Credit Management in Australia - July 2020 by AICM

Volume 27, No 5 July 2020

The Publication for Credit and Financial Professionals

IN AUSTRALIA

l Check out our ‘from the vault’ pictures celebrating our rich past l Make sense of all the data you’re seeing l Read a case study on automating your cash allocation

Contents Volume 27, Number 5 – July 2020

4 8

Message From the President Open letter from a Life Member

64 SA: SA Division Council 1989-90.

COVID-19

Making sense of payment patterns By Simon Bligh

Empowering business owners to act now By Andrew Spring

COVID-19, court procedures and your rights when issuing statutory demands By Ellen Nowland

Legal action and enforcement during the COVID-19 recession

66 Qld: 1984 – Roy Boff, Marion Hintz (President) and Peg Crook (Registrar).

By Roger Mendelson

Credit Management Tales from the trenches – implementing automated cash allocation

By Trevor Middleton

Clean up your act this financial year By Patrick Coghlan

In uncertain times, improve cash flow and risk by working smarter

69 Vic/Tas: August 1989: President Roger Penfound, Carol O’Connor with 3 top students of 1988 Class.

By Keith Cowart

How business can prepare for the end of JobKeeper

A colossal stuff-up

By Clare Venema

Cyber safety while working remotely or at the office – a phishing email example

By Andrew McLeish

72 NSW: 1989 – Eddie Watts and 1990 – Leanne McNamara.

10 Simon Bligh

Andrew Spring

Ellen Nowland

18 Trevor Middleton

74 24

Keith Cowart

Clare Venema

32 Andrew McLeish

34 Adrian Floate

WA/NT: 1992: Eight finalists with State President: Con Crista, Carmen Woodhouse, Vicki Horlock, Jan Barrett, Narelle Lewis, Diane Cowl and Steve Thomas.

Pieter le Roux

Fiona Reynolds

Lucy Tindal

ISSN 2207-6549

Paul Hunt

DIRECTORS

Leveling the playing field for Aussie small businesses By Adrian Floate

Leadership & High Performance

It’s not what you know, but who you know.... By Pieter le Roux

Trevor Goodwin LICM CCE – Australian President Julie McNamara MICM CCE – Queensland and Australian VP Lou Caldararo LICM CCE – Victoria/Tasmania Rowan McClarty MICM CCE – Western Australia/Northern Territory Gail Crowder MICM – South Australia Peter Morgan MICM CCE – New South Wales Debbie Leo MICM – Consumer CHIEF EXECUTIVE OFFICER

Legal A brave attack on the unfair preference regime fails By Fiona Reynolds and Lucy Tindal

40 45

How to engage with a lawyer cost effectively By Paul Hunt

Nick Pilavidis FICM CCE Level 3, Suite 303, 1-9 Chandos Street, St Leonards NSW 2065 PO Box 64, St Leonards NSW 1590 Tel: (02) 8317 5085, Fax: (02) 9906 5686 Email: nick@aicm.com.au PUBLISHER

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Nick Pilavidis FICM CCE | Email: nick@aicm.com.au CONTRIBUTING EDITORS

Training The importance of continual learning throughout your credit career

NSW – Chris Lagana MICM Qld – Carly Rae MICM SA – Clare Venema MICM WA/NT – Jeremy Coote MICM Vic/Tas – Michelle Carruthers MICM EDITOR/ADVERTISING

Division Reports

New Members

64 66 69 72 74 77

Credit Marketplace

South Australia Queensland Victoria/Tasmania New South Wales Western Australia/Northern Territory

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Contact: Andrew Le Marchant Ph: 1300 560 996 E: andrew@aicm.com.au

Andrew Le Marchant LICM CCE Phone Direct 02 8317 5052 or Mob 0418 250 504 Email: andrew@aicm.com.au 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, 2020. Cover Photo Credit: Amanda Elisa for United Nations Global Call Out To Creatives on Unsplash.com

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Click Here EDITORIAL CONTRIBUTIONS SHOULD BE SENT TO: The Editor, Level 3, Suite 303, 1-9 Chandos Street, St Leonards NSW 2065 or email: aicm@aicm.com.au July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

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From the President

Trevor Goodwin LICM CCE National President

nto the second half of 2020 your Institute remains in a sound financial position maintaining a solid membership base and conducting a variety of on-line education programs and webinars. The 2019 financial year saw the Institute achieve good revenue through our professional development courses, RTO, networking functions, membership, national conference and sponsorship. Covid-19 has brought us challenges but our policy strategies and good management has enabled us to continue to function well in delivering critical services and education while keeping credit professionals informed of latest developments and technology. It is extremely pleasing to see our members renew their membership vindicating the value and benefits the AICM offers. While COVID-19 continues to dominate global headlines, businesses are considering what challenges and opportunities lie ahead in the post-pandemic economy. Once JobKeeper payments, extended enforcement time frames and exemption for insolvent trading cease we will likely see the real impact of the COVID-19 pandemic. Credit personnel are preparing for the economic drain on businesses leading to increases in insolvencies, payment delays and payment arrangements. As part of the business recovery, credit professionals will play an important role in ensuring their firms maintain good risk mitigation strategies while looking to maximise growth opportunities through applying sound credit principles and practices. The credit role will need to focus on efficiencies, automation and process improvements while also considering the mental impacts of COVID on small business owners. Credit teams will need to have appropriately qualified personnel who are across latest legislation and credit techniques to assess risk and undertake complex customer negotiations and learn how to adjust and assess the ramifications of an ongoing pandemic world.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

It is therefore essential firms and their credit staff review their processes and ensure all colleagues are aware of these to support the business in the next phase moving forward after COVID-19. Some business dealings will never be the same again while others will take many years to return to that of preCOVID times. It will be important for credit teams to have a good credit policy in place, documented procedures, efficient systems and access to specialist credit training. AICM continues to develop, diversify and expand our training options and the way of delivery to our members to ensure members are well served and informed and receive the best training. We are offering support to our members to ensure they can navigate the everchanging business, economic and regulatory climate and provide the opportunities for members to connect with peers, experts and industry leaders. Our National Office team, together with the Board members and local division councillors continue to be busy in the planning of insolvency seminars, virtual classroom learning and webinars for the second half of the year while ensuring members are provided with information and interesting articles in our magazine Credit Management in Australia and newsletters. It is crucial that organisations ensure their staff receive qualified training to handle the difficulties and complexities which will occur dealing and negotiating with customers post JobKeeper. The training will also need to concentrate on how credit staff communicate with their customers given that each call with a customer will be different and will be tailored to that customer as it will likely involve more than just asking for payment to ensure the best outcomes are obtained and effectively prepare your clients and organisation. We encourage our members to undertake strong credit management principles such as to re-check terms of trade with every customer plus review customer’s

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From the President

“As part of the business recovery, credit professionals will play an important role in ensuring their firms maintain good risk mitigation strategies while looking to maximise growth opportunities through applying sound credit principles and practices.” underlying creditworthiness and payment ability. Monitoring of customers for adverse information alerts should be essential to ensure customers are not at risk of nonpayment and insolvency. Early warning signs will be of the upmost importance. It is our view that AICM members and their colleagues talk to their customers and maintain a close relationship with key customers, and be curious, ask questions as this will give you the best outcomes and protection. Information is “king”. The need for current, up to date information on buyers in the current environment is paramount. In addition to training courses the Institute continues to advocate on behalf of our members and recently have written to the Assistant Treasurer suggesting that unfair preferences be suspended as one option the government could implement after it begins to wind back fiscal support to businesses. Reforming the laws around preference payments remains one of AICM’s long term goals. In the second half of the year the Institute plans to hold our prestigious WINC events in as many divisions as possible and subject to COVID restrictions, along with a number of other events. We will communicate these to our members as soon as we can as we know these events are popular and highly regarded by our members. During July all divisions have been conducting the YCP interviews. I congratulate all finalists and wish them well with their application and interview process. Nominations for CTOY are also commencing and we anticipate a number of excellent entries in this award. July through August are also the time of the year where each division holds its AGM and elects Council members for the next 12 months. Any financial member can nominate to serve on their State Council and serve for a period of 3 years. After which they can nominate for a second term of 3 years.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

I encourage members to consider nominating for divisional council as it very rewarding and can assist with career development, while working with like-minded credit professionals in a friendly team environment. On a disappointing note, unfortunately due to restrictions of the COVID-19 pandemic the Board has made the regrettable decision to cancel this year’s national conference in Brisbane. This is most unfortunate for the Institute and its members who look forward to the conference each year. In its place we have rejigged our program to provide a one day State-based conference in each division to support members during what is hopefully the exit from the pandemic. It is planned for the divisional conferences to be held in October, so look out for further communication about the dates and locations for these divisional conferences which will be followed by a Gala awards dinner featuring the YCP and CTOY awards. The face to face one day conference will be supported by a national virtual conference with pre-recorded sessions with keynote presentations and live panels with audience Q&A which can be attended at your own pace with no need to travel. It has been a difficult year globally and for business. Locally the Australian economy has been impacted on several fronts in 2020 by drought, bushfires and COVID-19. Shortto medium-term outlook, including forecasts for economic growth, inflation, monetary and fiscal policy, and exchange rates is uncertain. Hopefully the second half of 2020 will be brighter. To all our members, stay safe, well informed and take the opportunities to educate and develop your skills. The AICM is here to educate, develop, represent and connect credit professionals to help you do your jobs better, advance your career and achieve better outcomes for our organisations. Trevor Goodwin LICM CCE National President

PROLIFT SUCCESS STORY REDUCING PAST DUE PAYMENTS BY 60%

BACKGROUND

BENEFITS

ProLift Industrial Equipment is one of the Midwest’s largest Toyota-owned dealers of forklifts, pallet jacks, reach trucks and other material-handling equipment. The company operates nine locations across Kentucky, Ohio, Indiana and West Virginia, selling, renting and servicing equipment manufactured by the industry’s leading brands. ProLift’s clientele ranges from major corporations to smaller, single-store businesses.

Beyond the expected improvements, Esker has delivered invaluable business intelligence about inaccurate data introduced to invoices during ProLift’s order entry process. Whether they contain an incorrect mailing address or reference the wrong PO number, such invoices are not collectable. Knowing that those problem invoices stem from front-end errors rather than back-office operations has enabled ProLift to distinguish — as Geiger puts it — “the symptoms from the disease.” Since implementing Esker’s Collections Management solution, ProLift has:

ProLift’s own business had been expanding steadily since 2007 when the company was acquired by Toyota Industries North America (TINA). But, as order volume increased, the technical limitations of ProLift’s ERP began to create friction during the company’s post-sale activity. In talking with collections personnel, ProLift identified the following outstanding needs:

Visualisation of all collection activities (e.g., via a dashboard) Customisable call lists and contact follow-up reminders and management tools Automated workflows capable of eliminating redundancies Seamless interoperability with existing and future ERP systems

SOLUTION After vetting several solutions, ProLift ultimately selected Esker’s cloud-based Collections Management software. With its ability to integrate with ProLift’s Microsoft Dynamics NAV ERP, Esker’s solution has introduced a new level of transparency to the company’s invoicing and payment tracking processes. ProLift’s internal stakeholders can now quickly resolve collections issues using a plethora of varied and highly localised data points. Thanks to the Collections Management solution’s extensive menu of options, ProLift staff can now:

Generate customised reports Assemble more actionable call lists Access granular customer activity data across a range of touchpoints and categories, from new sales to parts, service and rental (PSR)

Stuart Geiger, ProLift’s Corporate Controller, notes that Esker’s Collections Management solution has even helped ProLift better manage customer lines of credit. In addition to aiding with risk management, this functionality has also been critical in elevating the level of customer service it can provide. “With Esker, I can instantly collocate and analyse all 2,000 customers who have an open balance,” Geiger explains. “I can then make decisions about which customers have too high of a credit line, which don’t have enough available credit, and which are approaching their credit limit and need to be engaged.”

ESKER HAS BEEN VERY VALUABLE TO US. THE COLLECTIONS MANAGEMENT SOLUTION HAS ALLOWED US TO PINPOINT AND IMPROVE WHERE OUR RECEIVABLE PROBLEMS EXIST. STUART GEIGER | CORPORATE CONTROLLER

REDUCED PAST DUE PAYMENTS BY 60%, from 11,479 to 4,669 BOOSTED THE COLLECTIONS TEAM’S OVERALL PRODUCTIVITY by implementing better QA and clearing bottlenecks at every stage of the AR process DECREASED DAYS SALES OUTSTANDING (DSO) FROM 55.4 TO 48.3 within two years, significantly enhancing reconciliation efforts IMPROVED AVERAGE RESPONSE TIME ON CUSTOMER INQUIRIES TO 36 HOURS since implementation In the near future, ProLift hopes to implement Esker’s customer payment portal to make their end-to-end AR processes even more efficient.

