Division). Your Directors are serious

zz it is for the supply of goods or services or the sale

about developing the credit profession and I would like to thank VP James Neate (SA) and my fellow

or grant of an interest in land zz at least one of the parties is a small business

NSW Director Gregg Odlum for their wise council

(employs less than 20 people, including casual

and support. Steve Mitchison (WA) recently stepped

employees employed on a regular and systematic

down and has been a tower of strength in working on

basis)

professional development and all matters WA. Long

zz the upfront price payable under the contract is no

time mate and Membership Chair Jeff Hurst (Vic)

more than $300 000 or $1 million if the contract

(what can I say about Jeffrey that he hasn’t already

is for more than 12 months.

said) like Greg Young (Qld and YCP, CCE and CToY)

The Division Pinnacle Awards will be held during

are seriously passionate supporters of all things AICM

November and I ask you to consider now who you

and I thank them all for their friendship and support

might nominate for your State’s Credit Officer,

and for sharing my passion.

Credit Supervisor, Credit Manager, Lawyer, Recruiter,

This year’s national conference is being held at the Sea World Conference and Convention Centre on the Gold Coast from October 12 – 14 and is a must for all serious credit professionals. It is shaping up

Collections or Consultant of the Year Awards. This is a great opportunity to recognise your local achievers. I hope we see you at an AICM event soon as you support the Institute which supports you.

to improve on last year’s best ever conference with headline speakers including Dr John Hewson and his Economic Key Note address and Michael Pascoe as MC. They are joined by Adjunct Professor of Law Patrick Cavanagh, Professor Helen Anderson from the University of Melbourne Law School and Eric Duckler from GE in the US.

– Grant Morris grant.morris@coateshire.com.au Ph: 0407 405 198

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Human Resources

Arriving at the ‘new normal’ and tapping the talent within By Joshua Rutland* The need to evolve and remain relevant within any industry, for large and small organisations alike, is crucial to ensuring ongoing viability and sustainability, thus allowing us to deliver returns to shareholders. Given that we accept the need for continuing evolution, I thought it an ideal opportunity to take a closer look at how, in my opinion, this challenge impacts Credit Risk Management (CRM). We continue to face a low growth environment, continue to see tighter margins and increased expenses which ultimately drive the need to challenge the way in which we do business. Many businesses have undertaken exercises in LEAN or continuous

improvement; often driven by reviews to improve current processes and gain efficiencies by delivering improved customer and partner experience. This of course includes compliance, reduced operating costs – and the list goes on. As we continue in an environment with the expectation to ‘do more, with less’ we need to be open to the concept of really questioning our core functions and objectives and how we might go about achieving this. Within CRM, across different organisations and industries, we are all driven by the risk appetite and profile of our organisation. However, the message seems to be consistent; minimise operating cost, minimise credit loss, maximise profit without materially impacting our profile and individual proposition. There are many ways in which we can strive to achieve this but I am forced to question the best way to do this when we look at the current environment as ‘the new norm’.

Necessity is the mother of invention1 – “when the need for something becomes imperative, you are forced to find ways of getting or achieving it”2

Joshua Rutland

We are presented with an opportunity to embrace challenges and leverage off not only the wealth of experience and knowledge that we have in our businesses, but to new and innovative thinkers who may not be

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

as constrained by the conventional obstacles we have traditionally accepted as insurmountable. If we can embrace the need to change and be willing to ‘up-end’ things whilst taking some risk (always within our appetite), we can arrive at somewhere new that is better than could have ever been achieved through the natural evolution of change. In some ways you could consider the process to be jumping a few steps in the evolutionary cycle. I know, it sounds simple in theory and something that we would all be willing to jump into head first, however we need to take a considered and strategic approach if we are to avoid failure to execute and/or delivering on an improved model. In planning our approach, several key questions come to the forefront of my mind before we even get into change management principles; —— What technology exists already within our organisation that we can leverage off? —— What are our industry peers doing/what can we learn or apply from other industries? —— How can talent in our organisations assist in shaping the solution and execution? —— Are there emerging trends we need to consider (i.e. market movement)? —— Are we reducing or increasing risk? —— What are our budgetary constraints? —— And most importantly, how do we measure our success?

Human Resources

As you read this very brief list of questions, you already called out a never ending list of obstacles and issues that would have you throwing your hands in the air – but this is where we need to be prepared to innovate and take a chance. When you start to enter solution design, I have always found it beneficial to take a similar approach to that of an exercise of root cause analysis. Get to the bottom of it (ask the 5 why’s), consider every possibility (even those that are at the extremes of viable) and have the people in the room that know the business the best. Even when you think that you have arrived at the perfect solution, have someone in the room (whether a business analyst or even someone from your own teams) who can play devil’s advocate and really make you work to prove that you have the right decision at the top of the list. One of the important considerations often left off the list is people and culture, and these add an additional layer of complexity. It is important to understand the prevailing culture before embarking on any journey to re-invent the wheel. This allows us to understand our current state and any challenges that we may face along the way (including resistance to change). As any

experienced leader will attest, if we do not proactively address this before heading too far down the rabbit hole, our level of success may be greatly hindered when we emerge on the other side. This certainly can be a challenge that we face when implementing any change, however it is certainly something to be acutely aware of, especially when we are talking about significant change. As a natural extension, it is also an opportunity to consider what kind of culture we hope to have at the end of the exercise and how we can go about achieving this throughout the change process. As you work on delivering any new vision the people need to understand, share and feel connected to the project for the end result to be truly successful. Many of you reading this carry far more years of experience, a lifetime of academia and wisdom, however I would encourage you to share that wisdom to achieve a new vision. Find that innovator who can challenge the status quo, understand the business and offer a new and insightful perspective. We need to be willing to step outside our comfort zones, whether it be the new starter at the bottom of the corporate ladder who has an idea and is pitching that to an Executive,

or the Executive on the receiving end hearing that proposal – and looking past the nerves and questionable business case, to see the opportunity to be ultimately gained (for those that may have seen the TV show – Shark Tank). At the end of this process embracing the opportunity to take a step back, understand what it is that you are trying to achieve and how you will go about achieving it will lead to a new and improved model that delivers on; —— Improved customer/stakeholder experience —— Improved staff satisfaction and engagement —— Improved compliance —— Reduction of waste in process —— Improved operational efficiency —— Reduced operating costs Who wouldn’t want to achieve these things and have fun along the way? Best of luck on the journey. *Joshua Rutland is Manager Collections and Business Enablement, Bendigo & Adelaide Bank. Joshua was a 2015 and 2016 Victorian finalist in the Dun & Bradstreet Young Credit Professional Awards. 1 2

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October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Human Resources

Doing more with less: Credit management’s great challenge By Alexandra Cain*

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Human Resources

Can you pull a rabbit out of a hat? That’s been the ongoing expectation on credit management departments as budgets shrink and economic jitters continue. Three leading businesses describe their journey to consistently improve their operations. Credit management teams are under pressure. Head counts are reducing, offshoring is increasing and technology is improving. While this means the industry has had to keep a constant focus on change management, it’s also producing opportunities for businesses to improve efficiencies and cash flow. Here, we find out what three top companies are doing to ensure their credit management teams continue to add value to operations.

Take the sales team on the journey

Fabian Sommariva Fabian Sommariva, group credit manager with recruitment services business Allegis Group, formerly Talent2, has witnessed great change in his team since he joined the business eight years ago. “When I started with Talent2 I had five people working in our Australia and New Zealand operations. As the business grew, both through acquisition and organically, that role

turned into an Asia Pacific role,” he says. Sommariva now manages a team of eight in Manila as part of a shared service centre, alongside his staff of six in Australia and one team member in China. When it comes to introducing efficiencies the starting point was an assessment of the areas and processes that require improvement. “Then you need to explore all options available to you. These include third party providers or moving the function to another area because it doesn’t form part of the core responsibility,” he explains. The billings team, which reports to Sommariva in Australia, is an example. It was responsible for numerous finance-related tasks that were not core to billings. Those tasks have now been absorbed by the accounting and finance team. One of the most important aspects of Sommariva’s role has been introducing automated workflows as part of the collection process. “This allows us to deal with scalability with the anticipated growth over the next five years.” When it comes to managing offshore teams, Sommariva says it’s important to take the same approach as to managing internal teams. It’s

also essential to understand the vagaries of the market where the team will be located. “Find the right people, train them and give them an environment in which they have the ability to succeed. Structure their pay so they are rewarded when they exceed expectations and act quickly to identify great staff to ensure you continue to grow the business in a successful way,” Sommariva advises. “Make sure they have a complete understanding of processes, that they’re clearly documented and easy to find. And hold them accountable. I talk to some of my peers and they manage their team on a handsoff basis, whereas my approach is they are part of my team. I manage them as if they were in Australia. To me, that’s been the fundamental difference between success and failure,” he adds. Taking this approach has elevated Sommariva so he is not too bogged down in administrative work. “I’m not someone that sits in the back office. I’m seen as a business partner. We work with sales so they understand the end-to-end cash flow process, which helps decrease payment times.” This involves spending time training sales staff so they understand the client’s procure-to-pay process,

“I’m not someone that sits in the back office. I’m seen as a business partner. We work with sales so they understand the end-to-end cash flow process, which helps decrease payment times.”

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Human Resources

and ensuring the correct questions are asked at the initial point of engagement. Re-imagining the credit management function has required continual management support and Sommariva says it has been important for him to clearly articulate the return on investment of the initiatives he has introduced. For instance, the business is in the process of considering implementing a new credit management software program, which will help take costs out of operations. To secure this investment Sommariva presented the business case for it and what the financial impact will be for the business. “Create a story of the pros and cons. Cash plays an integral role in all businesses. So being able to explain how you can improve cash flow will help you to secure funds,” he says. The investment in software the business has made means it’s less reliant on manual processes. “Now we’ve got dashboards and on-demand reporting at the click of a button. We also used to have to direct debit for hundreds of clients. That was a very lengthy process to manually allocate invoices. What used to take us between two and three hours now takes us forty-five seconds,” he says. Of course, training and professional development has been critical given the changes the credit management team has experienced recently. Says Sommariva: “When we built the team in Manila we spent substantial time training staff on systems and processes. We also spent a great deal of time training the team on the procure-to-pay process within organisations in Australia and throughout the region because they’re very similar in most companies.” He says training never stops. “We have three hour meetings every fortnight that focus on specific topics, for example purchase orders. We look into reading them, understanding

them and what they mean, and how they work both from a client’s perspective and how we use them.” Ultimately, says Sommariva, improving systems has been a process of incremental gain. “When I started here we used to send out invoices by mail. Now we do that electronically and that has led to a major improvement in collection times and days sales outstanding.” The upshot of the work that has gone into slowly transforming the credit management function is that the team is achieving record results, a great foundation on which to continue introducing efficiencies and improvements.

Responding to market dynamics

David Hunt When David Hunt, national credit manager, credit services, Fujifilm Australia, started managing his team seven years ago there were eight people in it.

“We were in the heyday of film and sales were great. We were introducing a medical offering to the market, and in the meantime starting a graphics and printing division. We were building on the success of film and the imaging side of our business. Since then our product mix has come under significant pressure, particularly due to the fact people use their smartphones for taking photos rather than compact digital cameras. So that whole market pretty much ceased overnight,” says Hunt. “The other challenge is that people aren’t printing photos anymore. They’re just sharing them on social media. That led to big redundancies including a reduction in my staff to three people. Even though sales are reduced, there’s still a significant requirement for a functioning credit department. We’re still making the phone calls – we might not be ringing for $10,000, we might only be ringing for $5,000. But we’re still making the phone calls,” he adds. Hunt says he has been very focused on automating many tasks in his division. “We started by breaking down our everyday tasks with a view to seeing what could be automated. There were some obvious early wins. For example, at the beginning of every month a credit controller would spend the first few hours of their day placing customers that were outside of terms on stop supply. We automated this process, which required significant communication with the sales department because stop supply is not ideal from their point of view.” The credit, sales and IT divisions worked together to build a product

“Our biggest gain is a customer’s ability to pay their account through a payment gateway link on their notifications, through the customer web portal.”

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Human Resources

that suited everybody and at the same time automated the process. When the system automatically puts a customer on stop supply the sales rep is notified routinely by email. Clients also come off stop supply once the account has been paid in full. Says Hunt: “That simple step has saved each credit controller hours of work each month.” Experts agree the stop supply mechanism must be sensitively managed. “A lot of commercial credit departments manage risk by not taking it. It’s easy to put a customer on stop. Usually the stop supply action drives payments from customers,” says Michael Blonk, principal consultant at Herringbone Consulting. Blonk says what gets forgotten is the business lost to a competitor through this process. So a more nuanced approach such as the one Fujifilm has taken is required to avoid business being placed with a competitor. Central to Fujifilm’s process has been an IT system called Office Torque, which is credit management software that enables significant automation and functionality around the credit control process. This includes notifications to customers during the accounts payable cycle as to the state of their account, with notifications escalating as the account ages. It has a workflow system credit controllers can use to manage their time, sorting accounts in a worst to best order, so they can work their way down the accounts each day. “Our biggest gain is a customer’s ability to pay their account through a payment gateway link on their notifications, through the customer web portal. When they pay they can also tick off the invoices they’re paying and we receive an electronic remittance advice, which enables us to auto allocate those invoices from that customer’s account electronically. The payment comes in overnight and is also allocated to the account, saving significant time in allocations from the credit controllers,” says Hunt.

The innovations Hunt and his team have introduced have not only made processes more efficient, they have also led to better cash flow for the business at a point in its history when this is absolutely essential.

Connecting with sales

Allister Morris Shifting the positioning of the credit function so it now sits under the commercial rather than finance team has recently been a focus for Allister Morris, national credit manager, DP World Australia. “The commercial team fosters and maintains our client relationships with major shipping lines around the world and they are in the best place to understand if a client’s position changes in the market,” Morris explains. Repositioning the team has happened alongside a push to introducing efficiencies through technology. This has allowed the business to improve the way it checks references and verifies director information. It has also reduced payment times for some clients. “We’re always educating internal stakeholders to sell the benefits of what we’re doing and the importance of risk assessments when taking on new business,” he says. Staying close to the rest of the commercial team also means that if there is a problem

“The commercial team fosters and maintains our client relationships with major shipping lines around the world and they are in the best place to understand if a client’s position changes in the market.” with a client’s invoice the appropriate sales rep is aware of this when meeting with the client. Another recent initiative is an online credit application process, which reduced the turnaround time for approving new clients. “We also review our terms and conditions on a yearly basis and require clients to re-acknowledge those terms and conditions online,” he says. Introducing these efficiencies has allowed Morris to play a more active role in the business and collaborate with the commercial and finance departments. “This gives us information on our clients’ future prosperity and minimises our risk,” he says. Achieving the right balance between risk management and commercial imperatives will remain a focus for DP World.

*Alexandra Cain is a freelance finance journalist who has written for many leading Australian and international business publications.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Human Resources

We’re all in the conflict business Resolving a dispute quickly and well goes straight to the bottom line in credit management, so the good news is that we all have the ability to be brilliant at dispute resolution, it’s just a matter of gaining negotiation and mediation skills. Patrick Cavanagh will share his top tips with attendees at this year’s AICM National Conference.

Listen carefully to what people say ... Ask yourself, ‘how can I use this information to sort this particular problem out?’

Patrick Cavanagh, Commercial Negotiation facilitator at UQ Business School Executive Education, Adjunct Professor of Law at the University of Queensland’s TC Beirne School of Law, and one of Australia’s leading commercial negotiators and mediators, has 30 years’ experience in teaching the practice of negotiation and mediation. Cavanagh will share practical knowledge of how credit managers can use these key skills in dispute resolution at the AICM National Conference in October, and we caught up to find out what he wants attendees to take away from his session.

Build your people skills Being a good negotiator, in Cavanagh’s opinion, essentially requires someone to have good people skills. At its core, negotiation is not about haggling; it’s about getting the information you need to resolve the situation. So plan what you need from a conversation before it happens and work out how to bring the particular person you will be dealing with onside so that you get what you need. “You’ve got to be good with people,” Cavanagh explains. “The way I deal with Uncle Fred at the family reunion isn’t the same way I speak with Aunty Mary; you have to have different skills for different people and recognise when to draw on them.”

Listen carefully

Patrick Cavanagh

While you’re focused on speaking to people in a way that makes them comfortable so that you can gain the

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

information you need, don’t overlook listening to what they are saying. The information they provide is the basis of successful negotiation. “Listen carefully to what people say,” Cavanagh says. “Ask yourself, ‘how can I use this information to sort this particular problem out?’.”

Don’t dillydally Do something with the information you have gained, and quickly. Cavanagh uses the example of HR to illustrate this point, but it applies equally to credit management. HR managers, he says, can act quickly to resolve conflict in an organisation if they have the information they need sooner, rather than later, and can often avoid needing external – and costly – intervention. “HR need to be a lot better at resolving conflict earlier, rather than passing the parcel to an external supplier that charges huge amounts of money,” Cavanagh explains. “They should be striving to put the fire out while it’s small, when it’s manageable.” According to Cavanagh, every one of us is in the conflict business, even if it’s not spelt out in our CVs.

Patrick Cavanagh is Adjunct Professor of Law (Conflict and Interest) at UQ TC Beirne School of Law. Patrick is one of Australia’s leading commercial negotiators and mediators, and has facilitated the resolution of hundreds of commercial, property, tax, franchise, and partnership cases. He has also been instrumental in setting up and developing many alternative dispute resolution (ADR) organisations, both in Australia and overseas.

Credit Management

Big business lags small business payment times globally By Alexandra Cain* Right around the world large businesses are taking longer to pay their bills compared to small firms, putting pressure on the entire commercial ecosystem. Should global economic conditions deteriorate, this behaviour will put pressure on small entities and large across multiple sectors.

Trade payment data from around the world indicates global economic conditions are improving. But the data also clearly shows small businesses are funding the cash flow of larger companies. This has consequences for the global economy should credit conditions tighten. Here, we explore payment trends around the world, and the potential impact of these trends. First, it’s important to understand Australia’s trade payment times as a benchmark. According to Dun and Bradstreet’s most recent data, the trend for faster payments stalled during the second quarter of 2016. The national average for the time it takes businesses to pay their bills is now sitting at 44.9 days. The 2015 figure was 49.2 days. It’s worth noting the second quarter of this year is the first time payment times have climbed since 2015.

As Stephen Koukoulas, economics advisor to Dun & Bradstreet noted in a statement released with these numbers, “the trade payments data are often volatile on a quarter-byquarter basis, which means it is too early to be sure whether the slight rise in payment times is a sign of a weaker performance from the business sector or part of that volatility.” In the first quarter of this year 68 per cent of businesses settled their invoices within one to 30 days, with 24 per cent of businesses paying bills between 31 and 60 days, up from 21 per cent last year. This rise in payment times was consistent across the country, the Northern Territory being the only exception, with payment terms dropping from 42.5 days in the first quarter to 43.3 days in the second quarter. The ACT is the worst of all the states, with average payment

“ The trade payments data are often volatile

on a quarter-by-quarter basis, which means it is too early to be sure whether the slight rise in payment times is a sign of a weaker performance from the business sector or part of that volatility.” – Stephen Koukoulas, Economics Advisor to Dunn & Bradstreet

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

times of 50.4 days. Businesses in Tasmania are the best payers, with 41.8 days being the average payment time. From a sector perspective, businesses in the communications and mining sector increased payment times, with the average payment times for companies in the communications sector now 56.4 days, up from 49.9 days in the first quarter. Businesses in the finance, insurance and real estate industries achieved the biggest improvement in payment times, dropping seven days from 53.1 days to 46.1 days in the second quarter. Veda collects information on payment terms or on accounts receivable data from its data suppliers. According to its figures, as at June the days beyond terms, on average, were 11.8 days. Damien Stevens, Veda senior product manager, commercial risk, says this figure, “has been fairly consistent over the last 12 months. The average for the last 12 months is 11.6. We do see a difference depending on the size of the organisation and industry. If you have a look at larger organisations that have more than 100 employees, as an example, their days beyond terms for June were 16.7 days compared to the average of 11.8.”

Kiwi trends mirror Australia Across the Tasman payment data reflects similar trends to Australia’s figures. Like Australia, New Zealand has experienced a marginal rise in

payment times, but overall, payment data remains well below average. Average payment times have remained at about 35 days for the last four quarters. Dun & Bradstreet’s numbers show New Zealand businesses took 35.5 days on average to pay their invoices during the second quarter of the year, up from 35.2 days during the first three months of 2016. The second quarter 2016 Trade Payments Index was 0.5 days higher compared with the same period last year. But the figure is still substantially lower than the 10-year average of 42.6 days. Kevin De Beer, managing director for Dun & Bradstreet New Zealand, said in a statement payment data reflects the underlying strength of New Zealand businesses’ cash flow. “This strong result is in line with expectations internally and continues the stable trajectory of historically low payment times observed over the last year. While this result pre-dates the Brexit referendum, we are simply not observing that the economic uncertainty pervading markets at a global level is impacting business cash flows domestically.” “With continued low interest rates, a stable New Zealand dollar and barring significant global economic shocks, invoice payment times should remain at similar levels for the medium term,” added De Beer. Businesses in the agriculture, fishing and communications sectors improved their payment times on average, which reduced payment

“With continued low interest rates, a stable New Zealand dollar and barring significant global economic shocks, invoice payment times should remain at similar levels for the medium term” 12

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times by almost four days over the second quarter. But businesses in the manufacturing, wholesale and retail sectors took longer to pay (by 2.2 days, 2.5 days and 2.4 days respectively) compared with the previous quarter.

Brexit fallout could still be felt While it’s not possible to compare likefor-like figures across countries from Dun & Bradstreet’s figures, individual country data does paint a picture of payment trends around the world. Its data shows 24.1 per cent of British companies pay their bills on time. This compared to the average European figure of 37.5 per cent. Most British companies (64.7 per cent) pay on average between one and 30 days late. Micro companies are the best payers, while only 7.9 per cent of large companies pay their invoices by the due date. On an industry basis the best payers are agriculture, forestry, hunting and fishing. The worst payers are retail trade. Philip King, chief executive of the UK Chartered Institute of Credit Management, notes there are considerable differences by sector and region, with average businesses paying around 20 days beyond terms. “There has been some improvement in this position in recent times, especially since fighting late payment has been a political vote winner and the government has committed to paying 80 per cent of its suppliers within five days,” he explains. King says the consequences of late payment are considerable: it impacts investment, recruitment and stifles growth. “Conversely, improving payment performance delivers greater confidence and availability of cash which leads to growth and a more stable economy. Critically, it helps to create a more sustainable small business community, which is the engine for growth.” Late payment is, however,

Credit Management

“ Payment terms are a barometer for

economic conditions. If they are rising, the economy will slow down, irrespective of GDP, and over time poor payment data will be reflected in growth numbers.” – Dr John Hewson, Chair of GSA Insurance Brokers becoming a serious issue across Europe. According to Intrum Justitia’s 2016 European Payments Report, which draws on data from 9440 businesses, 33 per cent of respondents see late payments as a threat to their survival. Twenty-five per cent say they are likely to dismiss staff if clients pay late or not at all. Reflecting global trends, European small businesses report large clients are squeezing them. The report notes, “as many as 43 per cent of SMEs say that have been asked to accept longer payment terms than they are comfortable with and 39 per cent of those … claim that the request came from a large multinational client.” Looking at the rest of the world, Europe and the UK lag the US, where Dun & Bradstreet’s data shows 53.8 per cent of companies pay by the due date. But reflecting the international trend, micro payers are the best at paying their bills on time in the US, with only 13 per cent of all large companies paying invoices by their due date. In Asia, some of the best paying businesses are in Singapore, according to Dun & Bradstreet, where 53.1 per cent of businesses pay on time. There is no data available for size of business. In China, 33.2 per cent of businesses pay on time, with 37 per cent of small companies paying

on time and 28 per cent of large companies paying on time.

Global consequences While there is some evidence economic conditions around the world are stabilising, there is no doubt international markets remain fragile. The health of the commercial credit sector is essential for supporting economic growth, and more needs to be done to encourage businesses to pay their bills on time, especially big businesses. According to Dr John Hewson, chair of GSA Insurance Brokers, economic conditions start to deteriorate as businesses delay payments. “As this process increases, economic conditions continue to decline,” he says. Nevertheless, Dr Hewson says reforms introduced by the Australian Competition and Consumer Commission such as the ‘effects test’, should help reduce incidences of larger businesses delaying payments to smaller firms. “Payment terms are a barometer for economic conditions. If they are rising, the economy will slow down, irrespective of GDP, and over time poor payment data will be reflected in growth numbers,” he adds. Patrick Crivelli, a director of Skippr, a cash flow management fintech, takes this argument one step further.

“When your customer makes you wait for invoice payments you are now in the business of making interest free loans. There are a number of reasons why this situation is bad for business. It impacts your ability to grow, results in hidden costs through chasing payments, it creates loss of sleep over cash flow worries, and most importantly it negatively impacts business valuations,” he says. One way around this, says Crivelli, is to find overseas clients who pay more quickly. “China in particular has an insatiable appetite for many Australian-produced goods. Our research shows many Chinese buyers are willing to pay for merchandise before it has even left Australia. Some Chinese buyers will pay a percentage of the merchandise value upfront, before the goods have even been produced.” While it’s too early to tell whether the slight deterioration in payment times in the second quarter of the year is a sign of worsening economic conditions, more needs to be done to shorten payment times generally across the economy to help release cash for growth opportunities and to help support the economy into the future. *Alexandra Cain is a freelance finance journalist who has written for many leading Australian and international business publications.

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Supply chain finance – the sharpest tool in your shed By Charlotte Petris* As key gatekeepers to financial risk in a business, the focus is on the Credit Management team to manage increasing risk as revenue flattens and margins compress, but at what cost?

In an increasingly competitive landscape, your sales team are incentivised to close deals. As a Credit Manager, you are likely no stranger to inheriting lengthy payment terms the sales team have used as leverage. The impact of one large deal closing may result in: - An increase in the cost of working capital: Extending payment terms diminishes a company’s ability to re-invest in core business. - An increase in the risk of defaults: Longer payment terms increase the risk of not getting paid at all.

Aligning key performance metrics... or not

Charlotte Petris

Friction can often occur in a company where sales and credit team key performance indicators (KPI’s) are not aligned. This results in the credit policy taking a back seat in negotiations. As a Credit Manager, your obligation to manage and reduce credit risk whilst improving liquidity for the business does not

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vanish because you did not agree to proposed terms. Tools such as credit insurance, trade guarantees and factoring can be used to mitigate these risks. These tools do come at a cost, can be complex to implement and impose a compliance burden on the credit management team.

Lowering risk without increasing costs and complexity One option you may not have explored is to enquire whether your customer offers Supply Chain Finance (SCF). SCF gives you as a Credit Manager, the ability to improve collection days at a cost that aligns to the credit profile of your customer. This is typically a far cheaper cost of finance than you are able to obtain through traditional factoring. You receive cash on a timeframe that aligns to your business need, while the SCF platform manager bears the risk of late or nonpayment.

Credit Management

When is the best time to suggest leveraging SCF? Contracting and deal negotiations are a great time for Sales and Credit Management to align on strategy. Creating a tactical RFP that leverages a promise to extend payment terms, with the knowledge that early payment can be obtained when needed might just push a deal over the line.

Benefits for a supplier leveraging an SCF platform: zz An SCF program generally costs next to nothing for a customer to deploy. Most platforms are fully web enabled and can be integrated into ERP systems. zz Reduced cost of finance.

Friction can often occur in a company where sales and credit team key performance indicators (KPI’s) are not aligned. zz No additional compliance or reporting. zz Simple to use. The platform is online and with the potential to integrate with your ERP system or accounting platform. zz An accounting neutral outcome. SCF operates the same as if you accepted discounts for early payment, but in this case, you are in control.

Charlotte Petris is founder and CEO of Timelio, an online marketplace enabling businesses to raise working capital by selling their customer invoices to a network of investors. She is a member of the federal government’s Fintech Advisory Group and vice-president of Fintech Australia. At Timelio, we are champions of businesses having the ability to grow with all opportunities presented to them, unrestricted by payment terms. We encourage all Credit Managers looking to free up working capital to explore SCF, and open the communication channels on strategy with your Sales Teams. This might just be the perfect opportunity for you to leverage an innovative solution while gaining stronger influence over impact on the working capital cycle at every phase of negotiation.

Everything for the credit professional Gain access to a network of credit professionals & resources for free.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

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Is the small business loan revolution finally here? By David Jackson*

David Jackson

If you’re the credit manager, accountant or worse, the CFO of a small business, you’re constantly worrying about two things: your blood pressure and cash flow. Unfortunately, when one is high, the other one is likely running low. There are plenty of horror stories of small business owners and their financial managers maxing out all their personal credit cards and eating cardboard for a week just to meet payroll obligations. And if the big banks had rolled out the red carpet to your small business like they do to Big Business, maybe today you would have few alternatives. Luckily for you, that thing called the internet is literally breaking the banks. One look at the cost per click of Google’s keywords tells you all you need to know: there is a lot of competition and big money in finance. “Loans” is the second most expensive keyword you can buy, after “Insurance”. The suggested bid for the keywords “Small Business Loans” is $38.50 per click but very high competition and volume means it could frequently cost $77.00 or more. If this is how much lenders are willing to pay – per click – you can

be sure that there are plenty of lenders out there vying for your small business. In fact, a whole new breed of marketplace platforms and online lenders broke into the scene almost ten years ago, promising to disrupt the banking world. While the revolution has been slow, the banks, community banks, credit unions and building societies are definitely feeling the sting in 2016 as a wave of new, tech-savvy, mobile-driven platform business makes the loan application and approval process faster than ever before. But before jumping right in, or feeling a little overwhelmed by the increasing choices, below are some questions you may wish to ask yourself when considering an alternative lender.

Questions to ask yourself How much do I need? Some alternative lenders offer unsecured lines of credit for as much as $250,000. If you need more than this amount, an alternative lender may not be right for you. What do I need the money for? Certain alternative lenders specialise in niche lending such as equipment

You don’t want to waste your valuable time with tire kickers. You want to know very quickly if you’re eligible or not.

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Credit Management

or not. Read user reviews online and check with the Australian Competition and Consumer Commission, Choice or online comparison sites like Canstar to ensure your lender is the real deal. Will I receive any nasty surprises? If the lender wants to check your personal credit score as a prerequisite to the loan, consider this: The more dings you get on your file, the worse your credit score becomes, and the less likely other lenders will provide you with credit. Proceed with caution where this is the case.

The verdict on alternative lenders?

finance, working capital, merchant cash advance, equipment leasing, and commercial mortgages, to name a few different types. It can sometimes be worth finding out if there is a specialty type of finance that matches your intended use of the funds. What type of loan and loans terms are right for me? You may wish to choose a fully drawn advance, overdraft, or line of credit loan, and the terms may be fixed or variable with a lengthy or short repayment period. This all depends on your individual circumstances. What type of security, if any, can I put up? Unsecured don’t require any collateral, and alternative lenders are far more likely to offer these types of loans. If you do have commercial, residential, or personal security, you may also consider putting this up but it’s not always necessary with alternative lenders.