ESKER’S COLLECTION MANAGEMENT SOLUTION HAS ALLOWED US TO BETTER MANAGE WHAT WE’RE DOING AND INTELLIGENTLY ANSWER QUESTIONS ABOUT WHY AND WHERE WE’RE PLACING OUR RESOURCES. STUART GEIGER | CORPORATE CONTROLLER

ABOUT PROLIFT

Industry: Industrial Equipment ERP: Microsoft Dynamics NAV Solution: Collections Management Founded in 1978, ProLift Industrial Equipment began as Louisville Lift Truck, a forklift rental house in Louisville, KY. Today, as a Toyota Material Handling Company, ProLift is a full-service forklift and material-handling dealership operating nine locations, employing 450 workers and offering multiple product lines.

www.esker.com.au

Letters

Open letter

from a Life Member Members are the lifeblood of your AICM and we’re really pleased to hear from one of our valued Life Members with her thoughts on the current hardships being placed on Australians. It has been quite a while since I have been in direct contact with AICM, but I do keep up to date with what is occurring in the industry. For those who do not know me, I am a long term and life member of the AICM and played an integral part in creating Credit Team of the Year. I am now living in Far North Queensland. I reflect on what has occurred over the past two years and the huge impacts it has had on the credit industry and the Australian economy; monsoon, bushfire, drought and now COVID-19. I do not need to describe the concerns and direct impacts on your respective industry, customer base and most importantly your teams. In the last recession, my team and I spent a lot of time visiting customers, especially the building industry reviewing to see if they had the capacity to trade out of their situation. A very traumatising time for all and we are now experiencing similar situations if not more complex, as we navigate through unprecedented territory with COVID-19. Happily, there is increased awareness and training in the area of identifying customer vulnerability and the impacts of mental health being linked with financial distress. If you are able to train your teams in this area, I strongly recommend that you do as I find it a great advantage for you and the teams to understand the impacts of financial distress, as well as learn to turn a disastrous communication, whereby the customer is overwhelmed with indecision or worse, bad decisions, to

a potentially positive commitment where you are able to confidently manage the call of distress to an effective outcome. There is nothing worse than your team becoming despondent and morale ebbing due to listening to vulnerable customer’s being impacted by their situation and not being able to give advice. So how can financial counsellors assist and support our vulnerable customers, obtain workable and feasible solutions to have the debts reduced, especially when the Government imposed moratoriums are lifted and Jobseeker and Jobkeeper payments are withdrawn and the customer still has no way forward? Financial counsellors work with people who are in financial difficulty or crisis with a view to improving their situation. They will work with customers to ascertain their options and to facilitate customer informed financial decision making. They also seek to refer customers to other free non-financial services that can assist such as community supports and physical and mental health wellbeing. They recognise that getting back on track financially can also mean support in other non-financial areas. Financial counsellors are NOT financial advisors. They hold a credit licensing exemption to provide debt management options to consumers in financial hardship or crisis.

“There is nothing worse than your team becoming despondent and morale ebbing due to listening to vulnerable customers being impacted by their situation and not being able to give advice.” 8

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Letters

“The financial counselling empathetic and holistic approach assists vulnerable customers to understand their capacity to repay all their debts, or make requests to amend repayments with their capacity to repay.”

Jennifer Barclay-Smyth

A referral to a financial counsellor is not deemed as giving advice. Overall financial counsellor’s work for non-profit organisations and their services are free. Financial counsellor’s assist with the customer’s mental health and any other aspects of the customer’s vulnerability with access to a large range of government and community supports, with up to date support on any government subsidies and or funding that may be available to them. Financial counsellor’s have a similar ethos to a credit manager as they try to understand the customer’s overall financial situation and capacity to repay all commitments, based on the validated cashflow and incomes of the customer. The financial counsellor will then recommend various options to the customer and assist or support self-advocacy in communicating with their credit providers where required. Why would you use this as a strategy or resource tool, when I can obtain a commitment from the customer? When a vulnerable customer is overwhelmed with financial distress, they are sometimes not thinking clearly and or longer term. The number of commitments that fail after one or two payments is more apparent, as the customer is focusing on the situation or call at hand and not their overall situation.

The financial counselling empathetic and holistic approach assists vulnerable customer’s to understand their capacity to repay all their debts, or make requests to amend repayments with their capacity to repay. This approach improves the customer’s stability and establishes the term of the arrangements implemented. Just as importantly it can also reduce the impact of preferential payments. If you wish to refer vulnerable customers the key contact numbers: z National Debt Hotline 1800 007 007 z The Salvation Army Debtline 1300 221 993 (Queensland Only) z Rural Financial Services 1300 732 777 (for small business and they do not need to be in a rural area to utilise this service.) z Small Business Bushfire Financial Counselling 1800 413 828 (for small business and they do not need to be impacted by a bushfire to utilise this service.) Financial counsellors have expertise in financial hardship and mental health and are great resources for both the customer and the finance sector’s self-care and wellbeing. – Jennifer Barclay-Smyth LICM CCE

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

COVID-19

Making sense of payment patterns By Simon Bligh*

Earlier this month the corporate regulator issued a COVID-19 warning to company directors ahead of this year’s reporting season. ASIC chair James Shipton said disclosures had never been more important and assumptions needed to be realistic. The regulator also extended the deadline for both listed and unlisted entities to lodge financial reports by one month. But is one more month going to resolve questions on the timing of the economic recovery and help everyone make meaningful forecasts? We expect not.

Keep your finger on the pulse

Simon Bligh

To make meaningful predictions, companies need to be across all the warning signals. The interdependency between suppliers and customers means data insights on those metrics are a good place to start. What has happened to them and what could happen to them in future, will have a material impact on your business. Looking out for the first signs a business is going into difficulty is a sure way to stay one step ahead and make informed decisions. The very first indicator that a business or customer may be in trouble is when it starts to delay paying its bills. But importantly, this may not necessarily be your bill. With that in mind, the COVID-19 crisis has meant it has never been more prudent to keep your finger on the pulse on the broader payment patterns in Australia. So what is happening right now?

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

The canary in the coal mine: the worst is yet to come Business to business/trade late payments across the entire Australian marketplace have shown the sharpest rise in a decade. As you can see from Figure 1, payment delays have been coming off historic lows of around 10 days (March 2020). Prior to April 2020, trade late payments had been improving steadily since the GFC. illion has been monitoring trade late payments for decades and can confidently call-out major inflection points and their possible ramifications. Trade late payments is a telling sign of things to come, and we expect to see payments rising to GFC levels in the year ahead – about 25 days late. The ‘Average Days Late Payment by Sector’ chart (Figure 2) shows a sudden increase in late payment days across most sectors, in particular mining (now 13.6 days late), manufacturing (now 11 days late), transportation (now 9 days late) and wholesale trade (now 10 days late). This is despite public commitments from many large companies in some sectors to pay smaller suppliers on time, if not earlier. Late Payments analyses trade information from illion’s Commercial Bureau, the largest database of business -to- business payment information in Australia and New Zealand. It is a highly predictive data set and a critical element in credit risk scores and business failures forecasting. *Simon Bligh CEO, illion Tel: 13 23 33

COVID-19

Figure 1

Business to business average payment days late which were at a 10 year low have started to turn...

Figure 2

Late payments by sector

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

COVID-19

Empowering business owners to act now By Andrew Spring*

Now is the time for Australia’s business owners and directors to wrest back control from COVID-19 and make timely and tough decisions to help their company survive or wind up in the best possible way. Five months into this pandemic, we’re all wiser, and a little wearier too. And while many owners and directors have stepped up and displayed an impressive capacity to pivot their business and adjust to the ‘new normal’, many that are significantly financially distressed are delaying exploring ways to save or wind up their business, relying solely on external government stimulus. We know this because despite thousands of businesses being significantly impacted by coronavirus, the number of companies entering external administration has fallen. In June 2020, there was a 20 per cent decrease in SMEs entering external administration compared to May 2020, and a 50 per cent decrease compared with June 2019.

So why the delay?

Andrew Spring

The main drivers of business owners’ unwillingness to make tough decisions now are the various governments’ support measures, not to mention the age-old stigmas associated with insolvency. For many, the wage subsidies as well as access to credit and liquidity programs are providing a temporary shield from the COVID shock while the relaxed insolvent trading laws, which many are calling for to be extended, are keeping many creditors at bay.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

But it’s only ‘kicking the can down the road’. There are other forces at work too: the ATO is not winding up companies to pursue debts, WorkCover isn’t winding up companies, and banks have been given a moratorium until after the new year. This means there’s no urgency for a director to make a tough decision when they first experience signs of financial distress, as they might normally do. Some say they are burying their heads in the sand. But the impact spreads the financial distress, with creditors noting a blow out in DSOs.

The insolvency avalanche may not hit until autumn 2021 Now, with JobKeeper extended to March 28 next year, many directors will further delay making a tough decision, such as whether to restructure, action an insolvency procedure such as Safe Harbour or voluntary administration or wind up their business. Our recent survey of over 1000 directors supports this, revealing that 39 per cent are unlikely to explore restructure or insolvency options in the next three to six months, despite acknowledging that they are likely to require intervention after that point. Their reticence means they will have fewer, or no options, and when the predicted insolvency avalanche hits, they may struggle to secure a qualified insolvency practitioner, particularly a Registered Liquidator. At the time of writing, there were fewer than 648 Registered Liquidators in Australia.

COVID-19

Stopping an avalanche isn’t easy To reduce the high number of predicted insolvencies next year, we’ve been encouraging business owners and directors to act now by empowering them with information and choices - for some, choices they are unaware of such as various ways to secure creditor leniency to avoid liquidation. This ‘return of power’ should be welcomed by many as they have had little, or no, control over the damage coronavirus has wreaked on their businesses. We’re also reminding them that they still have the power and the responsibility - to assess their company to make informed decisions about its future. As creditors, there is an opportunity to support that discussion. Knowing that those customers who are actively engaging with you and their other stakeholders will provide the best chance for their survival as well as confidence for your business in continuing the relationship.

Dispelling the stigmas associated with insolvency isn’t easy either We can say ‘there’s no shame in insolvency’ until the cows come home

but it would do little to change the mindset of many business owners. We do, however, promote the benefits of a timely restructure or insolvency procedure, the ‘cost’ to everyone involved by delaying a decision, and busting some of the common myths including liquidation and bankruptcy are signs that they have failed, are inept or worse, corrupt – which is ludicrous, as most businesses are started with the blood, sweat and directors’ personal capital and, more often than not, they are the largest creditors. Interestingly, the high number of ‘no fault’ COVID-19 related insolvencies may become the most effective tool of change – and lead to some positive changes. Australian Small Business and Family Enterprise Ombudsman Kate Carnell is requesting in her Insolvency Practices Inquiry report that small businesses experiencing significant financial distress during future periods of major events like pandemics, bushfires and economic downturns receive: z a voucher of up to $5,000 to access a tailored plan from their financial adviser z deferment of payments on rent, tax and loans and other debts of at least 90 days

z capping the cost of insolvency procedures We liken the proposed voucher system to a ‘bulk billing for business’ concept. At this juncture many businesses that are accessing JobKeeper are only having a symptom treated, while the underlying issue is likely being ignored. The ‘bulk billing’ could work in conjunction with JobKeeper 2.0, which would enable those businesses most at need to assess their specific circumstances with a professional adviser to build a recovery plan, whether it’s informally through the Safe Harbour regime or formally through Voluntary Administration or Liquidation. The next six to eight months will no doubt bring more and new challenges and changes to our economy and with our massive budget deficit, a government less willing to offer new relief measures. But in the meantime, keep safe, ignore stigmas and make those tough decisions now!

*Andrew Spring MICM Partner Insolvency Intel – powered by Jirsch Sutherland

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

COVID-19

COVID-19, court procedures and your rights when issuing statutory demands By Ellen Nowland*

With Australia being subject to an unprecedented lockdown, many aspects of everyday life have been required to change or adapt to our new normal. The Court is no exception as new processes are put in place in relation to physical appearances, and legislation. This article will examine the recent case of CPR Solutions Mackay Pty Ltd v Zammit Earthmoving Pty Ltd [2020] QSC 165 (Zammit) and its implications in a current and post COVID-19 world. In Zammit, the Supreme Court of Queensland considered whether the 21 day limitation period under s459G of the Corporations Act 2001 (Cth) (Corporations Act) to set aside a statutory demand could be extended due to delays in applications being processed by the court due to COVID19 restrictions.