Do I have enough of a financial history for the lender to make a decision? Alternative lenders require far less documentation in order to make a loan decision, as they assess a number of online touch points and can attach straight to your accounting software to make their assessment. If you don’t have years of paperwork and evidence of cash flow, an alternative lender may be your best bet. How quickly do I need the funds? Traditional lenders often take several weeks and sometimes months to provide the funds (if they approve you at all). However, many alternative lenders can provide as quickly as within 24 hours, after giving a loan decision in minutes. This is another key difference between alternative and traditional lenders. Have I done my homework? You don’t want to waste your valuable time with tyre kickers. You want to know very quickly if you’re eligible

The Good As mentioned, they are fast and convenient: Funding can occur in as little as 24 hours. And they probably won’t care about your business plan or years of cash flow history, just your ability to repay the loan. Some also have tailored rates that reflect your credit risk, rather than applying standard rates to everyone, which equates to a fairer pricing system for everyone. The Bad Alternative lenders can sometimes charge a higher interest rate than the banks, as a result of lending more often to more businesses. They are usually shorter term also, which may not work for everyone. The Ugly They cherry-pick the best customers, so you may need to be running a solid business to qualify. *David Jackson is the founder and CEO of FundX (www.fundx.com.au), a marketplace, balance sheet lender that uses money from high net-worth, sophisticated and institutional investors to solve short-term cash flow gaps for Australian SMEs via a sophisticated single invoice discounting platform. David is a serial entrepreneur with over 20 years’ experience as an angel investor, founder, and mentor to early stage businesses in Australia, Asia and the US. He is also an active member of Stone & Chalk and BlueChilli, sits on the board of Sydney Angels Inc., mentors at incubate.org.au, and is a regular contributor to the Australian Financial Review.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Legal

Illegal Phoenix activity: What do AICM members think about it? By Professor Helen Anderson, Jasper Hedges – Research Fellow, Professor Ian Ramsay and Professor Michelle Welsh Illegal phoenix activity is a blight on Australia’s corporate sector that has been occurring for decades. It often involves directors of a company deliberately putting the company into external administration after shifting its assets to a new company (a “phoenix” company that “rises from the ashes”) to defraud creditors, employees and taxation authorities. While the exact scale of the problem is unknown, the most recent estimates suggest that phoenix activity is costing the Australian economy billions of dollars per year. In 2009 the ATO estimated that phoenix activity and related practices cost between $1 billion and $2.4 billion each year. In 2012 PricewaterhouseCoopers estimated the total cost to employees, business and

Professor Helen Anderson

Jasper Hedges, Research Fellow

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government revenue at between $1.78 billion and $3.19 billion annually. In early 2016 researchers at The University of Melbourne and Monash University conducted a survey of about 2,300 AICM members to find out what they think about illegal phoenix activity and to learn about their encounters with phoenix operators. The 155 survey respondents – a response rate of approximately 7% – expressed concerns about high rates of phoenix activity and damaging consequences for creditors, dodgy industry practices that increase the risk of illegal phoenix activity, and the failure of regulatory authorities to adequately address the phoenix problem. One third of the survey respondents believed that phoenix activity has “often”

Professor Ian Ramsay

Professor Michelle Welsh

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or “always” occurred where directors are applying for credit and they have a history of involvement in failed companies, while another third of respondents believed that phoenix activity has “sometimes” occurred. Less than one third of respondents believed that phoenix activity has “rarely” or “never” occurred. Overall, the respondents’ views suggest that, where a company director applies for credit and has a history of being involved in failed companies, there is a significant likelihood that they have engaged in phoenix activity. This is a very concerning result given that phoenix activity often involves serious civil and/or criminal illegality and collectively costs creditors, employees and taxation authorities billions of dollars per year. One factor that could contribute to this high rate of phoenix activity is a lack of appropriate business skills and ethical trading practices. Over half of the survey respondents said that directors who have been involved in failed companies “often” or “always” have inadequate business skills, while a further one third of respondents said that they “sometimes” have inadequate skills. One respondent observed that “there is no prerequisite to incorporating a company and commencing business. No formal qualifications are necessary, hence many directors are doomed to fail purely due to a lack of knowledge and business acumen.” Perhaps even more concerning is that 90% of respondents “agreed” or “strongly” agreed that directors or manager of failed companies tend to display little

In addition to better funding for regulatory agencies ... the survey respondents strongly supported measures to tighten regulation of company directors and bolster enforcement when they go rogue. regard for the company’s creditors. As one respondent remarked, “directors of phoenix companies have little regard for trading ethically. In general they are arrogant and believe they are above the law.” So why do they believe they are above the law, and what is the law doing about it? Not enough, according to the survey respondents. Part of the problem is a lack of funding, with over 60% of respondents “disagreeing” or “strongly disagreeing” that ASIC has sufficient resources. But there were also serious concerns about the lack of information made available by ASIC and the ATO to allow creditors to protect their commercial interests. An overwhelming 95% of respondents “agreed” or “strongly agreed” that ASIC should allow credit ratings agencies access to information supplied by liquidators to enhance the quality of advice they can provide to their customers. The same proportion of respondents “agreed” or “strongly agreed” that it would significantly enhance credit approval decisionmaking if the ATO were to list unpaid tax by commercial entities. If credit managers were equipped with this sort of information, they would

of the survey respondents believed that phoenix activity has “often” or “always” occurred where directors are applying for credit and they have a history of involvement in failed companies

be in a much stronger position to protect creditors from illegal phoenix operations. As one respondent commented, the listing of unpaid tax by the ATO would be “extremely useful” because “tax debt is present in all insolvencies and would be a highly effective warning sign when it starts to accrue.” In addition to better funding for regulatory agencies and access to information on corporate dealings and liabilities, the survey respondents strongly supported measures to tighten regulation of company directors and bolster enforcement when they go rogue. About 97% of respondents “agreed” or “strongly agreed” that all company directors should be issued with a Director Identification Number to enable ASIC and the ATO to track directors of multiple failed companies. A similar proportion “agreed” or “strongly agreed” that directors of multiple failed companies should be prohibited from managing another company unless they prove they are competent to do so. Several respondents also stressed the need for strong enforcement and penalties, with one respondent commenting that “directors of past failed companies should be banned for up to 5 years from managing another business” and that “failure to comply should result in severe financial penalties and potential jail terms.” These survey results show that there is much that can be done, and much that needs to be done as a matter of priority, to better protect creditors, employees and taxation authorities from the devastating effects of illegal phoenix activity.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Legal

Unfair preferences and how to avoid them – Part 2

This is the second part of a three part series on a practical summary of the law concerning unfair preference claims. By Nick Cooper* In this part, I discuss the defences and responses that may be claimed in answer to a Liquidator’s claim for an unfair preference. The defences and responses I deal with are: zz secured creditor zz running account defence zz defence of ultimate effect zz set-off zz no grounds to suspect insolvency a) Secured creditor. As noted in my previous article, there cannot be a preference claim against a secured creditor. The introduction of the Personal Property Security Register (“PPSR”) provides assistance in identifying secured creditors. Sections 51E and 51A of the Corporations Act gives the holder of a PPSR registration status as a secured party. But there remains uncertainty as to when to assess value of the security. That is, at the date of the alleged preference payment or at the date of the liquidation. The latter date was preferred in Matthews v Tap Inn Pty Ltd [2015] SADC 108, but that decision is subject to an appeal. Since my previous article, there have been two conflicting decisions in which the Courts have considered a creditor’s security in the context of preference claims. In Hussain v CSR Building Products Limited [2016] FCA 392, CSR supplied products under retention of title (“ROT”) terms. It asserted in a preference claim that it was a secured creditor and not liable to repay payments claimed by a Liquidator as preferences.

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Nick Cooper

It was held that the ROT clause was a secured debt, even though it was a transitional security interest, which fell outside the s. 51E/51A definition of a ‘security interest’. The Liquidator then argued that the payments could still be preferences to the extent the payments exceeded the value of ROT stock at the date of liquidation. This argument failed for several reasons including because of a lack of records available to assess the value of ROT stock at the relevant times. However, only 3 days later, Blakeley v Yamaha Music Australia Pty Ltd [2016] VSC 231 was decided. In that case, the defendant to a preference claim brought an application for summary judgment on the basis that its debt was clearly secured. It had supplied stock under ROT terms both before and after the introduction of the PPSR. In dismissing the claim for summary judgment, the Court held that the pre-PPSR supplies were unsecured debts. The postPPSR supplies were secured debts but the status of the security depended on when the stock was supplied and when the debts arose. Further clarity is needed from the Courts on these issues. b) Running account defence. This defence may act as either a partial or a complete defence to a preference claim and is set out in section 588FA(3). Essentially, these provisions apply where there has been continuous trading between the creditor and the debtor company throughout the relation back period. In other words, there have been supplies of goods or services and payments for those supplies throughout

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the period – as opposed to merely payments without the supply of goods and services. For example, there could not a running account whilst an account was on stop credit, as there would be no further supply of goods or services to the debtor company on credit. However in Julzar Pty Ltd v Rogers [1999] NSWSC 199, it was held that a temporary suspension of credit, to allow the account to be brought back within trading terms, does not destroy the “continuing business relationship” needed for the running account defence. In the case Air Services Australia v Ferrier (1996) 21 ACSR 1 – the High Court held that a running account defence would apply if the purpose of the payments was to induce the creditor to continue providing services, but the defence would not apply if the purpose was to merely repay an existing debt. In other words, whether the parties were looking into the future to continue the business relationship or whether the creditor was merely trading with the company in order to extinguish the debt. The effect of a running account defence is best illustrated by example. The amount of a Liquidator’s claim for a preference, after a running account defence, represents the difference between the peak indebtedness on an account and the closing balance (or balance of the account at the end of the business relationship). Consider the following examples, where a Liquidator claims payments totalling $200,000 over the six month period. The following charts plot the balance of the debtor’s account over that period:

In the above chart there was a net increase in the balance of the debtor company’s account. The peak indebtedness occurred at the end of the period.

In such circumstances, the running account is a complete defence to the Liquidator’s preference claim. Also consider the following example:

In this example, there was a net decrease in the debtor company’s account. However, the running account is still a partial defence to the Liquidator’s claim – as the Liquidator’s claim is not the value of all payments within the six month period ($200,000) but is the difference between the peak indebtedness ($120,000) to the closing balance ($20,000). In other words, in this example, the defence reduces the Liquidator’s claim from $200,000 to $100,000. c) Doctrine of ultimate effect. This is a common law defence which effectively provides that there cannot be a preference from a payment made in circumstances whether there was ultimately a benefit to the company in making the payment. The defence has been successful where payments are made in the context of a series of transactions benefitting the insolvent company, such as: zz payments to a landlord to secure the ongoing rental of a premises: Re Discovery Books Pty Ltd (1972) 20 FLR 470. zz payments to a consultant for insolvency advice: Beveridge v Whitton [2001] NSWCA 6. d) Set-off. In the recent case of Morton v Rexel Electrical Supplies Pty Ltd [2015] QDC 49, it was held that a pre-appointment debt could be setoff against a Liquidator’s preference claim. In other words, if one of your customers enters liquidation and you are owed a debt, any later preference claim brought by a Liquidator can be reduced by the amount of your debt still owing by the company.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Legal

If your debt exceeds the amount of the preference claim, the Liquidator’s entire preference claim may be defeated. However, it was held that the set-off is not allowed when the creditor has knowledge of the company’s insolvency. “Knowledge” of insolvency is more difficult for a Liquidator to prove than “suspicion” of insolvency. It should also be noted that many academics believe that the Morton case was wrongly-decided. The decision issued out of the District Court of Queensland. It will have to be seen whether the finding is reversed when next considered by a Court or superior jurisdiction. e) Good faith and no reasonable grounds to suspect insolvency. A common defence to preference claims is that there were no grounds for suspecting that the debtor company was insolvent. This defence is provided at section 588FG(2). The creditor defendant has the onus of establishing this defence. It should be noted that this defence requires the creditor to prove three elements being: zz good faith – in most cases, payments will have been made in good faith. A lack of good faith would be where there has been a serious threat or other misconduct which prompted the payment, or collusion with the company; and zz the creditor had no reasonable grounds for suspecting insolvency; and zz a reasonable person in the circumstances would have had no grounds for suspecting insolvency.

zz Sellers v Offset Alpine Printing Pty Ltd [2003] CA(Vic) – The plaintiffs were Liquidators of Eric Clarke & Associates, which traded an advertising business producing catalogues and brochures. The company was traditionally a slow payer. During the relationback period, the company entered into a repayment arrangement with Offset Alpine. All payments, except the last instalment, were made by the agree due dates. Further credit was also advanced to the company. It was held that the payments were not preferences. Legal action: zz KEL Builders (Qld) Pty Ltd (In Liq) v Brett Nash Electrics Pty Ltd [2001] QSC 178 – A builder (KEL) issued a circular to its creditors, stating that it could not pay all its creditors when due and that it sought further time to pay. KEL’s builder’s licence was then cancelled and this was publicised in a newspaper. The creditor Brett Nash Electrics issued a Creditor’s Statutory Demand, claiming approx. $70,000. After the demand was issued, Brett Nash received payments by cheque. KEL provided the cheques on the understanding that they would not be presented until advised by KEL. These payments were held to be preferences.

Repayment proposals:

zz Sims v Celcast Pty Ltd (1998) 71 SASR 142 – The Liquidator of Ermayne Pty Ltd (formerly Leal Boss Computer and Office Supplies Pty Ltd) brought a preference claim against Celcast, claiming $54,000. Several of the cheque payments to Celcast were initially dishonoured. A repayment arrangement was entered into, but Ermayne was unable to meet the installments. Ermayne sold its business and issued a circular to its creditors in late January 1995 stating that creditors would be paid as Ermayne collected its debtors and that this process should be completed by the end of March. Celcast appointed solicitors to collect the debt. Legal action was threatened, followed by the issue of proceedings and a Creditor’s Statutory Demand for payment. The payments were held to be preferences.

zz Mann v Sangria Pty Ltd [2001] NSWSC 172 – The plaintiffs were Liquidators of a business trading as a wholesale butcher and meat supplier. Sangria Pty Ltd was owed $186,000 and issued legal proceedings against the company. In response, the parties agreed to a repayment proposal. The payments were made late, but not significantly late. Sangria Pty Ltd asked for security and a copy of the company’s balance sheet. Sangria Pty Ltd supplied further stock to the company but only on the basis that it received post-dated cheques on delivery

zz Sims v Technical Holdings Pty Ltd (1998) 30 ACSR 330 – In the same liquidation of Ermayne Pty Ltd, the Liquidator issued a preference claim against Technical Holdings, which traded as Westline Furniture. One cheque payment to Westline was initially dishonoured, although this occurred some six months before the alleged preference payments. Westline issued monthly statements to Ermayne with comments such as “Overdue!” and “Cheque Please – account is now long

The statement that “I did not know that the company was insolvent” is not sufficient to meet this defence. The creditor must demonstrate that a reasonable person in the circumstances would have no grounds for suspecting (as opposed to actual knowledge of) the debtor’s insolvency. There is no general rule as to what constitutes grounds for suspecting insolvency and so this defence is best considered by looking at some cases:

of the stock. It was held that the repayment arrangement was a demonstration of the company’s insolvency and the payments were held to be preferences.

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overdue”. These were held to show nothing more than tardiness in payment of accounts. Westline received the same circular to creditors that Celcast had received, stating in late January 1995 that creditors would be paid as Ermayne collected its debtors and that this process should be completed by the end of March. Westline issued a letter to Ermayne in February threatening legal action if the debt was not repaid by 24 March. The payments is received were held not to be preferences.

held that that laxity of creditors in requesting prompt payment is not taken into account, but “in assessing solvency, the Court acts upon the basis that a contract debt is payable at the time stipulated for payment in the contract unless there is evidence, proving to the Court’s satisfaction, that: ÖÖ there has been an express or implied agreement between the company and the creditor for an extension of the time stipulated for payment; or ÖÖ there is a course of conduct between the company and the creditor sufficient to give rise to an estoppel preventing the creditor from relying upon the stipulated time for payment; or ÖÖ there has been a well established and recognised course of conduct in the industry in which the company operates, or as between the company and its creditors as a body, whereby debts are payable at a time other than that stipulated in the creditors’ terms of trade or are payable only on demand.”

When is a debt due for payment? zz Hamilton v BHP Steel (JLA) Pty Ltd (1995) 13 ACLC 1548 – The Liquidator of Hi Deck Roofing Pty Ltd sought repayment of $131,000. Hi Deck was a metal roofing contractor. Hi Deck was traditionally a slow payer. Although the preference payments were “round” amounts, there was little evidence of pressure being placed on the company to make the payments. It was held that irregular or spasmodic payments in reduction of the company’s debts may be an acceptable practice within certain industries, such as the building industry. On this basis, the payments were not preferences. zz Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation [2001] 39 ACSR 305 – The court held that payments to the ATO of $208,000 were preferences. No defence under s 588FG(2) was claimed. However, this case is important as the court set circumstances when a debt was “due for payment” other than within stipulated trading terms. The court

In the next article, I will discuss how you can reduce the chances of receiving a preference claim. *Nick Cooper is a Partner of the Adelaide office of Worrells Solvency & Forensic Accountants. He is qualified as a Chartered Account and hold a Bachelor of Laws. He is an Official Liquidator and a Registered Trustee in Bankruptcy. Nick has worked in the insolvency practice for 20 years. He has acted as an Administrator, Liquidator and Receiver of companies in a diverse range of industries. He has acted on behalf of major banks and in respect of clients of many accounting firms. In his role as a Liquidator and as a Trustee in Bankruptcy, Nick is often involved in litigation to recover assets for the benefit of creditors.

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October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Legal

The five golden rules when trading with a Trust By Rhett Kipps and Karl Hill* Trading trusts have become increasingly common in Australia. The term “trading trust” refers to an entity (trustee) that is conducting a business under the authority of a trust instrument in its capacity as trustee of a trust. Trust structures create confusion and many legal issues for trade creditors. Often, trade creditors may not even realise they are trading with a customer as trustee of a trust. This article provides a broad overview of trading trusts, how trading trusts apply in the context of trade credit, and some important pointers to trade creditors.

Rhett Kipps

1. A trust is not a separate legal entity At its most fundamental, a trust is a relationship where a person or legal entity such as a company (being the trustee) holds and deals with property for the benefit of others (otherwise known as beneficiaries). There are three essential features of a trust: (a) One or more persons or entities called a trustee; (b) Trust property or assets; and (c) One or more beneficiaries. The trustee holds the property ‘on trust’ for the beneficiaries. At law, the person entitled to deal with the assets of the trust is the trustee. When you are dealing with the trust, you are actually dealing with the trustee as the legal entity. The beneficiaries have an interest in the trust property (which in the case of a trading trust includes a business), and repose great trust in the trustee to exercise legal rights over their property. A trust deed often documents the nature of the relationship between the trustee, the beneficiaries and how the assets may be dealt with. Ordinarily, the following documents are proof of a trust relationship: (a) A deed of trust; (b) If the trustee is a company, company minutes confirming that the company is acting in its capacity as trustee of the trust; and (c) A separate bank account for trust money.

2. You sue the trustee, not the trust Karl Hill

Generally, the trustee is personally liable for its acts and omissions as

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

trustee, including ordinary trading debts incurred. As the trustee is the one exercising legal rights on behalf of the trust, it is legally responsible for unpaid liabilities. The trustee is the proper defendant in respect of any proceedings or claims arising out of the activities of the trust. The trustee’s personal liability to the trust’s creditors is generally unlimited, unless that liability is modified or excluded by contract. For example, if a trust has ordered goods or services then it is the trustee who bears liability to complete the order and pay the debts, even if the credit application nominates the trustee “as trustee”. The creditor’s remedy is against the trustee personally and not the trust (or the beneficiaries), as the trade debts are deemed to be the trustee’s own debts. However, trustees have what is referred to as a “right of indemnity” and an associated lien over the assets of the trust to recoup the liabilities and pay the debts the trustee incurred whilst lawfully acting on behalf of the trust. This valuable right creates a lien and charge (security interest) in favour of the trustee that takes priority to any of the beneficiaries or later appointed trustee.

3. Trust assets cannot be attacked directly Ordinary unsecured trade creditors cannot attack trust assets directly. As the trustee is the entity that incurs liabilities in the course of trade, the trustee is personally liable to be pursued by creditors. Insolvency proceedings may be taken against a trustee, if it does not pay the debts.

Legal

If this occurs, the person appointed to the trustee (trustee in bankruptcy or liquidator) will call upon the right of indemnity in order to realise trust assets for the benefit of creditors. This means that in the ordinary course, when the trustee incurs debts, it realises trust assets with which to meet the liabilities which it incurred in its capacity as trustee. Usually, a trustee has a right of indemnity from trust assets to recoup payment of liabilities which it incurred in its capacity as trustee, unless the trust deed specifically excludes such trust assets from being recouped. This has become rare because the law now provides that directors of corporate trustees will be personally liable for the debts incurred in the event that the trust deed provides that a corporate trustee cannot realise trust assets to meet its liabilities. A creditor pursuing a trustee may face the following problems: (a) insufficient assets of the trustee or in the trust; (b) the trustee’s right of indemnity being excluded by the trust deed; or (c) the trustee’s right of indemnity being lost by misconduct on the part of the trustee. In some instances, the creditor may be able to subrogate into the trustee’s right of indemnity to the trust’s assets where a claim against the trustee itself would be fruitless. While a trustee can limit their liability to others by providing in a contract that their trustee’s liability is limited to the assets of the trust. In practice, this is rare and is mainly used by large institutional trustee companies. The use of language such as “as trustee only” or “as trustee but not otherwise” might indicate an exclusion of the trustee’s personal liability to the creditor. This should put you on notice and prompt you to take specialist legal advice. A properly drafted credit agreement will avoid a lot of these issues by conferring the maximum protection available to the creditor.

To avoid a situation where the trust assets are insufficient to meet your claims, you should consider obtaining security from the trustee both in its own right and as trustee. For example, your terms of trade should include something to the effect of “the guarantor charges all property, whether held in its own right or in its capacity as trustee”. A trustee can also, in some instances, pursue beneficiaries to enable it to meet liabilities of the trust. If trust assets have been distributed to beneficiaries in an attempt to defeat creditors, then they may be pursued to repay the trust assets received.

4. Get your PPSR registrations right The Personal Properties Securities Act 2009 (PPSA) imposes significant obligations upon trade creditors seeking to enforce security interests. Trading trusts often hold an Australian Business Number associated with the affairs of the trust (as taxation law treats trusts are separate entities, despite the true legal position). Although all dealings are with the trustee in reality and the trustee becomes liable for any debts incurred whilst trading, the existence of a trust may alter how you are to register any security interest you may have under the PPSA . The PPSA provides that registration of security interests in respect of trust property may need to be registered against the ABN of the trust (rather than the trustee’s ACN or individual name) in order to be effective. Some creditors elect a conservative course of registering their security interest against both the ABN of the trust and the ACN of the trustee. An important question to bear in mind is whether the trustee is granting security only over trust property, in its capacity as trustee, or whether it is also granting security over personal property. Generally, if you have a security

interest over both trust and personal property, you should register your security interest against the trustee in both capacities i.e. in its own right and as trustee. If you are in any doubt, you should take specialised advice.

5. Know who you are trading with In our experience, it is not unusual for trading trusts to apply for credit by identifying only the name of the trust (as opposed to the trustee), and for the trade creditor to not possess a copy of the trust deed. This creates considerable difficulty for the creditor in pursuing an unidentified trustee. A properly drafted credit agreement will require a customer to complete the necessary fields to capture the required information. The following checklist may be useful to tick off when trading with a trust: (a) Who is the trustee? If the trustee is a company, what is its ACN? (b) What is the trust’s ABN? (c) Does the credit application confer a security interest? Does it extend to both assets held in the trustee’s own right and on trust? Should I seek advice on how to register this security interest on the PPSR?

Conclusion The law regarding trusts is complex. Likewise complexities often arise when dealing with a trust. Creditors should take considerable care to be aware of the above to ensure that their interests are protected and take specialist legal advice when required.

*Rhett Kipps is a Senior Associate at Results Legal Email: rkipps@resultslegal.com.au *Karl Hill is the Managing Director and Founder of Results Legal Email: khill@resultslegal.com.au Ph: 1300 757 534 www.resultslegal.com.au

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

PPS

Swings and roundabouts A review of the PPSA four years on By Richard Lyne and Stephen Polczynski* We are 4 years down the road since the Personal Properties Securities Act brought about changes to rights associated with retention of title and treatment of unfair preference payments. Suppliers have benefitted from the changes in some respects but have gone backwards in other respects. Polczynski Lawyers looks at the pros and cons of the PPSA for suppliers. The Personal Property Securities Act 2009 (Cth) (the Act) started in January 2012 and was intended to simplify commercial and securities law by providing a consistent regime to deal with priority disputes, in part by establishing a national centralised register of securities. The Act has certainly achieved one objective – there is one consistent regime to deal with priority disputes and there is a national centralised register of securities. Its second objective, to simplify the position is, at best, a work in progress.

One key area that has been affected by the introduction of the Act are those contracts including a “retention of title” (ROT) clause. An ROT protects a supplier supplying goods on credit or consignment in the event that the debtor runs into financial

difficulties eg insolvency. It does so by maintaining an interest in the goods supplied until such time as payment of the purchase price. ROT’s are classed in one of two categories: 1. All monies – which reserves title in all goods supplied until payment of all outstanding accounts has been made; and 2. Simple – which reserves title in goods only until payment for those particular goods has been made. Prior to the Act suppliers need only ensure that their terms and conditions were “in play” to be able to rely upon the ROT in the event of the debtor’s insolvency. The introduction of the Act has changed that though. Suppliers now need to “perfect” their “security interest” by entering a registration on the Personal Properties Securities Register (PPSR).

Richard Lyne

Stephen Polczynski

The swings

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Perfection is a concept introduced by the Act and is the “process by which the holder of a security interest obtains the optimal level of protection offered by the Act”. The most common form of perfection for suppliers will be to register a “financing statement” on the PPSR. A failure to register, or an incorrect registration, will result in a supplier losing its priority and effectively becoming unsecured, because the suppliers security interest will then “vest” in the customer and at that point the goods will be available to the customers’ suppliers as a whole. However: 1. a supplier who has correctly registered (perfected) an interest in unpaid goods will be entitled to a “super priority” as compared to other general security agreements (GSA’s) – this is referred to as a Purchase Money Security Interest or PMSI for short; and 2. the PMSI will only give the supplier protection in relation to goods that have not been paid for – and the burden of proving that the specific goods which the supplier is seeking to have returned have not been paid for, rests with the supplier. This can present a major problem as it requires the supplier to identify and allocate specific stock to specific outstanding invoices. This can create issues in circumstances where the stock is not readily identified or has

PPS

been mixed with other similar product. If the stock relating to the outstanding invoices cannot be readily identified to outstanding invoices then the PMSI is of no effect and the supplier’s priority (whether a super priority or not) is lost. In addition once goods have been paid for, they are no longer protected by the PMSI, even though they may well be caught by the residual security interest arising under the all-monies type clause. Such a residual security interest is not a PMSI and suppliers are not able to have recourse to all previously supplied goods – whether paid for or not in satisfaction of their debt. This is a material departure from the previous position, and means that although suppliers have within their contractual terms apparent security over all goods supplied, that security does not convert into an effective priority, in particular where a GSA has been registered. It follows from the above that the only effective priority an all monies ROT has is limited to the extent that a supplier can identify specific goods that relate to specific invoices that remain unpaid. In our experience identification may present significant issues to suppliers of goods. It is a particular problem where you have multiple suppliers supplying identical goods, which have serial numbers but which have not been tracked, by either the suppliers or once supplied, the purchaser. The insolvency practitioner appointed to the purchaser will argue that the lack of identification by serial number results in an invalid PMSI. The suppliers view will be that means that other methods of identification need to be employed. To avoid this issue suppliers should ensure that as far as possible they track their goods by way of serial number, in being able to identify the goods by type and serial number the supplier protects his position and passes the problem to the insolvency practitioner.

The roundabouts But the PPSA has not been all bad news for suppliers – there is some good news. One consequence in favour of suppliers under the PPSA is in relation to the area of unfair preferences and their recovery by liquidators. Section 588FA of the Corporations Act 2001 provides that: “a transaction is an unfair preference if it results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction was set aside and the creditor were to prove for the debt in a winding up of the company.” Emphasis added. Before the PPSA, a supplier who had received payment from a customer, in the six months prior to a liquidator being appointed, could only rely upon the statutory defences of good faith or continuing business relationship to avoid having to repay the sums claimed. However, because the definition of “security interest” extends to an ROT, a supplier is now viewed as a “secured creditor” to the extent of its ROT claim. This classification takes it out of the statutory definition of an unfair preference, as the payments do not relate to an “unsecured” debt. Practically this means that the liquidator will need to reduce any potential preference claim against the supplier by reference to the value of the goods supplied to the company that remain covered by the ROT claim and the burden of satisfying this lies with the liquidator. A recent case determined whether an ROT supplier may hold a secured debt, consistent with the Corporations Act 2001 (CA) introduced as part of the PPSA. This was the decision of Justice Edelman in Hussain v CSR Building Products Ltd, in the matter of FPJ Group Pty Ltd [2016] FCA 392.

The definitions of “PPSA security interest” and “security interest” in sections 51 and 51A of the CA were analysed and noted the CA was intended to be consistent with the PPSA. The ROT clause conferred a security interest which meant the payments could not be unfair preferences because they were payments for secured debts. The liquidators tried to argue that to the extent payments exceeded the value of the ROT supplies retained at the date of the winding up, the payments could be unfair preferences. However this argument was rejected because the liquidators did not have the records to show the value of the product supplied by CSR at the time of each payment and so the analysis could not be completed. Suppliers should be aware that situations can be complicated by a number of matters including where stock was supplied prior to the PPSA (which does not support a valid security interest) or where the ROT stock has to be valued and the date of valuation is important.

The ROT see-saw continues As can be seen from the above issues the PPSA has a wide reaching and complicating effect on ROT, for both suppliers in enforcing ROT claims but also for liquidators in enforcing unfair preference claims. In one sense suppliers have certainly benefitted from the point of view that they are considered to be secured creditors. However this improved position has been tempered by the limitations and burdens placed upon them when seeking to enforce a PMSI. What you gain on the swings you often lose on the roundabouts. *To find out more get in touch with Richard Lyne rlyne@plawyers.com.au or Stephen Polczynski spolczynski@plawyers.com.au or call 02 9234 1500. Polczynski Lawyers has vast experience in considering security interests, unfair preferences, swings and roundabouts. Whatever your position we can guide you through the process and help you to achieve a commercial outcome.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

PPS

Aussie businesses losing way on PPSA

By Christian Edwards*

It’s been over 4 years since the thousands of registered Australian securities migrated from legacy registration regimes into one centralised Personal Property Securities Register. And, according to the co-founder of EDX, it’s been a mess. When the PPSR went live on 30 January 2012, there were almost 70 registers in Australia. The Personal Property Securities Act 2009 or PPSA came in to effect on 30 January 2012. A two-year transition period was provided by the government to allow businesses to adjust. They have not.

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

According to the most recent analysis by Veda, only 15 per cent of Australian businesses are currently using the PPSR. Even more damningly, four out of five are making errors in the process that can entirely invalidate their security interests altogether. Co-founder of EDX, Kim Powell said: “I think that’s being very generous but whether its 15 per cent, 10 per cent or 20 per cent, you can take it that there’s a long way to go.” He added that while it was in the best interest of businesses to register their property on the PPSR; the reality was the overall level of adoption in Australia remains low.

PPS

“It’s a pretty shocking statistic and this really just reinforces what is being said about the complexity of the act.”

Aussie businesses floundering The transition to a single national register has not come without its challenges and the intervening time has seen many Australian businesses flounder in the attempt to comply and adapt to the change. The legal reforms – as well as the Whittaker review that followed – underpinned the use of personal property as security for credit and has a massive impact on everyday business processes, documentation, systems and the management of credit risk. However, according to Veda, at the end of the financial year there were still only nine million registrations on the PPSR, about half of which are motor vehicles. For creditors or businesses dancing around insolvent relationships, the consequences under the unified act are absolutely black and white. “If you are caught within the scope of the PPSA and you haven’t registered then you’re in trouble. On the overwhelming balance of probability you’ll lose your goods.” Moses Samaha, Veda general manager, commercial and property solutions, said not correctly registering on the PPSR was both easy to do and a huge risk. “According to Veda’s data, more than 80 per cent of businesses that have adopted the regime are making mistakes, which may limit or even invalidate their rights to recover their property, should one of their customers become insolvent,” he added. Kim Powell put it this way: “My general rule of thumb is that until your lawyer can call you and say you haven’t been caught out by the complexity of the PPSA, then assume you have. As one judge said: the PPSA can deliver seemingly draconian results – and then proceeded to give his actually draconian judgement.”