Background

Ellen Nowland

In Zammit, the respondent sought to recover the sum of $244,824.04 from the applicant for goods sold and services rendered, by serving a creditor’s statutory demand under s559E of the Corporations Act on 26 February 2020. On 16 March 2020, the applicant’s solicitors disputed the validity of the demand on three grounds, that: 1. parts of the work claimed in the debt balance were not requested by the applicant;

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

2. the respondent was indebted to the applicant for a greater sum of money than that claimed in the demand; and 3. a portion of the invoices relied upon were over 6 years old and potentially statute barred. Despite the disputes raised by the applicant, the respondent refused to withdraw the demand. Section 459G of the Corporations Act requires a debtor to bring an application for an order to set aside the statutory demand within 21 days after service is affected. In Zammit, the applicant’s solicitors filed an application to set aside the creditor’s statutory demand twenty days after the demand was served. Unfortunately, the Mackay registry did not immediately seal the application or provide a return date due to restrictions imposed due to the ongoing COVID-19 pandemic. Notwithstanding, the applicant’s solicitors served an unsealed version of the application on the respondent’s solicitors and indicated that a sealed copy would be provided upon receipt from the registry. The respondent’s solicitors did not accept that formal service had been affected under the Uniform Civil Procedure Rules 1999 (Qld) as the documents did not contain any of the following: 1. an action number given by the court;

COVID-19

2. the court seal or filing date; or 3. a return date for hearing the application. The sealed documents were not available for collection until 6 April 2020, being a total of 20 days since they had been filed.

Application of section 459G of the Corporations Act The Courts are often tasked with determining the validity of an application under s459G of the Corporations Act. In LJAW Enterprises Pty Ltd v RJK Enterprises Pty Ltd [2004] QSC 134, Holmes J (as her Honour then was) indicated that the requirements of section 459G of the Corporations Act are inflexible and deprive the court of any discretion to overlook any defects in service.1 In LJAW, Holmes J followed matters such as Benonyx2, Chelring3, Universal Trade Exchange4 and Robowash5, to determine that as the documents served did not contain any return date for an application, the respondent is unable to determine when they are required to attend before the court. Chesterman J in Cooloola Dairys Pty Ltd v National Foods Milk Ltd agreed with the statements of Holmes J and stated that “any application will not perform its required function if it is not sealed and does not show the action number allocated by the Court”.6 In Zammit, the court examined the impacts of the recently enacted COVID-19 Emergency Response Act 2020 (Qld) (Emergency Response Act). It determined that section 15(1) of the Emergency Response Act conferred powers on a registrar to make a decision within a modified timeframe, as it was state legislation, it could not modify or amend the timeframes under s459G of the Corporations Act. Despite the above limits on the state legislation, the Australian Government had also enacted the Coronavirus Economic Response

“With the amended timeframes for compliance of a creditor’s statutory demand scheduled to revert to normal from 25 September 2020, creditors and their representatives must be vigilant in respect of the Corporations Act and the timeframes imposed within it.” Package Omnibus Act 2020 (Cth) (Omnibus Act) in response to the COVID-19 pandemic and the impacts on everyday life. Despite the Omnibus Act altering provisions of certain legislation (such as the 21-day timeframe for compliance of a statutory demand under section 459G of the Corporations Act), it was not applicable in Zammit given the statutory demand had been served prior to the Omnibus Act coming into force on 25 March 2020. Prior to COVID-19, case law was firm that any application to set aside a creditor’s statutory demand under section 459G of the Act must be filed and served within the stipulated timeframe, namely 21 days). The purpose of section 459G of the Corporations Act is to put a creditor on notice as to an application to set aside its statutory demand. Given that the registrar had not affixed any of the usual notations associated with a filed document, there was no indication to the respondent (apart from the applicant’s solicitors assertion) that proceedings had actually been commenced. The question to be considered is whether an applicant can be punished for actions that are outside its scope of control (for example, a registry officer being unable to seal and set a date down immediately). Secondly, if they can be punished, should they? Unfortunately for the applicant in Zammit, the timeframe imposed by section 459G of the Corporations Act cannot be altered, amended or extended under any circumstances which also extends to situations outside a party’s control.

It is in the public interest for creditors and debtors to have clear parameters that they must each operate in when making creditor’s statutory demands and commencing proceedings to wind up a company.

Where to now? With the amended timeframes for compliance of a creditor’s statutory demand scheduled to revert to normal from 25 September 2020, creditors and their representatives must be vigilant in respect of the Corporations Act and the timeframes imposed within it. Despite the upcoming anticipated end to the temporary provisions, parts of the country are now facing re-imposed lockdown measures. It will be paramount that creditors and debtors take into account any potential delays to ensure that any documents that need to be filed and served to either instigate or oppose a creditor’s statutory demand are done so promptly, and with reference to any potential delays on filing procedures.

*Ellen Nowland Associate, Results Legal Email: enowland@resultslegal.com.au Tel: +61 7 3234 3218 FOOTNOTES: 1 Zammit, paragraph 21 2 Benonyx Pty Ltd v Fetrona Pty Ltd [1999] NSWSC 181. 3 Chelring Pty Ltd v Coombs [2000] WASC 60. 4 Universal Trade Exchange Pty Ltd v Westpac Banking Corporation (2002) 20 ACLC 1302. 5 Robowash Pty Ltd v Robowash Finance Pty Ltd (2000) 158 FLR 338. 6 Cooloola Dairys Pty Ltd v National Foods Milk Ltd (2004) 211 ALR 293 at 34

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

COVID-19

Legal action and enforcement during the covid-recession By Roger Mendelson*

As with most areas of life during the pandemic, there is some confusion about what creditors can do and can’t do during this period. The aim of this article is to provide a brief overview and some practical tips for dealing with the current situation. As rules keep changing, this advice is current as at 20th July 2020.

Can you still sue? In all jurisdictions, legal proceedings can still be initiated. If no Defence has been lodged, default judgments can still be taken out. The time period for lodging a Defence is unchanged. For example, the period in Victoria was and is still 21 days. A positive is that most jurisdictions now allow service by registered post.

What are most creditors doing? It is difficult to get reliable figures. However, my view is that most creditors who previously included legal action as part of their process have put legal action on hold. In particular, the large corporate creditors, such as telcos and energy providers have put a freeze on legal action and banks will sue only in exceptional circumstances at present.

Accordingly, in many cases there will still be judgments coming through, as a result of legal actions issued previously but where there was a delay in service. A decision will need to be made on whether or not enforcement action should be undertaken at this stage. Clearly, all attempts will be made to obtain a settlement or an instalment arrangement. In our experience, judgments can be settled at the rate of approximately 50%, if handled properly. In many cases, it is better to take a reduced lump sum or an instalment arrangement, rather than face additional risk, cost and time delay in proceeding to legal enforcement.

Where legal enforcement should be considered All credit managers will be aware that there are a percentage of debtors who know how to “play the game”. In those cases, provided that the creditor clearly has assets (particularly an interest in real estate), then “playing the game back” will be the only way forward. That is, either to write the debt off at that stage or take a deep breath and proceed to legal enforcement but be prepared to go all the way with it.

Enforcing judgments

Roger Mendelson

There is a time delay between initiating legal action and obtaining judgments.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Bankruptcy If the debtor has an interest in real estate or reasons for wanting to

COVID-19

avoid bankruptcy and the judgment debt was over $5,000.00, the best enforcement method was bankruptcy. However, the new temporary rules are that the judgment debt must now exceed $20,000.00. In addition, the 21 days for compliance with the Bankruptcy Notice after service has now been extended to 6 months. Accordingly, it is probably better to defer bankruptcy action until the temporary rules are removed, which is expected to be at the end of September.

Garnishees There has been no change in the rules. This is often an overlooked area of legal enforcement. If your debtor has a good job, particularly in the public sector, Garnishee is a worthwhile process, because the cost orders obtained will equal the cost many lawyers will charge and results tend to be excellent. Garnishee is particularly effective in New South Wales and for practical purposes is unavailable in South Australia.

Statutory demand Under the old rules, a Statutory Demand could be served if there was an undisputed debt owing by a company for a minimum of $2,000.00. This is the only enforcement step which can be undertaken without firstly obtaining a judgment. The $2,000.00 minimum amount has now also been temporarily increased to $20,000.00 and the period for satisfying the Demand following service has similarly been increased from 21 days to 6 months. Accordingly, my view is to defer issuing Statutory Demands until after the end of September.

Buying time Efforts should be made to set up instalment arrangements at this stage, even on large quantum debts. Include conditions which provide that in the event of default, the whole amount becomes due and payable and that the jurisdiction is in your home state. Also include a provision that the debtor charges any real estate owned by him. If the debtor complies which the arrangement, then well and good. If not, you have made future legal action much easier in that you do not need to prove the original debt and

effectively there is no real defence to your claim. In addition, you have extended the Limitations period, which will then commence from the date of default of the arrangement.

Outsource legal work to provider which takes on the cost and risk A reason why many creditors do not fully utilise legal action is because of the cost of high legal fees and disbursements. It does not make sense to use a traditional fee-for-service law firm, in those cases. It is far better to push the risk and cost of legal action to a debt collection agency which is prepared to fully fund them and has a clear incentive in gaining recoveries. The trade-off is that the commission rate would be much higher than normal.

*Roger Mendelson CEO of Prushka Fast Debt Recovery Pty Ltd; and Principal of Mendelsons National Debt Collection Lawyers Pty Ltd Tel: 1800 641 617 www.prushka.com.au

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

Tales from the trenches

- implementing Automated Cash Allocation By Trevor Middleton*

This is the tale of Cummins South Pacific’s journey to implementing “best practice” cash automation – from deciding that they needed a better way to allocate cash, to implementing and automating that cash allocation process, to the outcomes (both expected and unexpected) that they experienced. Whilst this is Cummins’ story, we feel there are sufficient business similarities to most organisations we talk to, and sharing their “best practice” journey will provide food for thought for your organisation.

About Cummins South Pacific Cummins is best known for its diesel engines, but its product range includes natural gas engines, hybrid and electric platforms, as well as servicing and supporting all of the related technologies (including transmissions, battery systems, etc.). Cummins has a credit team of 9 people, based in Melbourne. They have a network of over 35 branches across Australia and New Zealand, running an INFOR M3 (MOVEX) ERP.

Trevor Middleton

Why automate Cash Allocations Each branch was doing their own cash allocations each day manually in Movex. Cash allocation was done by the administrator in each branch, who is faced with multiple competing priorities on a daily basis. Head Office cash allocation was not always high on that list agenda if the branch manager was requesting other tasks!. Branch staff turnover meant that head office was continually training the branch administrators on how to process cash allocations accurately. That meant that the credit control team was either ending up doing allocations themselves anyway, or were compelled to double-check everything before collection calls, to ensure that they did not make any embarrassing collection calls. That would not be good for customer relationships. Customer monthly statement accuracy also suffered, and the need to complete the allocation process meant that the sending of customer statements was delayed. That time

“Having cash allocation completed earlier and accurately would allow earlier customer statement distribution, and therefore an earlier start to accurate collection activity.”

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Credit Management

and delay in getting statements out was affecting collection team performance and DSOs. Unallocated cash represented a larger percentage of balance outstanding than the company management was comfortable with. Branches were continually contacting the credit team to release customer orders that had been put on automated credit stops even though the customer had actually paid.

Allocation automation was seen as a solution to this If a solution could be found that interfaced with MOVEX, with a quick implementation/ROI, and that automated allocation down to individual invoice level, automation would allow Cummins to bring the allocation back in to head office. That would save many mundane hours of both branch time and credit team time. Having cash allocation completed earlier and accurately would allow earlier customer statement distribution, and therefore an earlier start to accurate collection activity.

“Customers would also be happier if their cash was allocated appropriately, statements were accurate, and they were not being contacted to pay for invoices that were not actually overdue.” Customers would also be happier if their cash was allocated appropriately, statements were accurate, and they were not being contacted to pay for invoices that were not actually overdue.