“If you are caught within the scope of the PPSA and you haven’t registered then you’re in trouble.” ‘Secured creditor’ However, if a business registers on the PPSA, according to Powell “you are a secured creditor”. “And as secured creditor you are part of the insolvency practitioners administration and there is a statutory and professional obligation to deal with you – as such – and some of them just do need reminding of that with a size ten boot,” he said. EDX recommends following these five steps when navigating the PPSR: 1. Risk assessment – Consider if the PPSR is right for your business needs. If you supply goods or equipment and aren’t registered, assess why not and consider the risks of not being covered. 2. Assurance review – Be sure your registrations are correct. There is no halfway house – if any mistakes have been made during your registration, any claim you make on your property down the track may be rejected.

3. Correct any mistakes – Update your registrations with the correct information to ensure your property is protected. Seek appropriate professional assistance to ensure what you’re doing is right. 4. Implement systems-based controls – Remove manual processes wherever possible to avoid human error, and update relevant business processes to maintain updated registrations on an ongoing basis. 5. Consider your enforcement approach – Keep your registration documents in order and monitor your customers so you are in the best position to reclaim.

*Christian Edwards, Asia-Pacific Banking & Finance, Email: cedwards@financialpublications.com.au Website: www.australianbankingfinance.com/

“Damningly, four out of five are making errors in the process that can entirely invalidate their security interests altogether.” – Kim Powell

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Economy

Half yearly insolvency update By Mark Hoppe*

Mark Hoppe

From January to May this year there were 3,634 Australian insolvencies, according to ASIC insolvency data (1). The Australian economy is generally stable compared to many other countries in the region and around the world. However, the local market is facing a deteriorating insolvency landscape, according to Atradius (2). The highest insolvency industry in Australia so far this year is construction. 625 insolvencies have been within

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

the construction sector, much higher than all of the other industries. Mark Hoppe, managing director, Atradius said, “The Australian construction industry has been experiencing high insolvency rates for some time now. Compared to other industries, it has the highest number of insolvencies by far. “While construction has the highest insolvency rate, there are other sectors that are also greatly affected. I feel the benefits of credit insurance is still fairly unknown across

Economy

many industries in Australia and I would encourage businesses to do some homework on the product to better understand how being creditinsured safeguards a company against risks that could otherwise cripple a business.” The accommodation and food sector experienced the second highest level of insolvencies at 316. Mark Hoppe said, “For some time now we have seen the food and accommodation sector’s insolvency rate increasing. This may in part be due to increased competition and changing consumer spending habits.” The metals, mining and steel industries has also been experiencing a high rate of insolvencies at 167 insolvencies so far this year. Mark Hoppe said, “There has been a continued drop in demand for the

steel and metal sectors, resulting in over-capacity and falling prices as producers seek to unburden themselves of their unused stockpiles. “The mining sector is also still experiencing difficulty. The slowdown in China is putting some pressure on the insolvency landscape, as is the continuing slump in the commodities market, which makes up a large portion of Australia’s export volume. These forces are leading to an increased risk of insolvency rates in the Australian market, with some industry sectors facing more exposure than others. “Despite the hard times we’re experiencing now, the mining sector is likely to start to pick up as continuing urbanisation, growth in manufacturing, and increasing investment in key infrastructure in Asian nations means

“There has been a continued drop in demand for the steel and metal sectors, resulting in over-capacity and falling prices as producers seek to unburden themselves of their unused stockpiles.

that demand for Australia’s minerals will continue to grow.” Other key insolvency rates included: zz Construction – 625 zz Agriculture – 62 zz Accommodation and food – 316 zz Education and training – 79 zz Electricity, gas, water and waste services – 63 zz Manufacturing – 172 zz Mining – 167 zz Retail – 273 zz Transport – 165 This year’s high rate of insolvencies highlights the need for businesses to be aware of any vulnerable areas to their business that could put them at risk of bankruptcy. In such an environment, it’s important that Australian businesses do what they can to minimise risk their exposure by implementing strategic risk minimisation practices. Credit insurance helps businesses to continue to trade confidently, despite the broader insolvency risk environment. Mark Hoppe said, “It’s important businesses strive not to be just another insolvency statistic. Take Dick Smith for example, a company which no one was expecting would become insolvent. “Dick Smith fell into receivership on 5 January with reported debts of $390 million. The firm’s management said sales and cash generation were below expectations in the key December trading period, continuing a poor run in the later part of 2015. Businesses must prepare for slow trading periods to avoid being overcome by debt.” *Mark Hoppe is Managing Director, ANZ Atradius REFERENCES 1) ASIC insolvency data, 2016 – http://asic. gov.au/regulatory-resources/find-adocument/statistics/insolvency-statistics/ insolvency-statistics-series-1a-companiesentering-external-administration-byindustry/ 2) Insolvency Forecasts; Atradius Economic Research; February 2016.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Economy

Tentative signs of improvement but corporate insolvencies remain at elevated levels lM ining states of WA and QLD report insolvencies at higher

than the national average

By Kelly Trenfield*

Kelly Trenfield

Analysis and commentary by FTI Consulting reveals there are tentative signs of improvement despite corporate insolvencies across Australia remaining at elevated levels. The recent trend of insolvencies is showing some regression with total numbers of companies entering administration reducing for three consecutive months. In addition, the average number of companies entering external administration for 2016 to date is 727, the lowest annual average since 2007. This improvement will need to continue for a number of months to break an overall pattern of elevated insolvencies. For the 12 months to May 2016, insolvencies rose nationally by 13% to a total of 10,155 when compared with the prior period (12 months to May 2015) where the equivalent number of companies was 8,966. By state, the mining economies of Western Australia and Queensland continue to report company insolvencies that are higher than the national average with Western Australia insolvencies rising by 29% to 1,022 and Queensland up by 17% to 2,147.

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

It is also interesting to note that across all the states, the clear majority of insolvencies occur by way of creditor wind up, accounting for 56% of insolvencies across Australia. “In similar cycles, insolvencies were impacted by receivership appointments but we are continuing to see appointments initiated by the directors of companies, rather than creditors or other stakeholders. This change to market behaviour certainly seems well entrenched,” said Kelly Trenfield, Senior Managing Director, Corporate Finance & Restructuring at FTI Consulting. “Many of Australia’s directors experienced the global financial crisis in 2008 and are much more aware of the world of insolvency and the need to take steps to avoid insolvent trading,” Ms. Trenfield said. The analysis and comments follow a review of the ASIC Insolvency Statistics for May 2016. The data for the month of May shows continued signs of stabilisation – a total of 735 companies entered external administration in May 2016, a 7% reduction compared with April 2016 and the third consecutive month

Economy

On the property front, there are some early signs of correction in the inner city apartment market generally in Australia. that insolvencies have declined. It is still too early to call a definitive improvement in conditions and there would need to be a sustained reduction over a number of months for this data to break a clear trend of increased insolvencies. “In this part of the cycle we would expect to see a decrease in the number of companies going out of business – but we are not there yet. We also see Australia’s financial institutions continue to prefer alternatives to formal appointments.” “On the property front, there are some early signs of correction in the inner city apartment market generally in Australia. In Queensland, we are certainly seeing construction being impacted, flowing on from the earlier property correction and there are signs in particular that the Gold Coast construction industry is expected to be impacted strongly in the next 6 to 12 months. A number of markets, including Brisbane, would appear to be facing a large oversupply of inner city apartments which will have a market pricing effect,” Ms Trenfield said. Kelly Trenfield, Senior Managing Director Corporate Finance & Restructuring View Kelly’s Profile. Ph: +61 7 3225 4900 Email: kelly.trenfield@fticonsulting.com FTI Consulting, Inc. is a global business advisory firm dedicated to helping organisations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 4,600 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The Company generated $1.78 billion in revenues during fiscal year 2015. For more information, visit www.fticonsulting. com and connect with us on Twitter (@FTIConsulting), Facebook and LinkedIn.

Foreign/RAB wind-up Voluntary Administration

Controller (except receiver and managing controller)

Scheme administrator appointed

Receiver appointed Creditors wind-up

Receiver manager appointed

Court wind-up

Managing controller (except receiver and manager)

Provisional wind-up

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Economy

ATO pledges tougher action on business tax debts By Georgina Wilkins/ Fairfax Syndication

“I see a lot of these highend debtors get away with things like nine payment arrangements. It shouldn’t be this way.” – Donna Smith

The Australian Taxation Office says it will take “more timely action” to prevent small business debts escalating. The ATO is being urged to take legal recovery action earlier to prevent small to medium companies trading while insolvent. The ATO says it is focused on taking “more timely action” to prevent corporate tax debts escalating and potentially impacting other creditors. Debt owed to the ATO has risen to almost $20 billion, with small-business taxpayers accounting for 60 per cent of the money owed. The ATO had previously allowed companies to accumulate more than $345,000 in back taxes before taking legal action. An ATO spokesman said the agency was rethinking its approach. “The community has told us they want firmer treatment of tax debtors who do not address their debt,” a spokesman said. “Businesses that ignore their obligations will receive timely, firmer action from the ATO. This will include legal action where there is evidence the business is insolvent.” But Donna Smith, managing director of debt collection agency Reliance Recoveries, said the Tax Office was still too lax when it came to calling in debts from larger small to medium-sized enterprises (SMEs). She said in one instance, a company was allowed to merge with another business despite owing more than $700,000 in back taxes. This was after being put on nine different

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

payment plans by the ATO and being issued with a legal proceeding that was never followed through. The company was later discovered to be insolvent but not until after it merged, she said, leading to twenty job losses. “The very first thing companies do when they’re struggling is they stop paying tax and stop paying super,” she said. “As far as I’m concerned, as soon as that happens they are trading while insolvent.” Ms Smith said the ATO’s failure to act sooner showed a bias in favour of larger enterprises over individuals and small businesses. “They hammer people in small businesses, the guys that are low rung, people that are generally going to do the right thing,” she said. “I see a lot of these high-end debtors get away with things like nine payment arrangements. It shouldn’t be this way.” In March, Tax Commissioner Chris Jordan said the ATO had reset its debt and payments strategy to take legal recovery action earlier for companies that did not respond to the agent’s demands. “We found that we were waiting far too long before initiating bankruptcy or wind-up action,” he said. “Taking earlier legal action is having the right impact – people are changing their behaviour and paying up earlier, and importantly, we are not letting those who are insolvent and unviable to continue to operate and get an unfair financial advantage.”

Software

SAP tips for credit management By Beth Gray MICM CCE* Many AICM members use SAP in their businesses and may have challenges with the system or are not utilising it to its full capacity, therefore we have asked Beth Gray, Director of SAP Users Pty Ltd to put together a regular column. Beth is a CCE and experienced Credit Professional. For optimal performance and engagement, she is always looking for ways to improve the tools with which she has to work. She is passionate about sharing knowledge and learning from others, which inspired her to develop the SAP User Group. The SAP User Group is a demonstration of how a business can utilise the experiences and knowledge of Credit Managers across different industries to optimise their performance and “know how’” of SAP.

SAP software tip: Your master data is key. “Know who you are dealing with”. Ensure you have quality correct customer master data. Having your customer master data correct with the appropriate fields populated, sets you up for success. Fully utilising the capabilities provided within SAP, results in efficiencies and correct information feeding through to the relevant transactions. This will definitely support day-to-day processing, which then flows through for accurate

reporting. Be consistent with the format of the data entered in your search fields, and this format should be noted in your procedures manual. Uniformity of procedures across all platforms in business is crucial to managing risk. If there is something you would like featured, or want to know, or if you have a great tip to share, please contact SAP Users and we will publish another tip next issue. Get the best out of your credit team and empower them. Are you optimising all the fields and efficiencies available in SAP? Have you explored the full functionality of SAP? Do you fully utilise the SAP functions to improve the credit risk management of your business? Learn what reports and search functionalities are available. #WhatYouDontKnowCouldCostYou

Uniformity of procedures across all platforms in business is crucial to managing risk. Use the power of networking, join the SAP User Group. Enhance your day-to-day work by benchmarking for best in class processes and procedures. Beth Gray MICM CCE is Director of SAP Users Pty Ltd Website: www.sapusers.com.au Email: beth@sapusers.com.au #WhatYouDontKnowCouldCostYou

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

Technology

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đ?&#x2018;Ą2 + đ?&#x2018;Ł2 Ă&#x2014; â&#x2C6;&#x153;đ?&#x2018;&#x2018; = đ??ś 2

Where t=tracking, v=visibility, d=disputes, c=cash

Equating the link between financial document delivery and better cash flow Email has dramatically

lowered the cost of sending

documents, shortened the time it

takes to get a document from the sender

to recipient and removed paper from our offices.

But email is an awkward tool for business

documents â&#x20AC;&#x201C; exceptions are buried in mailboxes,

there is no way to prioritise high value documents, management information is non-existent and it provides limited visibility to business users.

Having bad data, such as incorrect email

5 simple reasons of erroneous email Punctuation & grammatical errors 6%

addresses, spelling mistakes, or where the person has left the company will result in invoices not

being sent and subsequently not being paid on time.

Not surprisingly:

Incorrect email address 40%

Spelling mistakes 22%

zz 56 days of average DSO of an Australian company

zz 11% of companies say they didnâ&#x20AC;&#x2122;t pay because they never received the invoice.

zz Between 30 to 40 percent of recipients donâ&#x20AC;&#x2122;t open the document you send them.

CREDIT MANAGEMENT IN AUSTRALIAÂ Â â&#x20AC;˘Â Â October 2016

Company name change 11%

Employee has left 21%

Technology

harness intelligent analytics to drive better financial

The Challenge There are 3 primary reasons traditional (paper or

decisions.

level of debtor day’s outstanding, lack of control and

a superior alternative to ‘read receipts’ which

electronic) approaches to invoicing contribute to high visibility, and poor cash forecasting:

The renewal invoices embedded links provide

confirm whether the document has been printed or downloaded.

1. No tracking of invoices

With most approaches to invoicing, billers are never sure

whether their customers received or much less viewed or processed invoices.

With PT-X Connect Plus, AICM AR department has full

visibility of the end-to-end process so that they can track unsent, failed, delivered and ‘unactioned’ emails and

proactively ensure that invoices are ready to be paid by

2. Lack of visibility into receivables information Poor visibility into accounts receivable processes

exacerbates the impact of late payments, short payment, unauthorised discounts, disputes over tax rates, contract disputes and unrecoverable debts.

the due date to drive better financial decisions.

Both the status and value of the document is

presented through a real time dashboard which updates as the recipients interact with the document this allows

the AR team to focus on contacting members that didn’t receive the invoices due to incorrect email addresses and those that hadn’t actioned the invoice.

3. Long and complicated dispute resolution

The root of the problem is a lack of visibility and

collaboration. For example, you don’t know of an

invoice dispute until after payment has been delayed.

Even then, you still don’t know why the invoice is being

disputed until you engage in time-consuming back-andforth via telephone and e-mail. Perhaps the customer

didn’t receive the product that was ordered, maybe they are upset because of poor service or your invoice may not have been received or it could simply have been

overlooked. But you won’t know any of that until after

the invoice has been flagged as an exception. By then, payment is already late, and your business has been negatively impacted.

“Not only did this reduce the time and cost involved with following up overdue renewal notices, it allowed us to update members details so they continue to receive important credit updates.” – Nick Pilavidis, CEO, AICM

Bottomline Technologies will be exhibiting at Booth #27 at the AICM National Conference. Our onsite team will

be delighted to take you on a test drive of PT-X Connect. Come visit us and experience for yourself!

For more information, visit: www.bottomline.com/au/

Wouldn’t it be great if... There was a cost effective solution that allowed you to

products/bottomline-pt-x-connect

track and trace financial documents electronically that

provided you with real-time status insights – delivered,

viewed, downloaded or printed – so that you could see failures and manage exceptions instantly!

About Bottomline Technologies

When Bottomline introduced AICM to PT-X Connect™ In August 2016, AICM re-sent membership renewal

invoices via PT-X Connect Plus. This collaborative, cloud-

based service is designed to help organisations optimise financial document delivery, speed time to cash, and

Bottomline Technologies (NASDAQ: EPAY) helps businesses pay and get paid. We make complex business payments simple, secure and seamless by providing a trusted and easyto-use set of cloud-based business payment, digital banking, fraud prevention and financial document solutions. Over 10,000 corporations, financial institutions and banks benefit from Bottomline solutions. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

aicm Training News Getting the mix right Every credit professional knows that the mix of skills, knowledge and experience needed to maximise the benefits and minimise the risk of the credit function are unlike any other profession and different industries. What every credit professional may not know is that the AICM is equipped to help you gain, grow and develop your capabilities as a credit professional. We do this through: —— Qualifications based training; —— Credit management practice training; —— Continual professional development. The continuing professional development is well known to members and includes the National Conference and regular seminars, events and networking sessions held regularly throughout the year. The qualifications based training and especially credit management practice training is sometimes less well known to members. This training provides skills and knowledge required to build and maintain solid foundations as a credit professional. Credit management practice training is training that is focused on a specific learning need and is not formally recognised by government and other training bodies such as colleges and universities. This includes our toolbox modules but also includes topics required by you and your team such as “assertive collections techniques” and “working effectively with sales”. While the toolboxes are offered publicly other modules are generally only offered for in-house training and as the AICM is a not for profit

membership body you will be surprised at how cost effectively this can be done. Qualification based training includes the certificate and diploma in credit management. At the AICM we feel that credit professionals at all levels should hold this qualification as our CEO Nick Pilavidis is fond of saying “when I chose a childcare for my children, my highest valued 'asset', I ensured everyone looking after her had a qualification of some level, so it seems logical that businesses ensure their largest asset, the accounts receivable ledger, is also cared for by people with appropriate qualifications." The AICM is not the only provider of these qualifications but it is the only not of profit industry body. This means we have chosen not to require enrolment in the full qualification rather offering individual units to be taken and students are not financially impacted if they are no longer able to commit the time to complete the full qualification. We also offer a learning mode that suits you from Public face to face sessions, online and tailored in house sessions commencing at times that suit you. AICM qualifications have flexible start dates, unlike traditional institutions and universities that restrict you to specific semesters in the academic calendar. Following are some of the most popular individual courses delivered nationally in 2016.

Statement of attainments issued Maria Di Leo

VIC

FNSCRD502 Manage factoring and invoice discounting arrangements

Stephen Harley

QLD

FNSCRD405 Manage overdue accounts

Manel Pillai

NSW

FNSCRD405 Manage overdue accounts

Brennan Petryk

NSW

FNSCRD502 Manage factoring and invoice discounting arrangements

Charlene Evans

QLD

FNSCRD401 Assess credit applications

Swati Agrawal

NSW

FNSCRD401 Assess credit applications

Gabriella Maiuto

VIC

FNSORG401 Conduct individual work within a compliance framework

Joshua Symons

VIC

FNSCRD502 Manage factoring and invoice discounting arrangements

Stephanie Chisesi

NSW

FNSCRD401 Assess credit applications

Heather Pfitzner

QLD

FNSORG401 Apply principles and FNSINC401 Conduct individual work within a compliance framework

Sofia Singh

NSW

FNSCRD403 Manage and recover bad and doubtful debts

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

In-house training zz BOC zz Baiada Australia zz Scottish Pacific – Sydney, Brisbane, Perth and Melbourne

aicm Training News

QUALIFICATIONS BASED TRAINING

Telephone collection techniques

Assess credit applications The ability to effectively assess an application for credit, taking into account the potential risk the applicant may constitute to an organisation, is a crucial skill for credit professionals. This course addresses the following aspects of managing risk, particularly when assessing applications for credit: Outcomes are covered within this unit: zz How to identify and apply risk management techniques zz Evaluate the information provided in the credit application zz Assess the risk of granting the level of credit applied for and determining the appropriate level of credit zz Formulating recommendations as to how the risk management process may be improved

Manage bad and doubtful debts The ability to identify and recover an overdue customer account is a core requirement of a credit professional. This course ensures candidates have the understanding and skills of best practice in the area of debt collection. Outcomes are covered within this unit: This course deals with the key aspects of dealing with a debt that has been categorised as bad or doubtful including: zz The steps involved in reviewing an account to determine if a debt is likely to become bad or doubtful zz Understanding the difference between a bad and a doubtful debt zz Methods for dealing with a customer’s excuses for not paying the outstanding amount zz Negotiating with the customer to recover the outstanding payment zz Monitoring and documenting the outcome of the recovery action

Credit is more available today than ever before with a variety of purposes and accessible from a range of organisations. With the wide availability of credit comes the risk that the promised payments will not be made. This course explores the skills and knowledge needed to correctly initiate and complete the management of customer accounts which have outstanding payments. Outcomes are covered within this unit: This course deals with the key aspects of dealing with overdue customer accounts: zz Identify customers requiring collection activity – including the need to monitor your organisation’s overdue account reporting system, access and retrieve relevant information and records, and review overdue debtors in accordance with relevant policies zz Establish contact with a customer and attempt to resolve outstanding payment matters – including proposing appropriate communication with the customer and obtaining appropriate authorisation, making contact with the customer and building rapport, and advising relevant organisation(s) regarding the purpose of contact zz Negotiate resolution of outstanding payments with the customer – including advising debtors of the possibility of legal action for non-payment, using appropriate techniques to achieve resolution, confirming negotiation outcomes and diarising further actions.

Legal compliance Working in credit requires a sound understanding of the issues that arise in relation to legal compliance together with an appreciation of the significance of the wider financial services industry. The critical first step in managing legal compliance is the ability to identify the legislative and regulatory provisions that must be adhered to in the credit function and how this information should be managed.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

aicm Training News Legal

Legal compliance cont'd

Credit toolbox

Outcomes covered within this unit: zz Once the compliance parameters are established this needs to be translated to an individual’s role within the credit team. This means that the person needs to understand how to maintain their personal professional development and the strategies available to achieve this. zz Applying procedures that are designed to result in adherence to a compliance framework requires an understanding of effective work and time management. zz Compliance arrangements are subject to ongoing monitoring so that changes in compliance requirements are identified and as necessary communicated to other members of a credit team.

Credit toolbox courses are a unique opportunity to learn and refresh on the fundamentals of credit management from credit professionals with extensive real world experience. These half day sessions cover the fundamentals of credit management with a focus on understanding the core requirements and their real world application. Courses are presented by credit professionals with extensive experience in credit management, are CCE’s and/or have held senior roles in many organisations and industries. The courses have been designed by the AICM’s most experienced credit management trainer to ensure all courses cover the fundamentals required to understand what and why credit professionals do what they do. > Toolbox 1 – Introduction to Credit > Toolbox 2 – Collect With Confidence > Toolbox 3 – Understanding Credit Risk

To speak to AICM about these or any other learning or development, call 1300 560 996 or email andrew@aicm.com.au or debby@aicm.com.au

2016 Face to Face Training Calendar – Melbourne, Brisbane and Sydney MELBOURNE:

SYDNEY:

Important Information:

26th October – Resolve disputes (C,4)

19th October – Resolve disputes (C,4)

21st & 22nd November – Manage factoring and invoice discounting (E,D)

16th & 17th November – Manage factoring and invoice discounting (E,D)

23rd November – Establish and maintain appropriate security (C,4)

18th November – Establish and maintain appropriate security (C,4)

You do not have to be a current AICM student undertaking a full qualification to attend any AICM face to face training. You may wish to undertake a program for your professional development, or enhance and update your current skills and knowledge. On the completion of the face to face training, you will be required to undertake the online assessment/s for the unit/s of competency, if you wish to receive a nationally recognised Statement of Attainment.

5th & 6th December – Legal compliance (C,4,D)

BRISBANE: 7th & 8th November – Manage factoring and invoice discounting (E,D) 9th November – Establish and maintain appropriate security (C,4) 12th & 13th December – Legal compliance (C,4,D) 14th December – Legal recovery of outstanding debt (C,4)

7th December – Legal recovery of outstanding debt (C,4)

TABLE OF EXPLANATION: C= Core unit E = Elective unit D = Diploma 4 = Certificate IV

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Please register you interest early, as there is a minimum requirement of 8 students to conduct face to face training.

YCPA

The Young Credit Professional of the Year Award (YCPA) program is the largest and most prestigious youth credit award program in Australia and provides a great opportunity for young credit professionals to gain recognition both for themselves and their employer.

aicm

Young Credit Professional of the Year Awards The 2016 National YCP we will be selected after judging takes place at the National Conference, the finalist as a result of the state judging and awards are: Fiyona Kidenya, News Corp Australia NSW finalist Ross Leggett, Ruralco QLD finalist George Vahaviolos, EMT Legal/CCC Financial SA finalist Sarah Reed, Bunnings Group WA finalist Catrina Galanti, Austral Vic/Tas finalist

A LOOK INTO THEIR LIVES!

NSW FINALIST

QLD FINALIST

SA FINALIST

WA FINALIST

VIC/TAS FINALIST

Fiyona Kidenya

Ross Leggett

George Vahaviolos

Sarah Reed

Catrina Galanti

News Corp Australia

Ruralco

EMT Legal/CCC Financial

Bunnings Group

Austral

When I am out of work l I love going to the movies and specifically watching anything Marvel l I secretly wish I was a superhero (any will do) l I enjoy reading – on my 3rd round of reading the Game of Thrones books l I am a foodie and enjoy eating out with family and friends

When I am out of work Personal Interests: l Farming, getting back to my parents property in NSW l Reading, I travel a lot for work and my Kindle goes everywhere with me l Running (and injuring myself) l Yoga (not a pretty sight but I am trying!) l Wine, food and COFFEE l Travelling

When I am out of work l My personal interests include travelling l Favourite destinations include Greek Islands, Bahamas, Cancun and Las Vegas

When I am out of work l I have a passion for health and fitness. I train at the gym 5 times a week and love to cook l My fitness goal is to compete at the I.N.B.A (International Natural Bodybuilding Association) in May 2017 as a figure competitor

When I am out of work l I love to cook. I was in hospitality and at 21 years old ran a café. I then managed the family restaurant for 3 years. My love of food has not changed at all in this time and you can frequently find me in my little kitchen trying to create something tasty. I do miss the commercial kitchen!

Sport fan and athlete! l I participate in most charity fun runs, biathlons and obstacle events that run in Sydney each year l ROC, Stomp Stadium and Sydney harbour 10K have been my favourites this year l I love tennis – Serena Williams has been my favourite player since I can remember Little known facts l I had never watched or seen a TV until the age of 12 when my family moved to Australia

Sport fan and athlete! l My favourite sports team is Arsenal FC Little known facts l I could speak Greek before I could speak English

Sport fan and athlete! l I remain a NSW blues supporter for State of Origin but I support the North QLD Cowboys after 5+ years living in Townsville l I also like running Little known facts l I ‘learnt’ to play the violin for 10 years growing up. After that period of time and it still sounds horrendous, you know it’s time to give it up

Sport fan and athlete! l I can’t say that I have one sport that I follow or one team that I barrack for solely, however I have grown up around Rugby Union as my bother played for years and my dad is a coach l I enjoy swimming, body building and muay thai Little known facts l I am a 1st Degree Black Belt in Zen Do Kai l I have completed lifeguard levels in swimming l I am gluten free l I built my first house when I was 26

Sport fan and athlete! l I’m possibly the only Victorian that does not follow the AFL. I work right next to Etihad Stadium and have only attended 2 games my whole life. The only “sport” I’ve practiced is tai chi l I much prefer to spend time with my family, travel or read. I’m on about 100 books for the year so far. Little known facts ~ I really am “cat”, I love animals and must play with them all. I’d love a pet crocodile.

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

New South Wales

Winning team: Wise McGrath team.

Second: Force Legal team.

Golf Day – Bing.

Third: Jones Parnters team.

Presidents Report Let me start by saying, its great to be back!! I would just like to take this time to thank everybody for their support and well wishes over the time I was away due to the passing of my Dad late last year. I was blown away with the support I received for the AICM network and will be forever grateful. I am very excited to have been reappointed President of the NSW AICM Division. The AICM has made great advances in recent years and I look forward to continuing this drive in NSW. Congratulations to “my running mate” Balveen Saini for being appointed Vice President. Balveen was the National YCP winner in 2013 and has served on the council since then with her main focus being encouraging YCP’s and organising some of our most successful events such as the trivia and youth networking nights.

Membership NSW have had a good start to the financial year with over 30 new members in July and August. The NSW Membership portfolio team have been working proactively in association with the AICM’s new appointment Andrew Le Marchant to further develop and establish stronger ties with current and prospective members. Further changes to new member engagement were recently discussed at the national membership meeting and changes are currently taking place for the membership portfolio team in NSW to take an active participation in welcoming and engaging with new members to the AICM. 42

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Golf Day.

Golf Day We were finally blessed by some sensational weather for this years golf day held at Oatlands Golf Course on 9 September. We had over 100 people in attendance who enjoyed all the days festivities followed by drinks and canape’s. The winning team for this year was Wise McGrath closely followed by Force legal in second place with Jones Partners coming in third, our NAGA was proudly taken out by the Austral team. There were also many other prize winners on the day including our Vegas hole, raffles and business card draw as well as the usual nearest the pins, longest/straightest drive prize winners. Our fantastic sponsors for the day were: ARMA, CreditorWatch, Commercial Credit Services, Turks

New South Wales

NSW YCP Finalists.

YCP guests.

NSW YCP Fiyona with her manager Richard Gannon of News Corp.

AROUND THE STATES

YCP Winner Fiyona Kidenya and Mark Russell.

Young Credit Professionals Awards

Australian President Grant Morris presents NSW President Colin Magee with his 5 year membership pin.

Legal, Ampac, Force Legal, Veda, Austral, Wise McGrath, Jones partners, Prasidium Trade Credit, Bing Technologies, Baycorp, Hymans, Hall Chadwick, Byron Thomas Recruitment, Stone Recruitment, GSA Insurance Brokers, Dun & Bradstreet, BBW Lawyers, Debt Sale Brokers, Atradius and Express Mercantile. We also had some great helpers out on the course with the CreditorWatch boys, the girls from Bing and Dun & Bradstreet, The Turks Legal putting team and the boys from BBW. Thanks to the Ampac team for their awesome BBQ and Danielle Attard from CCS making sure both our drinks carts were well stocked all day. And lastly a massive thank you to Gregg Odlum, Andrew Smith, Danielle Attard, and Jennifer Massey for helping me out on the day.

The evening lived up to its reputation as being the gala dinner of the NSW AICM calendar. The crowd were impressed by the calibre of the finalists: zz Christopher Lagana – Ricoh Australia zz Fiyona Kidenya – News Corp Australia zz James Smith – ARMA zz Laura McCulloch – Nova Entertainment zz Luke Brothers – Winning Appliances zz Thomas O’Malley Jones – Kessler On top of the great finalists, food and drinks the night included a keynote presentation by Australian Olympic Hammer Thrower, Peter Farmer. The highlight of the night was the announcement of the NSW YCPA of the year Fiyona Kidenya. The NSW Division Council, YCPA judges (David Hunt, Balveen Sani and Colin Magee) and Dun & Bradstreet congratulate Fiyona and all the finalists and are sure the credit profession has a bright future.