Automation business case justification This was a relatively simple project to justify: Improvements 1. Branch Administration effort reduction n branches x X hours per day allocating x hourly cost = $nnn 2. Credit team effort reduction n credit controllers x X hours per day allocating/fixing x hourly cost = $nnn

3. Assumed cash effect of improvement in DSO due to improved collection: z 5% reduction DSO days = $nnn additional collections in the bank/balance sheet z Reduced cost of funds at assumed interest rate of x% x DSO Reduction $ = $nnnn 4. Unallocated Cash Reduction Existing unallocated cash reduction by 90% = $nnnn Costs 1. Implementation costs – external 2. Implementation costs – internal IT, Credit Team, project manager, etc. 3. Software License and Cloud Hosting Costs (annual) ➤

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

After a thorough search, a solution was identified, a Proof of Concept was performed to prove the allocation accuracy, Vendor Due Diligence and Security Capability was completed by IT, reference reviews were completed, and contracts were signed. The cash allocation solution was not ERP-specific, and the vendor had multiple ERP adaptors to interface to various ERPs. This gave Cummins independence from the specific ERP, which suited their wider international business (which could run multiple ERPs).

Automation implementation The implementation process was relatively painless. Because any cash allocation implementation is effectively creating payment journals and affecting the core financial system, significant focus and time was devoted to this, to ensure this process was robust. Thorough documentation and tight project management was run by a small, dedicated team. The team was led by an internal leader who had a clear vision and that focus made all of the difference. No assumptions were made, and the fact that the appointed team had very sound business knowledge ensured the project’s success. This was aided by working with a vendor who understood the Cummins business, understood how to automate cash allocation, and knew what bank statement data the banks in Australia and New Zealand were able to provide. Warning: even if the bank is nominally the same, don’t expect the data or even the transaction

types to be the same across multiple countries! Implementation took just over two months, which was about what was expected. Ramp-up time was about three months from GO Live, as the system used its ‘artificial intelligence’ to learn how customers identified their payments on the bank statements. As a result, with this system knowledge, even if the customer does not quote their customer or invoices number themselves on their payment, the system can identify and allocate automatically. Doing all of the “homework” up front definitely smoothed any scariness, and removed any ‘surprises’!

Expected outcomes Automated cash allocation is hitting 90+% match rate, to invoice level. That means that 90% of cash is allocated before the credit team gets started. Those allocations are fed directly into the MOVEX ERP, removing all manual data entry. Branches are no longer involved in the process, saving the significant number of expected hours of time. Remittance advice OCR electronic reading for large customers meant that allocation was able to be prepared in advance of cash receipt, smoothing the monthend peaks. Speed of allocation means that monthly statements are being distributed earlier, and issues are being resolved quicker. Overall, the DSO Reduction was better than the 5% predicted. Unallocated is less than 10% of the value it was before implementation, and still reducing.

“Because any cash allocation implementation is effectively creating payment journals and affecting the core financial system, significant focus and time was devoted to this, to ensure this process was robust.” 20

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Unexpected outcomes The friction between credit team and branches was significantly reduced. That led to more meaningful relationships and real conversations about actual customer issues. “Credit Hold” Order Release calls between branches and credit team have been reduced by more than 30%. Customer orders were not being held up unnecessarily due to incorrect credit holds. That free’d up even more credit control team time. No-one had really understood how much time the Credit Control team were spending on allocations at month-end peak times. All of that time has been freed up to focus on collection and unfulfilled promises to pay, etc. The Treasury team are much happier because their bank reconciliations are quicker and more accurate, due to removal of manual data entry errors. Cash Forecasting accuracy has improved significantly.

Overall result Cummins South Pacific has built a solid foundation of accurate, timely and reliable cash allocation. That has free’d the team to focus on the real task – of talking to customers and ensuring invoices are collected. The improvements in customer satisfaction, staff satisfaction, and collection results have more than beaten the business case justification, which was already compelling.

Thanks This article precludes us from naming individuals. Sufficient to say, Cosyn really enjoyed working with a very focused, capable, fun team. You know who you are!

*Trevor Middleton MICM Principal Consultant Cosyn Software Email: trevor@cosynsoftware.com Tel: 1800 123 613 www.cosynsoftware.com

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Credit Management

Clean up your act this financial year By Patrick Coghlan MICM*

With the beginning of a new financial year comes the resolution to be more organised. This doesn’t just apply to messy desks and overloaded desktops: it’s also vital to clean up your data. Data is (or should be) at the core of your business and is heavily relied on for effective decisionmaking, revenue growth and credit risk management. But, not all data is helpful. There’s harm in dirty data, that is, information in your portfolio that is incorrect, outdated, incomplete or inconsistent. Regardless of whether dirty data has been caused by human error or hardware failure, it convolutes a database and makes it harder for your organisation to access the correct information and use it to its fullest potential.

The harmful effects of dirty data For Accounts Receivables: z Eliminates the ability to make accurate assessments of a customer’s creditworthiness z Increases the risk of invoicing errors and costly decisions For Customer Relations and Sales: z Causes a lot of ‘back-and-forth, resulting in a poor customer experience z Contributes to lower customer acquisition rates and poor lead generation Patrick Coghlan

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

For Operations: z Wastes valuable time and resources to confirm the credibility of incorrect data z Creates invalid and useless reports that hinder accurate decisionmaking

How data cleansing works Data cleansing involves detecting all the dirty data within a database and removing or updating that information. It corrects and consolidates data to ensure your system performs at its peak effectiveness. When your data is clean, you’re better equipped to make important decisions, communicate with your customers and ensure your business’ services are relevant. You’ll be able to: z Better understand the credit risk your customers pose to your business z Streamline your credit risk management processes z Increase your company’s internal efficiency and profits z Improve your product or service to better meet customer requirements z Rely on your data to reveal new opportunities within your industry Obtaining quality data can be completed in the following six steps. 1. Data validation: This process authenticates your database and detects and removes

Credit Management

errors. These can include factual errors, spelling mistakes and inconsistencies. 2. Data standardisation: By standardising data from different sources and formats, you’re left with one cohesive data set. This improves accuracy and consistency, which is crucial for quick credit decisionmaking. 3. Duplicate data elimination: Duplicated data files can result in inaccurate records and skewed results. 4. Data matching: It’s essential to cross-check the information in your database with external data sources to ensure its reliability.

5. Data enhancement: Get access to even more details with data enhancement. For example, you can append credit scores to a list of loan applicants to help you better do your due diligence.

The benefits of a portfolio health check

customers with a comprehensive review of their database. It’s designed to make it faster and easier to clean up large databases. You’ll be able to identify the risks of the entities you’re dealing with, stay on top of customer changes and rely on information appended directly from ASIC, ABR, Australian courts, mercantile agents and CreditorWatch itself. We recommend cleansing your data annually. What better time than the start of the financial year?

Data cleansing might seem like an insurmountable task, but it doesn’t have to be. CreditorWatch can automate the six steps of data cleansing with our innovative feature: Portfolio Health Check. A Portfolio Health Check provides

*Patrick Coghlan MICM CEO, CreditorWatch Tel: 1300 50 13 12 www.creditorwatch.com.au

6. Data reconstruction: This is the overall process of transforming dirty data into clean and accessible information.

“When your data is clean, you’re better equipped to make important decisions, communicate with your customers and ensure your business’ services are relevant.”

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

In uncertain times, improve cash flow and risk by working smarter By Keith Cowart*

The corporate landscape has dramatically changed in an instant. COVID-19 is a force that the modern business world has never faced before. After ensuring that their employees and families are safe, companies are beginning to focus on their short-term survival and longterm viability. One major focus area is around improving cash flow and reducing risk. Companies view the management of working capital, particularly accounts receivable, as an important measure of a company’s financial health. Credit and collections departments play a critical role in bringing cash into the organisation, so it’s important to consider these five points to ensure you’re operating as effectively as possible.

1. The ability to work remotely

Keith Cowart

Some companies were already prepared for working with a remote workforce in their credit and collections departments by implementing a credit and collections management solution that features a cloud deployment, remote access, automation and AI to aid with decision-making. Companies that were not prepared are now looking for a partner to provide such a solution. Outdated, manual processes are difficult to track and manage even when your full team is within the

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

same office every day. With stay-athome orders across the globe driving teams to work remotely, it’s even more difficult to stay on top of day-to-day activities. Specialised credit and collections management solutions that offer remote access allow team members to work from any location. Credit and collection managers have visibility to the daily assignments and the work being completed and can quickly adjust assignments as circumstances continue to change. Visibility into cash flow impacting activities makes it easy for managers to understand how to make improvements.

2. Credit applications and reviews During these uncertain times, credit managers must review credit applications with a very different lens. Where a company may have been willing to take on a certain level of risk before, they now must make decisions that will help reduce the level of risk until the economy recovers. Credit managers can leverage their specialised credit and collections management solution to quickly adjust their credit policy criteria, which will simplify the reviews conducted by their teams. Many companies also have a policy in place to review outstanding credit lines once every few months, quarters

Credit Management

or years. Now, they will be tasked to review all accounts to ensure they’re not unnecessarily exposed to more risk than the company can bear. Through automation in the credit review process, accounts can be automatically scored and any exceptions that require additional scrutiny can be automatically routed to the appropriate reviewer/approver.

3. Collections management The collections process is a major part of every company’s cash flow. With AI and automation, credit and collections teams can lower days sales outstanding and improve cash flow by prioritising customers by collections risk. AI can also accurately predict the likelihood of future delinquency, which is a massive benefit in preventing it from ever occurring. Finally, by automating correspondence, AI allows you to easily create and send emails with special messages of support and understanding to your customers without impacting your ability to focus on cash flow.

4. Dispute/deduction management Disputes and deductions are likely

to increase over the foreseeable future. As cash flow becomes tighter, customers will be very particular about what they are willing and able to pay. Be prepared to handle an influx of these disputes and deductions with automated identification, coding, routing and approvals. Without this automation, disputes will pile up, overwhelming companies and making future write-offs a very real and daunting possibility. A credit and collections department can be crippled by a manual dispute process that grows out of control.

5. Cash application Getting cash in the door and correctly applied in the accounting system is an often-overlooked piece of the creditto-cash process. Companies that are dealing with this manually have teams of people dedicated to retrieving remittance data, matching it up against incoming payments and banks statements, and then finally posting it against open invoices. Automated, specialised solutions that incorporate AI and machine learning relieve the manual work and improve over time by learning how exceptions are processed.

By speeding up the cash application process with automation, you reduce errors and rework the resources required to apply the payments while speeding up relief of the outstanding AR in the accounting system. You also create more accurate cash flow forecasts and collection queues while freeing up credit lines for more revenue-generating sales activity. Improving cash flow and removing risk is a major focus for companies. With remote management, automation and AI, you can focus on being good social stewards to your employees, vendors and customers as we all get through this period together.

*Keith Cowart Senior Product Manager, Corporate Liquidity Solutions FIS Global For more tips on how credit and collection teams can navigate through these uncertain times, please visit our website or contact: Varun Cherian Tel: +61 3 9982 5558 Mobile: +61 430 558 859 Email: Varun.Varghese@fisglobal.com www.fisglobal.com

NCI, more than just trade credit insurance Leverage our information on more than 1 million businesses around Australia, and educate yours.

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

How business can prepare for the end of JobKeeper The federal government threw business a lifeline when it extended the $70 billion JobKeeper program to support more than one million employers and 3.5 million workers during the COVID-19 crisis. But now with the possibility of JobKeeper being removed early – before September in next month’s mini-Budget – there are predictions of a surge in insolvencies and more job losses. So what can business leaders do now to prepare for the end of JobKeeper?

“The impact on the economy will be very sector-driven. “If you are in a sector that is massively impacted by COVID, you’re going to have the largest proportion of layoffs. If you’re in a sector that is less impacted, you will have a reduced proportion.” 26

The prospect of the early withdrawal of JobKeeper is causing concern in business ranks and is likely to result in a new wave of staff layoffs, predicts Carl Gunther GAICD, President of the Turnaround Management Association Australia. “Every cash flow forecast that I’ve looked at contemplates JobKeeper staying in place through to September,” says Gunther. “So if the government pulls JobKeeper sooner rather than later, businesses have to know what their new plan is. And that plan should be combined with what steps they take internally within their business, to refit the cost base.” A number of businesses have been thinking about this (early withdrawal) and have restructured their business so they can afford to run their business in a post COVID-19 environment, he says. “I think the end of JobKeeper, whenever it comes, will result in further layoffs.” The warning comes as an Australian Bureau of Statistics survey

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

conducted over the week from June 8 revealed that nearly 30 per cent of businesses have cash in hand to support fewer than three months of operation. Almost one in 10 said they had the cash to last only one more month. As we look towards the federal Government’s mini-Budget on July 23, firms should check the announcements from Canberra about which sectors are the most impacted in order to understand the effect on their own business, plus the effects on suppliers and clients, says Gunther. He is seeing a lot of businesses which are already prepared for the end of the wage subsidy plan. “They know exactly the headcount now, they have a plan in place and know exactly the headcount for when the JobKeeper numbers get switched off. It will be painful. But they are planning accordingly.”One transport and tourism enterprise is planning to reduce headcount by 70 per cent once JobKeeper ends.

Credit Management

He says the consensus view appears to suggest that unlike the global financial crisis, where the downturn took a long time to ease, the COVID-19 impact will take the form of a sharp downturn and a sharp recovery towards a new normal. Whereas the major GFC impact was felt for over three years, the consensus view is that business should plan a shorter recovery period. “That means we may possibly be talking about a 12-month runway until fourth quarter 2021,” he says. The impact on the economy will be very sector-driven. “If you are in a sector that is massively impacted by COVID, you’re going to have the largest proportion of layoffs. If you’re in a sector that is less impacted, you will have a reduced proportion.” Businesses which have not thought about this yet need to get started

immediately, he says. “We have a really very short runway, before they have to reset the business, to reset it for the new normal, whatever that turns out to be.” Beyond JobKeeper, there are a number of other factors that will come together later in the year to put more pressure on businesses, he adds. These include the gradual tightening of the ATO’s pre disposition to PAYG tax deferrals, the end of bank loan interest pauses, state payroll tax and land tax concessions, rental relief measures and the end of the temporary suspension of insolvency trading laws. “It’s all going to come together at one time and for some this will be in the form of a train smash. That is, the train is coming down the line and will smash. I think it’s a case of when, not if.”

Gunther recommends the following steps to prepare for the end of JobKeeper.

Steps to recovery 1. Refit the business cost base 2. Look at the supply chain and shore up supply lines 3. Decide which stakeholders are the most important and plan accordingly (customers, suppliers, staff) 4. Ensure you have enough capital in place to rebuild the business “No matter what, you have to have capital, so you’ve got to preserve capital in order to do a rebuild, not just to plan for survival,” he says. In distressed companies, boards and directors also need to seek advice around whether there is a path through a restructure or formal insolvency restructure. ➤

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Credit Management

“It’s something that directors should be considering. Voluntary administration can be a useful tool as we have seen with Virgin Australia and LJ Hooker.”

Scenario planning for the future Businesses should be planning different scenarios now ranging from higher case to lower case stress, in order to prepare for the end of JobKeeper, says Sal Ageri, Deloitte Australia Lead Partner, Restructuring. “It’s always best to prepare for the worst and hope for the best,” he told the AICD in an interview. “It’s going to be a big concern because for businesses that haven’t been able to get additional credit lines or liquidity or equity into the business, our expectation is there is going to be some potential for some corporate failures as a result.” Businesses should know by now what levers they can pull to compensate for the loss of the government wage subsidy program, says Ageri. “But the bigger question is, when, will you know that will happen? And that’s really hard.” For the July mini-Budget, government announcements indicate there may be some industryspecific and geographic changes to JobKeeper, with continuing targeted extended support possible even beyond September for heavily-hit regional economies such as North Queensland and sectors such as aviation and tourism. However, Ageri says Deloitte would like to see JobKeeper to be extended at least till the end of September as originally announced, because other sectors such as education, retail and consumer business and hospitality have also been devastated. “It’s going to be a really slow rebuild, so it will be a long time until we get back to some sort of normal playing field.” Sector-specific assistance has already been extended in some quarters. The government unveiled on June 24 a $250 million support

“The Safe Harbour protections lay out a really cool governance framework to continually test boards to ensure that the path they’re continuing on is the right path.” package for Australia’s arts and cultural sectors. The childcare sector will be the first to lose JobKeeper in July, but the federal government has offered a $708 million transitional funding package.

Safe Harbour framework For boards and directors, a useful way to approach the end of JobKeeper would be to consult the Insolvency Safe Harbour duties of directors framework. (Download here the AICD’s Insolvency Safe Harbour Director Tool) “The Safe Harbour protections lay out a really cool governance framework to continually test boards to ensure that the path they’re continuing on is the right path. It also challenges the thinking in terms of scenarios. And whether plans laid out to either restructure or reshape the cost price of business are on track. “It’s a good framework and it makes a lot of sense to get some precise stress tests,” says Ageri. It is an overarching framework to allow boards to focus on the important things and to challenge the status quo. The federal government has announced a six-month temporary relief period from personal liability for trading while insolvent, which ends in September. This is designed to give directors confidence to trade through the current crisis without pressure and to enter their organisation into administration if there is a chance it might be insolvent.

than 40 per cent of respondents reported they are relying on the JobKeeper payments and that the scheme has, of all the COVID-19 policy measures, provided organisations with by far the greatest relief during the pandemic – particularly in the SME and NFP sectors. Overall, 44 per cent indicated that the JobKeeper Subsidy Scheme had provided the most relief – with the number jumping to 47 per cent amongst SMEs and 51% amongst NFPs. Forty-four per cent of respondents also expect to have reduced workforces over the next six months compared to pre-COVID-19 levels. A total of 2,371 AICD members responded to the survey, in which a large majority of members (81 per cent) support a cautious and conservative approach to phasing out government economic support measures, such as JobKeeper. The survey also found that 12 per cent of respondents (16 per cent SMEs) reported that temporary relief from personal liability for trading while insolvent laws had influenced board decisionmaking on whether to trade through. “This depth of reliance on safe harbour (particularly for SMEs), suggests that come late September, when the relief is due to expire, there will be many organisations facing difficult financial decisions, especially when combined with the expected phasing out of other support measures such as JobKeeper at a similar time,” the AICD member survey says.

Heavy reliance on JobKeeper In a recent AICD survey on The governance impact of COVID-19, more

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

This article was originally published on the AICD COVID-19 Resources Hub

Credit Management

A colossal stuff-up By Clare Venema* “The Centrelink Robodebt scandal – debt collection gone wrong”

If these economic times weren’t turbulent enough for the Federal Government in light of the COVID-19 pandemic, paying back an estimated whopping 721 million dollars1 back to Centrelink recipients couldn’t come at a worse time. More than 370,000 Australians2 have been affected by the Robodebt mishap, some of whom having allegedly suffered significant emotional harm from the illegal debt notices. How did this happen? And more importantly, how will the damage be rectified?

Robodebt explained

Clare Venema

In simple terms, Robodebt is a computer system that checks how much people who are receiving welfare benefits should get paid.3 Centrelink welfare recipients are required to report their income (usually on a fortnightly basis), and these records are compared to Tax Office data from the recipient’s employer to show how much they are actually earning.4 The two figures are compared and if they don’t match, the recipient will be required to pay back the difference between their reported earnings and their actual earnings.5 This may seem like a relatively simple, even foolproof system. However, the system was inherently flawed and therefore, resulted in the significant payback owed. The primary flaw was that the system lacked the element of human oversight, with many recipients being required to pay back multiple debts for the same welfare service.6 Furthermore, the demands issued

by Centrelink reversed the burden of proof by requiring people to demonstrate that they didn’t owe money.

Legal history The first case to challenge the Robodebt was heard in the Federal Court in November 2019 by a Victorian woman. The judgment found that the demand for payment of the alleged debt was not validly made, thus ruling in the woman’s favour.7 A large class action by former and current Centrelink recipients challenging the debts has followed in the Federal Court, being fronted by Gordon Legal against the Commonwealth Government on behalf of 5 applicants and other group members. The Labour Party’s Bill Shorten has publicly supported the class action, along with the Greens Community Services spokesperson, Rachel Siewert. The Labour Party has called for a Royal Commission into the Robodebt debacle, which has mounted pressure on the Coalition to answer to claims that the system failed recipients and furthermore, resulted in significant emotional harm.8

Emotional harm Bill Shorten has led the charge in claiming that the Robodebt scheme has caused welfare recipients emotional harm, stating that the scheme has “…been putting ordinary Australians through pain, trauma, people have lost jobs, people have lost relationships, people have suffered emotional injury, people ➤

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Credit Management

were not allowed to go overseas, all on the basis of illegal government debt notices”.9 There have even been claims that the unlawful scheme has caused recipients to take their own lives.10 The Labour party has advocated for the inquiry into these alleged incidents by way of the Royal Commission. Furthermore, James Naughton, principal of Gordon Legal, has stated that the class action will seek compensation and claims for damages for the inconvenience and distress that the Robodebt system has caused.11

Unjust enrichment The publicly accessible Statement of Claim filed by Gordon Legal on 16 March 2020 on behalf of past and current Centrelink recipients, claims that the Commonwealth Government has been unjustly enriched on the following grounds: 1. Unjust enrichment without lawful basis;

2. Unjust enrichment by mistaken payment; 3. Unjust enrichment on a basis that failed; 4. Unjust enrichment by compulsion or duress; and 5. Unjust enrichment by unlawful conduct. Broadly speaking, unjust enrichment is a remedy that aims to restore to an innocent party, the gains that someone else has obtained from them. The courts accept that there are four basic elements to claims of unjust enrichment, namely: 1. The defendant must have been enriched; 2. The enrichment must have been at the expense of the claimant; 3. The retention of the enrichment is unjust; and 4. Considerations of any available defence. Along with the argument of unjust enrichment, Gordon Legal asserts that the Commonwealth Government was negligent in breaching its duty of

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

“More than 370,000 Australians2 have been affected by the Robodebt mishap, some of whom having allegedly suffered significant emotional harm from the illegal debt notices.” care to Centrelink recipients who had unlawful debts raised against them. On 6 March 2020, the Honourable Justice Murphy of the Federal Court ordered that the parties hold a mediation prior to 19 June 2020. While the outcome of the mediation is not currently known at this time, the matter is set down for trial commencing on 20 July 2020 (however if this date is not available, the trial will commence in September).12

Credit Management

The real debt figure Though the Robodebt payback figure has been commonly publicised as 721 million dollars, the true value of all welfare debts unlawfully issued through the Federal Government is expected to exceed 1 billion dollars.13 Since 2015, a total of 2.1 billion dollars is estimated to have been raised through the Robodebt scheme, including approximately 200,000 debts that the Government still considers to be legal and subsequently, is not proposing a refund.14 The true figure of the debts raised through Robodebt is much larger than the refunds being issued, namely, because much of the money has not been paid back. At this stage, it appears that three quarters of the money banked from the Robodebt claw-back will need to be repaid or absolved.15 Furthermore, the service costs for processing the Robodebt refunds are estimated to be in excess of 200 million dollars.16 This doesn’t even count the legal fees that may arise from the class action, with Gordon Legal demanding interest on refunds and damages, with the interest on the refunds alone estimated at 90 million dollars.17 The Government has also paid millions of dollars to external debt collection agencies in pursuing the Robodebt, however the actual figure is not known at this time due to commercial confidentiality.

The payback Though the class action is ongoing, the Government is set to begin repayments to approximately 190,000 recipients in July of this year.18 This decision came after the Department of Human Services halted a key part of the scheme in 2019, stating that it would require additional proof before it used the Robodebt system to identify excess payments.19

What we can learn from this From a debtor’s perspective, the Robodebt debacle has shown that

even a Goliath, like the Federal Government, can get things wrong. This may prompt debtors to be more litigious when issued with demands for payment which in any event, will keep credit professionals on their toes. For credit professionals, situations such as the Robodebt scandal serve as a reminder that human oversight is a helpful means to ensure accurate recording, as there is no replacement for effective, mindful and consistent practice.

for damages, ask for an apology”, ABC News (online), 30 May 2020, https://www. abc.net.au/news/2020-05-30/robodebtclass-action-continue-damages-debtswaived/12302174 12 Gordon Legal, “Robodebt frequently asked questions”, https://gordonlegal. com.au/robodebt-class-action/robodebtfaqs/ 13 Luke Henriques-Gomes, “Robodebt: total value of unlawful debts issued under Centrelink scheme to exceed $1bn”, The Guardian (online), 10 June 2020, https://www.theguardian.com/australianews/2020/jun/10/robodebt-total-valueof-debts-issued-under-unlawful-centrelinkscheme-to-exceed-1bn-refund 14 Ibid. 15 Ibid 16 Ibid