Introducing the 2016 NSW YCP – Fiyona Kidenya Collections Team Leader, Newscorp When I am out of work: I love going to the movies and specifically watching anything Marvel – I secretly wish I was a superhero (any will do) I enjoy reading – on my 3rd round of reading the Game of Thrones books I am a foodie and enjoy eating out with family and friends. October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

New South Wales Sport fan and athlete: I participate in most charity fun runs, biathlons and obstacle events that run in Sydney each year – ROC, Stomp Stadium and Sydney Harbour 10K have been my favourites this year. I love tennis – Serena Williams has been my favourite player since I can remember. Little known facts: I had never watched or seen a TV until the age of 12 when my family moved to Australia.

Parramatta Event Reacting to decisions made by people that think they know everything This evening was well attended by over 40 credit professionals interested to hear what the effects of Brexit will be and how to respond to management's bad credit decisions. Adam Clarke, National Credit Manager at Startrack spoke on “Responding to Bad Credit Decisions” covering key points such as; – Why does upper management override credit decisions? – Risk/cost associated with overriding decisions? – How to change/influence outcomes? – The Benefits/opportunities of change? – Positioning to gain trust and buy-in? – Sustaining trust and buy-in? – Case study with discussion The session was interactive with a case study discussion at the end which really got the crowd involved and opened up valid points and opinions. We also had had Wojtek Randla from Baycorp discussing the effects of Brexit which was well received by the crowd and some entertaining videos to keep people amused. A very enjoyable night was had by all in attendance. – Adam Clarke

personal relationships.’’ A member of the Australian Institute of Credit Management (AICM) and a member of the NSW council, Justin is a strong and passionate advocate for the credit industry and believes in sharing best practices for the overall development of the industry. Justin is a sports fanatic and supports any and all teams out of QLD/Brisbane and enjoys spending time with his friends and family outside of work. With his extensive experience in the Mercantile Industry, Justin is always available to share his views and offer assistance. He can be contacted on 0415 054 688 or via email Justin.watson@baycorp.com.au

Upcoming events Barefoot Bowls at North Sydney on 17 November will be a great occasion to enjoy the warmer weather and get together with colleagues and fellow credit professionals. Masterclass and Pinnacle Awards Dinner on 8 December. The Masterclass is a great opportunity to get up to date on some key credit management topics and the Pinnacle Awards will see credit professionals recognised for their achievements. and great way to wind up another great year for the NSW division. Look forward to seeing you all at the conference. – Colin Magee, NSW Division President

The Australian Institute of Credit Management welcomes our Partners for 2016. National Partners

New council member Justin Watson Justin Watson MICM is the Operations Centre Manager at BAYCORP Australia. He joined Baycorp in January 2015 and currently oversees the Purchased Debt (PDL) division. A highly regarded professional, he ensures that the company targets are met including the responsibility of ensuring that the Operational resources are effectively employed towards achievement of Baycorp’s strategic goals. He is also involved in identifying and implementing strategies to transform the PDL Operations function to support the BAYCORP Australia’s vision of becoming the leading Debt Resolution Specialist. For over 15 years, Justin has occupied several management position within the Credit industry. From 2012 – 2014 Justin was the Regional Operations Manager at NCML. During his time at NCML, he successfully managed the late stage recoveries of a large number of small to large businesses within the credit industry. Prior to joining NCML, Justin worked with Collection House for 11 years as head of Contingency Collection. He led several high performing teams and was instrumental in devising and implementing numerous initiatives to optimise service efficiency, process excellence and drive change initiatives that positively impact the bottom line. ‘’Joining the council is an avenue for me to take a more active role in the industry I love and foster strong business and 44

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Divisional Partners

Professional Partner

Official Division Supporting Sponsors

Our National, Divisional and Professional Partners support and work with the AICM to promote the Institute’s activities, represent the Credit Industry and develop the careers of all Credit Professionals. As these organisations support your Institute and your Industry please consider them when you require assistance.

Queensland

Ashleigh Mason, Decia Guttormsen and Nathan Wilkinson.

YCP finalist Ross Leggett and Mark Russell from D&B. Julie McNamara of Patane Lawyers and Nick Combis of Vincents.

President’s Report We have seen another 3 months of great events taking place and we are fast approaching the biggest of them all – National Conference on the Gold Coast. Firstly (as always), the ongoing support in 2016 from our partners, Veda, Dun & Bradstreet, Austral Mercantile, Vincents, Results Legal and Randstad is greatly appreciated. The engagement and commitment by their people make us all proud to be AICM members. As we have had a very busy quarter in the way of events, I would like to touch on a few:

AICM AGM Our AGM and YCP night was held at Rydges at Southbank. The AGM saw me being appointed the new Divisional President and Peter Mills take on the roles of Vice President and Treasurer. I would like to thank Peter Mills for his contribution as President for the last 12 months and look forward to his continued support with the council.

AICM QLD Young Credit Professional Awards Sponsored by Dun & Bradstreet The YCP dinner was well attended. Again, a big thank you goes out to D&B for their continued support. As a former YCP national finalist, I can say that it is not only the monetary support, but also D&B’s support and engagement in the process that helps make YCP what it is. I would also like to thank all the Judges: Katheryn Kershaw from Randstad, Greg Young from Forbes Dowling Lawyers and Megan Dunbar from D&B Australia for taking the time out to help develop our younger members. The YCP night was hosted by yours truly and assisted by Mark Russell from D&B who was proud to announce the new QLD YCP – Ross Leggett. Congratulations to Ross on his achievement, we all wish you all the best in the National Competition. I would also like to thank the other finalists for October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

QLD Finalists with Mark Russell of D&B.

AROUND THE STATES

Queensland

Guests at YCP night.

Roger Masamvu, Toni Sawyer, Jason Parker, Alex Croce and Nathan Wilkinson.

Roger Masamvu and Ryan Booker.

YCP finalist Ross Leggett. WINC guests.

taking the leap. You were all exceptional candidates with plenty to offer your employers and we look forward to your continued involvement with the AICM. As a part of the events for the day, we also held a half day workshop aimed at credit officers. Feedback was that it is a good initiative and a big thank you needs to go out to all the contributors, Bruce Patane of Patane Lawyers, Toni Sawyer of AICM, Katheryn Kershaw of Randstad and Peter Mills of Thomson Geer Lawyers (for providing the room facilities free of charge) and other council members that also gave up their time to help put it all together.

CNN’s We held our last CNN on Wed 14 September at Thompson Geer Lawyer offices which covered the updates to the government PPS register’s software. A big thanks to Peter Mills for his expert and interesting summarisation of this very important credit tool. 46

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Another important date is the 23rd of November, which will be our end of year function which will be held at Rydges in Southbank. There is no better way to celebrate the year that was with that view! More details will be out closer to the time and the QLD council look forward to see you all there. I also wanted to take the time out to acknowledge the efforts of Stacey Woodward who has been in charge of our Media portfolio, her updates and reminders on LinkedIn and Facebook have proven to be a great tool for keeping members up to date with past and future events. Our membership numbers are also on the rise and again, and Felicity Ford should be thanked for her brilliant efforts in the membership space. Thank you all again for your support to the Queensland council, and making the AICM informative and “fun” for its members. – Roger Masamvu, President

Queensland AROUND THE STATES

WINC guests.

WINC: Debbie Leo.

WINC: Linda Murray presenting.

WINC: Friends with dignity.

Women in Credit WINC 2016 was a huge success with over 100 people attending our prestigious lunch held on Friday the 9th September at Customs House in Brisbane. The event would not have been possible without the dedication of our Sponsors, Veda, NCI and Results Legal along with the help of the silent auction, raffle, and gift bag supporters. Last but not least the WINC committee who worked tirelessly to ensure its success. We had some very inspirational words from Linda Murray and Debbie Leo on career by design who gave us all the confidence to strive for our goals and set new bars we didn’t think we could achieve. It was great to see a roomful of likeminded women and a handful of men asking how they could support and encourage women in their workplaces. This event was not only a great networking opportunity to learn something but the chance to raise over $3,000 for a very worthwhile cause, our chosen charity Friends with Dignity who help families who have suffered Domestic Violence Looking forward to doing it all over again in 2017! – Queensland WINC Committee

WINC: Maria Schandl.

WINC: Anna Taylor. October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

Queensland

WINC guests.

WINC: Zara Mends, Maria Schandl and Anna Taylor. WINC: Julie McNamara and Linda Murray.

The Australian Institute of Credit Management welcomes our Partners for 2016.

Breakfast 13 July AICM members enjoyed an excellent technical and fun session on the court examination process (by liquidators of directors and their related entities), presented by Nick Combis and Steve Staatz of our state partners Vincents. Steve highlighted the opportunities for creditors to not only assist, but to also conduct the examination themselves, and to often use this process to achieve a financial settlement with debtor’s directors. Steve will be conducting an examination at the Brisbane courts in the near future. Members will be advised so that they can attend and gain further insight into this valuable recovery tool.

National Partners

Divisional Partners

– Peter Mills

QLD YCP We welcome this year’s Queensland Young Credit Professional, Ross Leggett. Ross is currently the divisional Credit Manager with Ruralco Holdings and holds a Bachelor of Agricultural and Resource Economics with Honours. He has a passion for Credit Management and furthering himself professionally and academically. Ross loves farming, travelling and enjoys running and yoga. We all wish Ross the very best of luck at this year’s conference on the Gold Coast! Although not winning this year’s QLD YCP, the remaining finalists Emma Beal, Ashleigh Mason, Mark Moorhouse, Nathan Wilkinson and Nicole Storm did a brilliant job and we hope to see them in the years to come at AICM events and conference. 48

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Official Division Supporting Sponsors

Our National and Divisional Partners support and work with the AICM to promote the Institute’s activities, represent the Credit Industry and develop the careers of all Credit Professionals. As these organisations support your Institute and your Industry please consider them when you require assistance.

South Australia

YCP nominees with emcee James Neate, State President Gail Crowder and State Manager of D&B Michael Seychell.

President’s Report As the sun is starting to shine a bit more and the days are getting a bit longer, we are enjoying the taste of spring just around the corner! This will give the committee a chance to plan some enjoyable outdoor events in the latter half of the year. After a break for a year or so, our quiz night was a huge success! Full of fun and brain teasing questions the feedback has been that it was the ‘best quiz night’ yet! The committee staff ensured it ran smoothly and briskly keeping the momentum and excitement all evening. Great to see some new faces/teams coming along. The venue continues to be just the right size with great acoustics, amenities and parking. Make sure you look out for next years’ to lock in your calendar. The annual Award’s Night was one big event! The Crowne Plaza was a superb venue. The pre-dinner drinks were held in an area with floor to ceiling glass which showed the spectacular views of several parks surrounding the city. The attendees had a wonderful time being fully entertained with the numerous awards and our witty emcee James Neate. It was also good to have Nick Pilavidis attending which gave that national touch to the event. Good luck to our proud SA YCP winner George Vahaviolos from EMT Legal/CCC Financial. In September we had our Mock Court event. This was the real deal!! We were fortunate enough to secure a judge, barristers and more. We explored the court process based on an actual trial. Full of intrigue with the opening address, evidence in chief and cross examination of the credit manager. This was an education for all managers and staff. We’re hoping to engage Senator Nick Xenaphon and hold a breakfast meeting. Senator Xenaphon is very keen and we hope to have a date to announce soon despite his busy schedule. Between 2008 and 2016 Nick served as an independent senator. For those that have heard him speak at events before, you will understand how excited we are about this. This will be announced very soon. At the start of 2016 we set out to make changes to our calendar and I believe the events so far have been of this high quality we’re seeking. We plan to continue to improve this over the months ahead and into 2017. Our members and associates opinions is very important to us so please keep your SA

Beautiful venue for SA's award night.

committee informed. With the National conference just around the corner I trust some of our SA members will be attending this year. There are always many speakers and forums that are of interest for all industry types and you will be guaranteed to come home with up to date credit knowledge. See you there! The 2016 SA AGM did not see too many changes this year. The committee will continue as status quo for another 12 months. However, we did see the appointment of Anne Wilkins as Vice President. Congratulations Anne! A big continued thank you to our business partners. Please remember that you always have the opportunity to be involved in events throughout the year. Keep in touch with your committee! – Gail Crowder, SA Division President

SA Awards Night This year the annual Awards Dinner was held at the exquisite Crowne Plaza Hotel. Perfectly positioned overlooking Hindmarsh Square, in the centre of Adelaide it offered high class facilities for the 80 attendees. Pre-dinner drinks, enthusiastic networking and presentations of numerous awards kept the evening moving at quite a pace. The Crowne Plaza gave excellent service and quality meals making it a most October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

Michael Seychell, D&B and SA YCP winner George Vahaviolos.

AROUND THE STATES

South Australia

SA Councillors including James Devonish – Fellow Award, Gail Crowder – Laurie Ellis Award and Trevor Goodwin – Life membership.

Quiz night: The winning team – "Law and Disorder".

Unfair contracts seminar.

Quiz night: Worrells team.

enjoyable evening. The Young Credit Professional of the Year has been proudly sponsored by Dun & Bradstreet for many years. The guest speaker for the evening was the highly credentialed Dr Travis Kemp who entertained the audience with his thought-provoking presentation. There was good interaction and questions/comments from the audience which instigated lots of conversation. Dun & Bradstreet’s Business Development Manager, Stewart Lovie, introduced the finalists for the YCP State Award along with SA’s State manager, Michael Seychell assisting him. Matthew Ray from NCML, George Vahaviolos from EMT Legal/CCC Financial, Leah Capones from Bendigo and Adelaide Bank, Monika Vucenovic from Kemps Credit Solutions, Shivaan Christensen from Credit Recovery Solutions and Montgomery Wolf from Worrells Solvency and Forensic Accountants. The winner announced was George Vahaviolos who will now go on to represent S.A at the National Conference in October. Well done George and good luck! During the evening Josh Richards and Anne Wilkins, the SA Division’s membership chair, introduced a number of new members to the audience and presented years of service pins to Maree Kairl of NCI and Trevor Goodwin of NCI. Josh proudly presented James Devonish with his Fellowship to the Institute. Lindsay Chuck announced a very special award to Trevor

Goodwin for Life membership. James Neate, our witty emcee for the evening, presented Gail Crowder with the Laurie Ellis Award. To conclude what was a splendid evening, we were pleased to have Nick Pilavidis attend who thanked everyone for attending and Dun & Bradstreet for their continued involvement and sponsorship of the YCP Award. Keep grooming those young credit professionals for 2017’s night of nights!

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

– Trevor Goodwin and Gail Crowder, Functions

Unfair Contracts seminar Joseph Scarcella, Partner at Ashurst Lawyers, preceded the Awards dinner with an informative presentation on ‘unfair contracts’. If you deal with small businesses you certainly need to be aware, understand, identify and prepare for the changes effective from 12th November 2016. The attendees became very involved with many questions, concerns and examples of their current dealings with small business contracts. You need to look into your procedures, be transparent, provide an option to opt out, prioritise important clauses, and have fair terms. Another important point is that should fees and costs not be identified or calculated properly there will be a 7 per cent penalty.

South Australia

9th November 2016

Meeting of Creditors 24th November 2016

End of Year Event

Quiz night: Trevor Goodwin – quiz master.

Coopers Brewery Toro Australia Kemps Credit Solutions Lynch Meyer Lawyers Options Wines Mercantile CPA The individual feedback from the attendees has been nothing but positive! What a fun and fast moving night it was. We hope to see you next year when we lock in another date) – Trevor Goodwin and Gail Crowder, Functions

The Australian Institute of Credit Management welcomes our Partners for 2016. National Partners

Quiz night scorer Anne Wilkins.

Joseph was very open and engaging with his knowledge of how you should do everything you can to have a good understanding of the unfair contracts amendments before implementation on 12 November.