*Clare Venema MICM Email: vene0010@outlook.com Mob: 0435 636 969

FOOTNOTES: 1 Jordan Hayne & Matthew Doran, “Government to pay back $721m as it scraps Robodebt for Centrelink welfare recipients “, ABC News (online), 29 May 2020, https://www.abc.net.au/news/202005-29/federal-government-refundrobodebt-scheme-repay-debts/12299410 2 Ibid 3 Gemma Acton, “Robodebt explained: How the Centrelink program worked, who is entitled to refunds and how to apply”, 7 News (online), 12 June 2020, https://7news.com.au/the-morning-show/ robodebt-explained-how-the-centrelinkprogram-worked-who-is-entitled-torefunds-and-how-to-apply--c-1096650 4 Ibid 5 Ibid 6 Ibid 7 Jordon Hayne, “Robodebt class action to continue as vindicated recipients push for damages, ask for an apology”, ABC News (online), 30 May 2020, https://www. abc.net.au/news/2020-05-30/robodebtclass-action-continue-damages-debtswaived/12302174 8 Ibid. 9 Jordan Hayne & Matthew Doran, “Government to pay back $721m as it scraps Robodebt for Centrelink welfare recipients “, ABC News (online), 29 May 2020, https://www.abc.net.au/news/202005-29/federal-government-refundrobodebt-scheme-repay-debts/12299410 10 Luke Henriques-Gomes, “Labour calls for royal commission into Coalition’s robodebt scheme”, The Guardian (online), 23 June 2020, https://www.theguardian.com/ australia-news/2020/jun/23/labor-callsfor-royal-commission-into-coalitionsrobodebt-scheme 11 Jordon Hayne, “Robodebt class action to continue as vindicated recipients push

17 Ibid 18 Jordan Hayne & Matthew Doran, “Government to pay back $721m as it scraps Robodebt for Centrelink welfare recipients “, ABC News (online), 29 May 2020, https://www.abc.net.au/news/202005-29/federal-government-refundrobodebt-scheme-repay-debts/12299410 19 Ibid. SOURCES: Jordan Hayne & Matthew Doran, “Government to pay back $721m as it scraps Robodebt for Centrelink welfare recipients “, ABC News (online), 29 May 2020, https://www. abc.net.au/news/2020-05-29/federalgovernment-refund-robodebt-scheme-repaydebts/12299410 Gemma Acton, “Robodebt explained: How the Centrelink program worked, who is entitled to refunds and how to apply”, 7 News (online), 12 June 2020, https://7news.com.au/themorning-show/robodebt-explained-how-thecentrelink-program-worked-who-is-entitledto-refunds-and-how-to-apply--c-1096650 Jordon Hayne, “Robodebt class action to continue as vindicated recipients push for damages, ask for an apology”, ABC News (online), 30 May 2020, https://www.abc.net. au/news/2020-05-30/robodebt-class-actioncontinue-damages-debts-waived/12302174 Luke Henriques-Gomes, “Labour calls for royal commission into Coalition’s robodebt scheme”, The Guardian (online), 23 June 2020, https://www.theguardian.com/australianews/2020/jun/23/labor-calls-for-royalcommission-into-coalitions-robodebt-scheme Gordon Legal, “Robodebt frequently asked questions”, https://gordonlegal.com.au/ robodebt-class-action/robodebt-faqs/ Luke Henriques-Gomes, “Robodebt: total value of unlawful debts issued under Centrelink scheme to exceed $1bn”, The Guardian (online), 10 June 2020, https:// www.theguardian.com/australia-news/2020/ jun/10/robodebt-total-value-of-debts-issuedunder-unlawful-centrelink-scheme-to-exceed1bn-refund

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

Cyber safety while working remotely or at the office

– a phishing email example By Andrew McLeish*

Andrew McLeish

With the changing landscape in today’s “new world”, cyber security is becoming more of an issue than most people realise. While many people are working from home, and because in some cases it has been done quickly, many companies are falling behind with their data security. We are seeing an increase in the number of reports where clients (including their employees) are reacting to emails purporting to be something they are not. Many cases have identified that phishing scams are the result of data breaches. A phishing email is one type of online that criminals send to unsuspecting people who appear to represent your customer but in fact they do not. In a recent example, our client was exposed to a cyber threat because one of their employees innocently responded to an email and provided company identifiable information to the criminal. The result of that email response caused

the criminal(s) to provide further information to the employee and ultimately defrauded the business out of a large sum of money. To date we can only assume where the money has gone and we can only assume this because without cooperation from international agencies, the likelihood of recovering any funds is impossible. A twist to this story is that we couldn’t locate the original email in the first instance to see what had occurred because the emails were being deleted. How is this possible you ask!!!! What we were able to identify was that the resultant email allowed the criminal to infiltrate the network using a small program that they attached to the email allowing them access. This type of program is called an “alternate data stream”. Simply explained the alternative data stream was a small executable program that opened up a port in the network and installed a program

“We are seeing an increase in the number of reports where clients (including their employees) are reacting to emails purporting to be something they are not. Many cases have identified that phishing scams are the result of data breaches.”

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Credit Management

allowing entry into the network so that the criminal can access anytime. We located the alternate data stream using our forensic techniques (can’t give away all the good stuff just yet) and identified the “false” user account in the network that had been created. Checking the backups that were stored off site we located some of the original emails and ultimately were able to identify header information that provided us with valuable information about where the email was being sent from (IP address) and what the employee thought was the correct email account. The email address only contained one extra character, an underscore, which can easily be missed when automatically replying to a familiar email account. A possible positive that has come of this is that the company does have cyber insurance to cover cyberattacks, denial of services (DOS), data leakage and other inclusions, however the outcome of any insurance payout is now dependent on the circumstances surrounding the phishing email scam.

TOP TIP This may sound simple but often overlooked. When you get notified that a company you deal with is changing bank account details, it is always recommended to call the company and confirm the bank account details. It is also advisable for the company making the bank account change to send an email, send with an attached/imbedded document with the company letter head, updated details and it should be signed by the CEO or COO or someone with authority.

What did the business learn? The takeaways from this investigation were that we were able to: 1. identify the originating email and the IP address of the phishing email; 2. with the backup data, recover some other data that was missing, assumed deleted; 3. locate the malicious software that the criminal had installed to use “next time”; 4. provide all the proof to the client, their insurance company and, most likely, to the courts or their lawyers if required; and 5. install monitoring software across the network which will allow the company to identify and block any further attempts of malicious software or other inappropriate activity over the network.

Some simple rules to follow There are many other rules that can be identified and followed to ensure that cyber security is maintained, but the following is a short list for you: z Always be aware of who you are emailing and if needed recheck the email address rather than automatically replying to a known email account z Ensure that you have intrusion detection set up and monitoring your network z Make sure there is actually someone (a person) tasked to monitor any activity which is being flagged and action that activity z Use two factor authentication when accessing sensitive information, for example banking,

online data services and the like z Ensure that all end points in your network (PC, notebooks, laptops, iPads and phones) are all actively synchronising to the antivirus software and the antivirus software is updated regularly; and z Lastly, make sure that network firewalls and other security hardware and software is patched and always up to date.

*Andrew McLeish Managing Director Stopline Pty Ltd Tel: 03 9882 4550 Mobile: 0487 333 099 Email: andrewmcleish@stopline.com.au www.stopline.com.au

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Credit Management

Leveling the playing field for Aussie small businesses By Adrian Floate*

Australia’s payment problem It’s estimated that 82% of retailers close down due to poor cash flow. You might think that ‘poor cash flow’ relates solely to a lack of sales or leads. In reality, many businesses are actually selling a substantial amount of products, but the time it takes to receive payment for these items causes significant financial strain. This is where the hidden culprit in Australian business transactions is exposed, inefficient payment collection processes.

A staggering 53% of all invoices sent between Australian businesses are paid late by an average of 23 days. Another 20% has an incorrect amount,

Adrian Floate

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

while another 20% are paid to the wrong business entirely. For larger businesses with millions of dollars in equity, these late payments don’t cause critical strain. They have the funds and diversified revenue to survive the wait, and the resources to work through payment errors. For smaller businesses with lower cash flow however, the long wait between receiving cash for goods sold, coupled with payment inaccuracies can cripple their entire operation. Australian businesses exchange approximately 1.2 billion invoices annually with around 20 percent of those (240 million invoices) being debt owed to small business suppliers. With 53% of those payments arriving late, there is a huge amount of stagnant money not going to the businesses who need it. It means at least 127 million invoices are paid late each year to small businesses.

Credit Management

The financial strain this causes small businesses can lead many to fund missing cash flow from home loans and credit cards. To compound the financial pressure on small businesses, COVID19 restrictions slammed the brakes on the worlds’ economy. Countless Australian businesses applied for business grants and job keeper payments from our Government and they had a very small time frame to qualify. Most businesses were in a rush to cough up their financial data to the ATO and prove their revenue decline from the previous year, the number of eligible employees on their payroll, and the operating costs they had to meet to survive. Ask any Australian business owner who applied what this process was like and most will confess it was

somewhere between challenging and a nightmare. The reason? 85-90 per cent of the small businesses applying for Government funding lack systemised business processes and still use paper and spreadsheets to manage their business. Without digital processes to assist, compiling all the required information manually was a huge time drain on already struggling businesses.

The solution E-invoicing. It’s an electronic, faster and innovative way to trade and it’s a direct solution to the paper problem Australian businesses face. However, of the one billion invoices sent each year by Australian businesses, only 10-15% were E-invoices, the rest remain paperbased.

If all of these paper-based businesses implemented E-invoicing, an additional $100 billion would be injected into our national economy. So why hasn’t E-invoicing taken off? One of the main reasons is the assumption that it is an expensive technology to implement. E-invoicing tends to be custom-built software designed for large businesses who, owing to compliance obligations, are more invested in getting paid on time. Small businesses yet to take on E-Invoicing technology are left with manual processes. Creating invoices through accounting platforms or Word documents and sending them out as PDFs via email or even posting hard copies to customers. These manual methods require a significant investment in time from both the seller and buyer and ➤

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Credit Management

requires the latter to manually enter data into their accounting system. This double data entry is prone to human error and contributes to the 15 percent of payment errors linked to all paper invoices. E-invoicing attacks these flaws by sending invoices directly to a customers’ accounting system, ready to be approved and paid. There is no manual re-keying and a lower chance of errors. Not only is this process faster, but it’s also much cheaper. Research shows it costs $30.87 to process one paper invoice, $27.97 per PDF invoice and only $9.18 per E-invoice for Australian and New Zealand businesses. Paperwork is also directly linked to deforestation and global warming, with an estimated 10,000 - 20,000 sheets used annually by each office worker in traditional pen-and-paper businesses. That figure is likely higher for finance industries. Additionally, it means the traditional lengthy reconciliation of reports becomes automated. Receipts are stored digitally and accessible at any moment with the click of a button. While most Australian businesses have not made the switch to E-Invoicing, many governments worldwide have embraced the technology. The UK and Europe

made it mandatory in 2008, while the US and India are currently exploring national E-invoicing frameworks. Australia dabbled with E-invoicing back in 2016, when the Australian Tax Office pushed for a nationwide standard of electronic invoices. Soon after, the Digital Business Council was launched to create a national framework of standardising E-invoices. Despite this, it wasn’t until 2019 when both Australia and New Zealand’s governments created a trans-Tasman plan to standardise electronic invoicing between the two in an effort to save $30 billion over 10 years. To improve payment arrival time for businesses owed money, the Federal Government also advised E-invoices had to be paid within five days or interest would be added, as of January 1st, 2020. The E-Invoicing landscape in Australia is changing, more rapidly since the effects of Covid-19 and a shift to digital business processes. New technologies are emerging to solve the issue of late payments.

How do businesses pay each other today? Payments between Australian businesses are dominated by bank transfers using ABA files, a system

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

developed by the Australian Banking Association (ABA) in the 80s that operates through accounting software and enables multiple creditors or payees to be paid in a single internet banking transaction. For accounting and payroll systems in most Australian businesses however, bank transfers have become its Achilles heel, due to its high risk of fraud exposure and minimal security. Smaller businesses commonly pay their suppliers with direct debit, credit cards, bill payment services and custom payment tools implemented to meet the needs of larger organisations. While these payment processes have been the norm for decades, they are solely for the benefit of one party and not the trading relationship. In Business-to-Business (B2B) payments, both buyer and seller must create, process and reconcile each transaction. It wastes valuable time and resources and drives inefficiency between both parties. B2B payments are significantly different from Business-to-Consumer payments (B2C) in their volume, frequency and value. 95 percent of transactions between consumers and businesses are made by card and frequently occur many times per week from multiple shoppers. There is also no need for consumers to pay multiple merchants or suppliers in a single transaction. Because B2C payments happen more frequently and at a lower value, consumers have more readily adopted new payment technology. They are also more likely to favour contactless payment options and less interested in digital receipts, unless an item is expensive, comes with a warranty or is tax-deductible. While there are many custombuilt E-invoicing platforms that specifically benefit large Australian businesses, it is only now that affordable, flexible and powerful

Credit Management

E-invoicing software is being made available to smaller businesses.