Quiz night

Divisional Partners

The SA Division’s quiz night was held on Friday 22 July at the Unley Community Hall. What a fun and entertaining night it was! The hall was the perfect size for our group of around 65 people. Trevor Goodwin was our zesty quizmaster for the evening with the aid of Anne Wilkins as the judicious scorer. Gail Crowder fluttered around the tables razzing up the crowd. “Heads and Tails” and “Throw the Money” at the bottle of Chivas Regal were some of the extra fun games of the night. After a keenly fought contest the team of “Law and Disorder” were the clear winners. A big ‘congratulations’ to the winning team! Through the kind generosity of sponsors we had some great prizes on the night. We thank the following businesses for their donations: R M Williams Bickfords Australia/Vok Beverages Veda Advantage Worrells Solvency and Forensic Accountants National Credit Insurance (Brokers) Samuel Smith & Son Pernod Ricard Winemakers

Official Division Supporting Sponsors

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

Events Calendar

AROUND THE STATES

Victoria/Tasmania

Tania Bailey and Angela Porter of Ranstad at the Tasmanian network event.

Tasmanian network event.

President's Report This year we had another fantastic participation in the Vic/ Tas Young Credit Professional Awards with 12 enquires. Eight applications went to final stage and set a very high standard with their right through the whole application and interview process. I personally would like to thank each applicant. Congratulations and well done Catrina Galanti from Austral Mercantile as this year’s Vic/Tas YCPA winner. Catrina will be representing Vic/Tas at the National Young Credit Professional Awards at the Gold Coast in October. The Tony Mamone award was presented to Meg Pillai from Transurban. Congratulations and all the best for the future. Meg is an aspiring young credit professional who I am sure we will hear good things about her in the near future. For those who may not be aware of the Tony Mamone award, Tony was a long serving councillor who dictated much of his time in training and running short courses. Tony took great pleasure in parting his knowledge to everyone especially to all the up and coming young credit professionals, hence we present this award each year to a YCP finalist that displays a thirst for knowledge. The network nights are still well attended and have been great value to the people attending with relevant and updated information on the latest trends and information, especially the PPSR sessions which continues to be a highly relevant topic. Our first Tasmanian Network session held in July was a great session with close to 40 people attending the Hardship and Avoiding Preference Claims presentations in Hobart. There will be more sessions in Tasmania late in the year. Stay tuned and watch out for those flyers. 52

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Tasmanian network event.

Well done to all the members who took the recent CCE exam and were successful good luck in completing the paper to become a CCE. Congratulations to all the entrants for this year’s Credit Team of the Year, getting involved in the event, I believe it brings the teams closer together and creates a strong bond. I encourage as many as you can to participate in next year’s event. By all accounts the AICM Women in Credit function held at the RACV club was a great success. I was unable to attend as a 3 hour plane delay had me cooling my heels at an interstate airport. I would like to thank Veda, Results Legal and NCI for sponsoring this event and all the great companies who donated prizes and gifts, again thank you for your generosity. A very big thank you to Fran Thorne who by all accounts did a stellar presentation on the day.

Victoria/Tasmania

YCP winner Catrina Galanti with Vincent Galanti.

YCP keynote speaker Paul Broadfoot.

YCP guests at Melbourne Town Hall.

on a number of different topics given by Vic/Tas Councillors Frank Gambera; Neil Smith and our State President Lou Caldararo (with additional support provided by Suzanne Lucas and the Tasmanian Collection Services). These people took time out of their busy day to travel to Tasmania and back in the one afternoon/evening – well done to all. A committee has now been established to work on additional events and we are sure there will be an increase in our membership as a result of the efforts of all involved.

WINC Tasmanian network event.

I encourage any member who would like to submit a credit related article to email aicm@aicm.com.au where Nick and team will review the document for publication.

Events Over the past few months the Vic/Tas Division has held a number of very successful events and seminars for all members.

Tasmanian – network evening On 27July we ventured over sea to visit our Tasmanian friends and held a great network evening where the feedback was encouraging and will result in similar trips to this great part of Australia. With over 40 people attending to hear presentations

At the beginning of September we held our second Women In Credit Luncheon and what a great day it was. Held at the city RACV Club in the heart of Melbourne with over 100 ladies (and a few Gentlemen) with money collected from raffles and the even popular goodies bag etc. being donated to Safe Steps an organisation set up over 40 years ago to assist those threatened with family violence. Our guest speaker this year was Fran Thorne who presented a truly entertaining 45 minutes. Fran has had a number of jobs in over 30 years of corporate management roles but in recent times has established the now popular Australian Womens Network resulting in regular radio interviews in the USA. Planning for next year’s event is now underway and we encourage those who have so far not been able to attend this truly worthwhile networking afternoon to keep an eye out and make sure you pencil the date in on your calendars. We would like to thank the committee involved in making this the success it was – thanks to Catrina Galanti (Vic Sales October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

Vic State President Lou Caldararo and Craig Brooks of D&B with the YCP Finalists Catrina Galanti, Toni Atkinson, Nitish Arora, Joshua Tseitlin, Meg Pillai, Lyndon Miranda and Joshua Rutland.

AROUND THE STATES

Victoria/Tasmania

WINC team – Jeff Hurst, Debbie Leo, Mary Petreski, Catrina Galanti, Fran Thorne, Prudence Chang and Anna Taylor.

WINC: Presenter Fran Thorne.

Manager, Austral Mercantile Collections); Mary Petreski (Accounts Receivable Supervisor, Baxter Foods) Sherif Hussein (Credit Manager, REA Group); Amanda Borland (AICM National Office); Carole McTavish (National Credit Manager, Toll Ipec); Robyn Erskin (Brooke Birds); Jeff Hurst (Director, Trade Bureaux Australia); Lou Caldararo (National Credit Manager, Spicers) with additional guidance from Debbie Leo (GM Veda); Anna Taylor (Results Legal); Prudence Chang (NCI); Zara Mends (NCI); Tracey Sheehan (Trace Personnel). Without the involvement of these people, events like this would simply not be possible. We would also like to thank those organisations who assisted on the day with prizes: Results Legal, Veda, Baxters Foods, Cor Cordis; Good Life Health Clubs; Scalzo Food Ind; Art Series Hotel; Creditor Watch; Austral; View; Love Intimo; Mercantile CPA; Pfizer; Magum Signs; NCML; Stephanie Kate; Room to Improve; Brooke Bird; AMPAC. Thanks to each and everyone for attending and your support. There are a number of seminars to be held in the coming weeks/months and we encourage all our members and friends to attend these great events – half day Seminar in September; Credit Tool box in early 2017 to name just a couple. See you there.

Events Calendar

WINC guests.

The Australian Institute of Credit Management welcomes our Partners for 2016. National Partners

Divisional Partners

Professional Partners

28th October 2016

Youth Networking – Trivia Night 11th November 2016

Official Division Supporting Sponsors

CCE Breakfast

17th November 2016

Network Event

Topic: Telephone Techniques 1st December

End of Year Function – Pinnacle Awards

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

Western Australia/NT

Ricki Lee Schulze, Sarah Reed, Edwina Reed, Warren Myers, Beth Blackwell and Ben McCallum.

WA Council and friends.

WA credit community – year in review 2016 has proven to be rather successful for us here in the West. I am proud to say the new faces to Council have brought great ideas to the table to allow us to improve on last year’s efforts in delivering quality events for our Members. We look forward to continually presenting informative breakfast clubs, educational toolboxes and awesome social events to the Credit Community of Perth. Without our Members, National and Divisional Partners we wouldn’t be where we are today. We have a very busy end of year calendar. In July, we celebrated long into the night at the Crown after announcing the WA State winner of the Young Credit Professional Award. Every year the West finds exceptional credit talent and this year was no different. We can’t wait for the rest of Australia to meet Sarah Reed. She will be representing us at the National Conference on the Gold Coast in October. September heralded our first Women in Credit Luncheon. We thank Veda for their support of the event here in WA and Debbie Leo for chairing the panel. The guest speakers were amazing. Linda Murray, Lisa Steadman and Cobie Rudd shared their stories on life and success in industries that can be somewhat uncompromising. We look forward to 2017’s event already!! Photos to follow in the next issue. Our toolboxes made a welcome return to 2016. We were fortunate to have Toni Sawyer visit Perth at the end of

Lisa Marr – WA President and Donna Tresize – D&B.

September to deliver the newly written education program. Going forward we hope to present all three toolboxes during 2017 to the next generation of credit industry professionals. December sees us return to the South Perth for Christmas on the Bay. It’s all about to get exciting in WA!

2016 YCP When I accepted an invitation to join the WA Council in the middle of last year, I reflected on what I was passionate about and how I could contribute to AICM community. Quite quickly I arrived at the conclusion the engagement and advancement of young Credit Officers and Accounts Receivable Officers was what excited me. How do we help the next generation of Credit Managers, specifically how do we keep them in the industry and contribute to their development? Immediately my mind went back to 2005, when I was fortunate to be a WA State finalist in the Young Credit Professional award. In particular, what great exposure it was, and how it gave a real shot in the arm for my own career. October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

Almin Uzicann, Natalie Batten, Jo Western, Cindy Louis, Jason Louis, Debra Allen and Kevin Allen.

AROUND THE STATES

Western Australia/Northern Territory

YCPA winner Sarah Reed with finalists Mel Cooper and Rebecca Phenna..

Ricky Black – D&B, Sarah Reed and Lisa Marr – WA State President.

It was a difficult choice given the quality of the finalists, but we were blown away by Sarah Reed from Bunnings. Sarah is incredibly engaging, bright, personable and clearly an inspiring young leader. Coming from a family with credit in the blood, her technical knowledge exceeded expectation and Sarah was able to articulate why she will be a prominent National Credit Manager some time in the future. On behalf of the WA AICM members, all the best in October on the Gold Coast, Sarah. You will do us proud. – Ben McCallum, WA Director

The Australian Institute of Credit Management welcomes our Partners for 2016. Geoff Bailey – AMCAP, Narelle Borley, Brett Molony – Price Sierakowski and Frank Vandenbregt – AHG Ltd.

So the opportunity to be part of the judging panel for the 2016 WA YCP was wonderful. Along with Ricky Black from D&B and my former mentor Denise Riley, we had three excellent State Finalists. The really exciting thing for me was these were three credit officers making the transition into leadership. They had all started at the entry level. All were passionate about their careers and had clear pathways to what they wanted to achieve. All worked for outstanding organisations led by highly respected Credit Managers. Our key objective was to not only find a star to represent us on the National stage, but to find a winner who displayed all the hallmarks of being a high quality credit manager in the 2020’s and beyond.

Events Calendar

8th December 2016

Xmas on the bay

VENUE: SOUTH PERTH YACHT CLUB

CREDIT MANAGEMENT IN AUSTRALIA • October 2016

National Partners

Divisional Partners

Official Division Supporting Sponsors

New Members New South Wales

Victoria/Tasmania cont'd

Wayne Palmer Vani Selvarajan Karen Brooker Helen Darvell Katrina Worland Michelle Brown Catherine Salei Glen Tonna Donna Carthey Umesh Chand Alexander Quinn Patricia Bustamante Suyaty Tandi Debbie Rose Nadia Bennett Karen Alexander Jackson Heenan Georgina King Alexandra Johansson Vicky Simpson Darrin Mitchell Olga Kohler Sam Barendregt Melissa Wyatt Amy Spence Neil Shilbury Violet Alexander Georgina Wu Trina Griggs Lynnette Barlow Archana Chawla David Molesworth

Rachel Reading Norman Townsend Claire Bones-Wilson Veronica Hodge Haylee Archer Christy Francis Teresa Vraketselis Brendon Briscoe Debbie Shearing Craig McKinlay Andrew Sharpe Kim Palmer Vicki Marriott Kristian Schluter Luke Brockie Johnathon Fysh Jarrod Coppleman Julie Black Suzanne Chhour Susan Verran Jared Plotz Cynthia Tirta Djaya Shreeja Guruvayurappan Wendy Taafe Sylvia Perra Ramya Jagannath Rolly Rosales Paul Scagliotti Michael Coates Shaun Thomson Sheryl Natoli Manmohan Bobby Saigal Christopher Yam Frank Fisher Dominique Franco Danielle Myroniuk Jyotika Singh Rowan Gallagher Lan Gao Vicki Plessas Martina Vucak

Laminex Pty Ltd GrainCorp Operations Limited Orange Hire Industrial Galvanizers Jaybro Orange Hire Altro Holdings Executive Collections Rhino Rack n/a Caltex Australia Ricoh Australia Pty Ltd QBE Insurance (Australia) Ltd National Credit Management Ltd Austral Mercantile Collections QBE QBE Insurance Matthews Folbigg Pty Ltd Caltex Australia Petroleum Pty Ltd Caltex Australia Petroleum Pty Ltd Matthews Folbigg Pty Ltd Pirelli Tyres Australia Pty Ltd Austral Mercantile Collections Pty Ltd Ecolab Pty Limited Kennards Hire Pty Ltd Veda Holman Webb Lawyers Turks Legal Kennards Hire Pty Ltd Holcim (Australia) Pty Ltd NCI Roland Corporation Australia Pty Ltd

Queensland Diane Watson Te Awhi Herewini Maree Bramadat Blake Munt Kenneth Barmby-Spence Charlene Evans Benjamin Ebelt Tamra Langdon

Collection House Limited Collection House Ltd Collection House Ltd Collection House Limited Premier Financing Holcim (Australia) Pty Ltd Holcim (Australia) Pty Ltd Holcim (Australia) Pty Ltd

Western Australia

South Australia Gemma Haggett Angela Walden Kate Netschitowsky Beau Mead Colleen Higgins Nicola-Jane Whannel Amy Cooper

National Credit Insurance National Credit Insurance CCC Financial Solutions Group CCC Financial Solutions Group Adelaide City Council NCI National Credit Insurance

Victoria/Tasmania Jesse Hemingway Kim MacFarlane Jamie Henderson

Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Aurora Energy Aurora Energy Aurora Energy Pty Ltd Aurora Energy Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd Recoveries Corporation Pty Ltd Vinidex Pty Ltd Hertz Australia Pty Ltd Hertz Australia Hertz Australia Hertz Australia Pty Ltd Hertz Australia Hertz Australia Hertz Australia Pty Ltd JHK Legal Australia Pty Ltd JHK Legal Australia Pty Ltd Pepkor South East Asia Boral Australia Origin Energy Smith Leonard Fahey Lawyers Australia Post REA Group Warrnambool Cheese & Butter Factory Goodyear Dunlop Tyres (Aust) Pty Ltd Carrier Australia Pty Ltd Automatic Data Processing Ltd. Holcim (Australia) Pty Ltd Kingspan Insualtion Pty Ltd

Aurora Energy Pty Ltd Aurora Energy Pty Ltd Aurora Energy Pty Ltd

Michelle Teague Petrus Hamers Adam Marini Hendrik Taylor Kevin Ding Elli Leng James Fulton Rachael Henry Colin Wagstaff Sarah Reed

Wesfarmers Kleenheat Gas Pty Ltd Kleenheat Wesfarmers Kleenheat Gas Pty Ltd Kleenheat Wesfarmers Kleenheat Gas Pty Ltd Austral Mercantile Collections Pty Ltd Austral Mercantile Collections Austral Mercantile Collections Pty Ltd QBE Trade Credit Bunnings Group

Overseas Satish Venugopal

Union National Bank

October 2016 • CREDIT MANAGEMENT IN AUSTRALIA

AROUND THE STATES

The Institute welcomes the following credit professionals who were recently admitted to membership in July and August 2016.

Unlock the potential in your credit career credit staff

Consider an AICM Qualification course If you aspire to achieve greater heights in your credit career or want to get the best from your credit staff, then a qualification course can help you achieve your targets. Offered nation wide, you can study in your own time (24/7), with support available. If you have industry experience or prior education, you may be eligible for Recognition of Prior Learning (RPL) credits to fast-track your qualification. If youâ&#x20AC;&#x2122;re an employer, you may qualify for a training grant. Talk to AICM today to discover your course options.

Diploma of Credit Management

Certificate IV in Credit Management

Certificate III in Mercantile Agents

Key credit issues such as personal & corporate insolvency, developing credit policies & compliance.

Issues relating to credit applications & securitisation, compliance, managing bad & doubtful debt & customer service.

All aspects of enforcing payment obligations & obligations of mercantile agent & debt collection activities.

Take the first step to a better career & talk to AICM today

Call 02 9906 4563 or vist aicm.com.au