Addressing the B2B payments needs Market research has shown businesses are seeking these five components from a payments service: 1. Security and Certainty. When payments are made they reach the intended recipient without an interception. 2. Efficiency. The removal of human error and an increase in timesaving solutions. 3. Flexibility and Precision. The ability to pay one, three or 100 invoices in a single transaction. 4. Integration. A payment flow integrates end-to-end to ensure that the accounts receivable ledger of the supplier is in “sync” with the accounts payable ledger of the customer. End-toend integration automates and simplifies reconciliation by making the system determine missing transactions. 5. Speed. Immediate notification of transactions upon payment.

How new E-invoicing software is satisfying these needs While standard E-invoicing technology helps avoid the financial headaches accompanied with outdated paper and PDF methods, many have their own hidden expenses that can sting businesses financially over time.

The most commonly used electronic bill payment systems in Australia charge around $0.70 per transaction depending on your bank. Most businesses absorb this cost for the benefit of their customers and offer alternative payment methods in an attempt to remove these fees. While these costs are seemingly innocuous, depending on the number of transactions your business issues each month, these fees can add up to massive expenses over time. Most banks and credit unions also only accommodate a set number of ‘free’ transactions each month. Once that limit threshold is exceeded, your business will cop additional charges. New payment collection systems that enable E-invoicing can process more than $25,000 in a single statement payment, satisfying the volume of B2B transactions. Businesses using these new payment technologies no longer cop fees from banks or credit unions for exceeding their daily transaction threshold.

At Cirralto we have recently launched a product we think will revolutise the payment sector. SpendaCollect, a digital platform that drives cashflow by connecting the customer and merchant to a single source of truth. Modernised payment collection systems, like SpendaCollect, can also integrate with inventory management tools, point of sale software and accounting systems in real-time, providing seamless business processes and improved customer engagement. New payment tech also provides a better experience for a business’s customers, allowing them to track, group and pay one or all of their outstanding invoices at once via more payment methods. Not only does this save time removing the burden of chasing down invoices, it also provides more financial flexibility for the customer. By empowering small businesses with better payment collection capabilities every business regardless of size can be on the same page for faster and more accurate payment collection, making the goal of attaining an extra $100 billion into our national economy a welcome and highly-realistic target.

*Adrian Floate Managing Director at Cirralto Email: Adrian.Floate@Cirralto.com.au Tel: 0412 377 877

“New payment collection systems that enable E-invoicing can process more than $25,000 in a single statement payment, satisfying the volume of B2B transactions. Businesses using these new payment technologies no longer cop fees from banks or credit unions for exceeding their daily transaction threshold.”

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Leadership and High Performance

It’s not what you know, but who you know... By Pieter le Roux*

In my career I have seen a number of high performing staff members fail to achieve their personal career goals because they do not promote their own brand. As a Manager you might know who I am talking about. Those silent types, diligently pounding away at their keyboard in their workstation, hoping they will be noticed. Unfortunately career advancement is not just about the quality of your work, but also about your network (the who you know). Perhaps you are one of those silent types and reading this. Here is what I have learned and what I told a young ambitious Millennial, not so long ago:

Promote your brand

Think about it. Pepsi is not going to promote Coke as a soft drink. So it would be silly for you to hope someone else will bring your accomplishments to the attention of people who can provide you with career opportunities. Yes, I can hear a bunch of people saying: “A good leader should recognise high potential staff and develop them etc

Pieter le Roux

etc”, but we all know management gets busy. Again, this strategy places your future in the hands of what other people may or may not do. If you hope to get recognised based on your work output alone, you may be in for a long wait. Pump your own tyres a bit. Don’t be afraid to show your manager what you have implemented, achieved or what you have in mind. Fly your flag and promote your worth and value to the business. Don’t worry about what people might think. Your real friends will encourage you and not feel threatened by your attempts to improve your position.

Create a presence

Think of your manager. Now think of his or her manager. If you had to ask that Manager, “Do you know [enter your name here]” what do you think he or she would say? If your answer is: “Not a lot or he/she would probably not know who I am”, then you have some work to do. So where do you start? Start small if you want to. Summon the courage for a simple clear – good morning –

“Don’t be afraid to show your manager what you have implemented, achieved or what you have in mind. Fly your flag and promote your worth and value to the business.”

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Leadership and High Performance

“Unfortunately career advancement is not just about the quality of your work, but also about your network (the who you know).” [Enter Managers name here] every day. Don’t stop. You might not get a response at first, but keep going. PUSH (Persists Until Something Happens). Remember, contrary to popular believe, Managers are people too. If they don’t know who you are, your persistent greetings will sooner or later force them to find out. Find out what that manager likes. Perhaps it’s soccer. I personally don’t know the first thing about soccer, but it does not stop me from finding out that Chelsea beat Liverpool the week before. Next opportunity you get, greet the boss in the kitchen and ask him what he thought of the game. I bet you, you will get a response, especially if you know he is a Chelsea fan. Why is presence important? When senior management needs to think about new roles or projects, its important that your name easily comes to mind and is not lost amongst the crowd.

Invest in yourself

Yes, certificates and degrees are good. It has it’s place. However don’t discount training in life skills. Also focus on training that can improve Public Speaking, Emotional Intelligence, Assertiveness and Confidence. The latter teaches you how to manage yourself within the corporate environment. In my humble opinion, these types of training courses are completely under rated. Too many people focus only on getting highly qualified (book smarts), but do not know how to convey that knowledge in a meeting room or interact with people. If you can become good at this, the corporate world is your oyster.

can get unstuck if you can only talk a good game. So ensure you give it all you’ve got, so that the effort you’ve put in to get you here, is not discredited by mediocre performance. Ok – I will stop talking now. Hopefully I have given you something to think about. As I told that young Millennial, everything I said might seems a bit daunting to you, so start small but please just start. The more you talk or attempt to create a presence, the easier it gets. I don’t know of one person who got on a bicycle for the first time as a kid and rode it like a professional, popping wheelies etc. Most of us had a wobbly experience and even had a few crashes. The above is no different.

Walk the talk

So you got that opportunity you wanted or you have been appointed the leader of that project. Time to deliver. This is where the quality of your work comes into play. Things

*Pieter le Roux MICM National Shared Services Manager Coates Hire Email: Pieter.LeRoux@coateshire.com.au Tel: 61 2 9701 3274

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

Legal

A brave attack on the unfair preference regime fails By Fiona Reynolds and Lucy Tindal*

Fiona Reynolds

Lucy Tindal

On 27 May 2020, the Federal Court of Australia delivered three judgments in respect of unfair preference claims brought by the liquidators of Gunns Limited (‘Gunns’) against three of its creditors. Judgments in all three proceedings were handed down simultaneously: z Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) v Badenoch Integrated Logging Pty Ltd [2020] FCA 713 (Badenoch); z Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) v Bluewood Industries Pty Ltd [2020] FCA 714 (Bluewood); and z Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) v Edenborn Pty Ltd [2020] FCA 715 (Edenborn) The liquidators were successful in all three proceedings. The judgments are interesting because of the arguments that were raised by the creditors in order to try to defeat the liquidators’ claims. The creditors sought to challenge the application and assessment of the following: 1. The determination and assessment of the start and end point of a

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

continuing business relationship, or ‘running account’, between a company and creditor; 2. The ‘peak indebtedness rule’; and 3. The doctrine of ‘ultimate effect’. One of the creditors also sought to argue that even if the Court was satisfied that it had received an unfair preference, the Court had a discretion under s588FF of the Corporations Act 2001 (the ‘Act’) to order that it was not required to repay the preferential payments to Gunns. Many, if not all, of the arguments raised by the creditors to try to defeat the usual application of these principles will strike a chord with creditors who have similarly faced an unfair preference claim by a liquidator. Each and every argument raised by the creditors was categorically unsuccessful. The decisions serve to highlight that these principles are here to stay and their application is strongly established in precedent.

Background to the Gunns preference proceedings Gunns was the parent company of the Gunns Group, a large scale corporation operating forest management, development and manufacturing. The Gunns Group was also responsible for the management

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of various forestry and horticultural managed investment schemes, ultimately taking over contracts from the Great Southern Scheme following its collapse. Badenoch, Bluewood and Edenborn were each creditors of Gunns whom provided contracted harvesting, haulage and wood chipping goods and services to Gunns. In separate Federal Court proceedings, the Court determined that Gunns was insolvent on and from 30 March 2012.

The continuing business relationship or ‘Running Account’ Section 588FA(3) of the Act provides that where there is an ongoing supply of goods or services and payments made for those services during the relation back period, then all of the transactions forming part of the relationship should be taken

“...relevant authorities have established that there will only be a continuous business relationship if the purpose of the payments is to induce further supply as well as to discharge past indebtedness.” into account as if they together constituted a single transaction for the purpose of determining whether a creditor has received an unfair preference. However, relevant authorities have established that there will only be a continuous business relationship if the purpose of the payments is to induce further supply as well as to discharge past indebtedness. If there is no intention to induce further supply, then the continuing business relationship ceases and any payments received after that date will fall outside the running account and be discrete unfair preferences. The liquidators accepted in

all three matters that there was a continuing business relationship or running account between Gunns and each creditor. At issue were the start and end dates of the running accounts during the relation back period. As all creditors will know, the credits and debits that fall into and outside the running account can make a big difference to the amount of the preference and, in some cases, whether there is any unfair preference at all. Each creditor contended that the running account ran uninterrupted from the start to the end of the relation back period. ➤

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

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Each creditor submitted that s588FA(3) of the Act applied to treat all the transactions within the relation back period as a single transaction for the purpose of s588FA(1) of the Act and that it was not appropriate for the liquidators to nominate alternative dates during the period. The liquidators disputed in Badenoch and Edenborn that there was an uninterrupted continuing business relationship throughout the relation back period and alleged that it came to an end prior to the end of the relation back period. In Badenoch, the liquidators submitted, and the Court accepted, that only two of the eleven payments under attack formed part of a continuing business relationship. What was fatal to Badenoch’s case was that the nine payments made by Gunns followed payment plans negotiated after Badenoch had sent to it a solicitor’s demand threatening legal action unless certain debt was paid; had ceased to provide services to Gunns pending receipt of payment for prior services (albeit for 10 days only) and threatened to issue a creditor’s statutory demand for payment of debt. Whilst Badenoch continued to provide limited services to Gunns even after such threats were made, the Court determined that the predominant purpose of the nine payments was to reduce past indebtedness in the face of threats of legal action rather than to secure the ongoing provision of services. In Edenborn, the liquidators submitted, and the Court accepted

that there were in fact two periods of a continuing business relationship and, in effect, two running accounts during the relation back period. The liquidators submitted that the first running account commenced at the start of the relation back period and ended when Gunns suspended its operations as a result of a ‘force majeure’ event arising from contractual issues between Gunns and other entities not involving Edenborn. Edenborn could not provide its services to Gunns during this suspension period. The second running account commenced when Gunns’ operations resumed, approximately 3 months later, which then continued until the date the liquidators (then as Administrators) were appointed to Gunns. During the approximate three month period that Gunns’ operations were suspended, Gunns made three significant payments to Edenborn, which resulted in substantially reducing the overdue debt. The liquidators contended that these payments were separate and discrete payments and fell outside the running account. Edenborn submitted the running account between it and Gunns continued during the suspension period because the ‘force majeure’ event was unconnected to Edenborn and its contract with Gunns remained on foot during the suspension period so there was no cessation of the continuing business relationship between them. What was fatal to Edenborn’s

“What was fatal to Badenoch’s case was that the nine payments made by Gunns followed payment plans negotiated after Badenoch had sent to it a solicitor’s demand threatening legal action unless certain debt was paid;” 42

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

case was that there was evidence that during the suspension period Edenborn’s demands for payment from Gunns escalated from an initial threat to issue a letter of demand unless the debt was reduced below a certain amount, rising to a threat to issue a statutory demand and demands for full payment as a condition of recommencing services for Gunns. This evidence established that the payments made by Gunns during the suspension period were clearly not for the purpose of inducing further supply, rather, were to reduce past indebtedness in the face of threats of legal action and threats to withhold future services. The Court placed little weight on the fact that Edenborn provided a small amount of services (relative to the debt that was repaid) just after the suspension period and said that this did not negate a finding of a break in the continuing business relationship.

Point of peak indebtedness Satisfied that there was a continuing business relationship between Gunns and each of the three creditors, the liquidators then submitted that the continuous business relationship should be taken to have started not from the start of the relationback period but from the date of the highest point of indebtedness of each creditor to Gunns during the relation back period. The ‘peak indebtedness rule’ has its genesis in Rees v Bank of New South Wales [1964] HCA 47 in which it was held that it is open to a liquidator in a preference proceeding to choose the highest point of indebtedness in a running account as the “starting point”, rather than the balance of the debt at the start of the relation back period, for the purpose of calculating the quantum of the preference. Each of Badenoch and Bluewood contended that the peak indebtedness rule established by Rees had no

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“Where a payment is part of a running account between a debtor and creditor, the task of the Court is not to look at the effect of each payment in isolation, but to determine the ultimate effect of course of dealings between the parties.” further application following the introduction of s588FA(3) into the Act in 1993. These creditors submitted that s588FA(3) of the Act makes plain that when there is a running account, all transactions in the running account must be treated as a single transaction for the purpose of determining whether the creditor has received an unfair preference. To permit the liquidator to pick one point during the relevant period directly conflicts with the plain language meaning of s588FA(3) of the Act. Further, the failure by Parliament to enshrine the ‘peak indebtedness rule’ when it introduced this provision into the Act in 1993, signaled that the peak indebtedness rule no longer applied. The creditors went so far as to submit the Court should not follow the authorities that have applied the peak indebtedness rule as they have been wrongly decided. In support of their submissions, the creditors relied on the New Zealand Court of Appeal decision of Timberworld v Levin [2015] 3 NZLR 365. In Timberworld, the Court considered whether the Australian peak indebtedness rule applied to the New Zealand equivalent of s588FA(3) and determined that it did not. The Court of Appeal stated that: “to arrive at some artificial point during the course of all the relevant transactions and to select the point of peak indebtedness (resulting in transactions prior to this point

being disregarded) would be to ignore the express wording used by the Parliament” (at 386) [69]. This was the first occasion on which an Australian court was asked to consider the Timberworld decision. Justice Davies considered the reasons given by the New Zealand Court of Appeal and conducted a thorough review of the relevant authorities, including relevant extrinsic material to the bills that introduced s588FA into the Act. Her Honour disagreed with the New Zealand Court of Appeal’s reasoning and observed that the weight of Australian authority indicated that the current provisions of the Act were not intended to substantively change the law with respect to unfair preferences and that there was nothing in the extrinsic material which indicated that the peak indebtedness rule was not intended to continue to have operation. She rejected Badenoch and Bluewood’s submission that the peak indebtedness rule has no application to s588FA(3) of the Act. Bluewood made a further alternative submission that the application of the peak-indebtedness rule to the circumstances of its running account was grossly unfair. In its case, the liquidator had picked the date on which Gunns had suspended its operations as a result of a ‘forcemajeure’ event. You will recall that Gunns made a series of significant payments to Bluewood during the suspension period. Bluewood

submitted that the application of the peak indebtedness rule in this instance was grossly unfair because Bluewood did not provide services to Gunns during this period, not because it did not wish to do so, but because it was prevented from doing so due to circumstances outside of its control. Meanwhile, Gunns’ obligations to make payments to Bluewood were not similarly suspended. Justice Davies disposed of this argument swiftly. Her Honour observed that the value of the subsequent services that Bluewood had provided to Gunns, once operations resumed, were to a lesser value than the payments received, so even if the suspension period was disregarded, it would not change the outcome. The ultimate effect of the course of dealing was that Bluewood received an advantage over other creditors by reason of the payments. In the circumstances, her Honour was satisfied that there was nothing unfair about the application of the peak indebtedness rule in this circumstance.

Doctrine of ultimate effect Where a payment is part of a running account between a debtor and creditor, the task of the Court is not to look at the effect of each payment in isolation, but to determine the ultimate effect of the course of dealings between the parties. In the case of payments made to induce further supply, those payments will not be preferences unless the “ultimate effect” of those payments is that their value exceeds the value of the goods supplied. In so doing, the Court evaluates the effect of the course of dealing between the parties on their financial relationship. In Edenborn, the Court received competing submissions from the liquidators and the creditor as to the manner in which the “ultimate effect” of the payments received by Edenborn from Gunns is to be assessed and determined. ➤

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

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The liquidators contended that all that is required is a comparison of the face value of the services provided by Edenborn to Gunns as against the value of the payments made by Gunns to Edenborn. Edenborn contended that what is required is an enquiry into the actual effect on the net assets of Gunns of the services provided and payments received by Edenborn. Edenborn submitted that the ultimate effect of its dealings with Gunns was to increase the net assets of Gunns available to meet the demands of other creditors. It submitted that the services that it provided enabled Gunns to convert its timber assets into woodchips for export so the value of the services that it supplied to Gunns should be measured by the “downstream” revenues and profits that Gunns enjoyed in that period as a direct result of its services. Edenborn cited no legal authority for this proposition. Justice Davies reviewed the relevant authorities and concluded that the approach advocated for by Edenborn misconceived those authorities. Her Honour dismissed the proposition that a liquidator is required to establish that the services or goods supplied by the creditor, in return for payment, did not increase the revenue and profits of the company beyond the value of the services or goods supplied. She affirmed that all that is required is a comparison of the face value of the services provided by Edenborn to Gunns as against the value of the payments made by Gunns to Edenborn.

It submitted that Gunns directly benefitted from the services that it provided to it during the relation back period and adduced expert accounting evidence to quantify the amount of profit that Gunns enjoyed as a direct benefit of its services. It further submitted that an order for payment would provide a windfall to the liquidators. The liquidators contended that s588FF(1) of the Act confers jurisdiction and power on the Court, not a discretion. The liquidators further submitted that the contention that they would enjoy a “windfall’ gain as a result of the payment was completely misconceived as the preferential amount is determined by the application of the running account principle in s588FA(3) of the Act and the doctrine of ultimate effect. This rule and doctrine is designed to ensure that all unsecured creditors are treated equally in the period leading up to the liquidation and that where there is a running account between a creditor and a company, the creditor receives the benefit of the services supplied in return for the payments. Justice Davies considered the relevant authorities and concluded that the power of the Court under s588FF is a discretionary power. However, it must be exercised judicially in light of the purpose and object of the preference provisions in the Act. Her Honour considered the matters submitted by Edenborn and stated that she was not satisfied that they justified the Court exercising its

Discretion

“Justice Davies considered the relevant authorities and concluded that the power of the Court under s588FF is a discretionary power. However, it must be exercised judicially in light of the purpose and object of the preference provisions in the Act.”

Edenborn argued that the powers given to the Court by s588FF(1)(a) of the Act are discretionary because the provision provides that the Court ‘may’ make an order directing the creditor to repay the preferential payments to the company.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

discretion not to order the repayment of the preferential payments. She also accepted the liquidators’ submissions that the running account principle and doctrine of ultimate effect militates against any “unfairness” of the kind contended for by Edenborn.

Final comments At the heart of the ‘running account’, ‘peak indebtedness rule’ and doctrine of ‘ultimate effect’ is a desire to ensure that all unsecured creditors are treated equally in the period leading up to the appointment of a liquidator. These decisions clearly establish that the courts hold a strong faith in the operation of these rules and that in practice they operate as intended. It is fair to say that creditors faced with a claim to repay significant sums to a liquidator as preferences will find it difficult to accept that there is any fairness in having to repay preferential payments. It is a bitter pill to swallow. These three decisions highlight that it is a fools’ errand to try to resist an unfair preference claim on the grounds that the unfair preference regime operates unfairly to the targeted creditor.

*Fiona Reynolds Partner TurksLegal Tel: 0417 215 703 Email: Fiona.Reynolds@turkslegal.com.au *Lucy Tindal Senior Associate TurksLegal Tel: 0424 136 361 Email: Lucy.Tindal@turkslegal.com.au www.turkslegal.com.au

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How to engage with a lawyer cost effectively By Paul Hunt*

I’ve been a lawyer for over 20 years. One of the things I hear often is how expensive lawyers are. Part of the issue is of course the complexity of the law and how the ‘other side’ behaves, but there are things I see clients do that actually increase the cost of their legal services. In this article I hope to give you some insight into how lawyers charge, and what you can do to reduce what you are charged.

Time and task

Paul Hunt

Most lawyers charge their clients on what they call a time billing basis. Whatever time is spent on your matter gets charged at the hourly rate of the person undertaking the task. Hourly rates are usually broken down into 10 x 6 minute units. What is hidden in this is: z each task is usually separately billed; and z part of a unit is charged as a whole unit. Something that takes zero to 6 minutes will be charged as 1 unit. Something that takes 6 to 12 minutes will be charged as 2 units, and so on. If you send a lawyer two emails which the lawyer actually reads in 3 minutes, you will generally be charged 2 units (1 unit for each email) – i.e. as if it were 12 minutes! If you combine the two emails into one email, then you would only be charged 1 unit. But make a judgment call, if you are having back and forth emails with

the lawyer, pick up the phone and spend the units asking them to explain the issue to you. Note: if you send an email asking the lawyer to call you, you may be charged for the email and the phone call. Tip 1: Reduce the Tasks – send one comprehensive email, not multiple emails. Tip 2: If there are multiple emails on the subject – pick up the phone.

Give the lawyers what they need Lawyers sell time. They charge you for the time they spend on your matter. If you give them your opinion, maybe the thoughts you have on the matter that you have ascertained from an extensive review of the internet, the football scores, or indeed useful information about your matter, you should expect to be charged for that time. What do lawyers need? Lawyers need facts. — Dates — Times — Documents — Emails — Text messages — Photos — Conversations. Unless a lawyer asks you, they don’t want what you remember about a contract, they want to ➤

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

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see the contract. Documents that were created at a time carry far more evidentiary weight than what someone remembers later about it. A copy of the actual email is important, not just a cut and paste of what was in the email. What do lawyers do with the facts? Generally they turn these facts into a time line or chronology. The chronology is extremely important. When things are put in date order, the lawyer can see when rights and obligations were created, and when they were breached. Often, the chronology exposes connections between things which appear on their own to have no relationship but when looked at in date and time order start to explain the behaviours of parties. Of course creating a chronology takes time. If you can do this for them, at least in draft, then you are saving the time (and therefore the cost) of the lawyers doing this.

The chronology, cross referenced to the facts which are independently verifiable (i.e. not from someone’s memory) allow the lawyer to see the whole case and determine how the law applies to those facts. The exception is conversations where a person’s memory is all there is to ‘prove’ the facts. For a conversation to be introduced into evidence it must be in admissible form. This does not mean it has to be word for word what was actually said, it is OK to put the conversation in “words to the effect of”. I have found that the best form to describe a conversation is to write it out like the script of a play or a movie. For example, instead of saying Vader said the dark side was powerful and Obi-Wan never told me what happened to my father. I told him Obi-Wan told me enough, that he had killed my father. And then Vader says he was my father! I was shocked. I said it wasn’t true.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

It should say: Vader and I had a conversation in words to the following effect: Vader: If you only knew the power of the dark side. Obi-Wan never told you what happened to your father. Me:

He told me enough! It was you who killed him.

Vader: No. I am your father. I was shocked. The conversation continued in words to the following effect: Me:

No. No. That’s not true! That’s impossible!

Tip 3: Create a time line of your matter and provide cross-referenced supporting primary material. Tip 4: Write out conversation evidence in the style of a play or a movie.

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Hourly rates and who does the work Charge rates generally increase with experience and seniority. For example, the standard charge rates of a firm may be: Role

Standard Rate per hour ex GST

Principal

$700.00

Special Counsel

$550.00

Senior Associate

$400.00

Associate

$350.00

Solicitor

$300.00

Graduate

$250.00

Paralegal

$175.00

The theory behind different charge rates is that any task that could be undertaken by a more senior lawyer will take less time than a junior lawyer (or paralegal), and so the actual cost is about the same no matter who does the work. For example, a Principal may spend 1 hour doing work and charge $700.00, because they are experienced and know what to do, however the same work would take an Associate 2 hours to do, costing the same: $700.00. In practice however, someone that is not as experienced should seek the guidance of the senior person on how to undertake the task, and this often leads to the junior undertaking the work, that work being reviewed by a senior person, then the senior person and the junior person. This may appear like doubling up, but can save you money if you know what to ask junior lawyers to do, and what to ask senior lawyers to do. The more administrative tasks should be done by more junior lawyers. So it is important for you to understand who in a firm is going to undertake the work, and who is going to supervise it, and what work can be done by junior people. Sending an email to the partner

and two junior lawyers may result in 3 people charging you for reading the email! Tip 5: Ask who is best to do the parts of your work and allocate that work to them.

Negotiating Don’t be afraid to negotiate on the hourly rates, but careful what you wish for. Hourly rates are linked to a law firm’s budget, and flow through to salaries of the lawyers, on costs and of course profit. This does not mean lawyers won’t negotiate on the rates, but you need to understand your own bargaining power to negotiate, and the effect of any reduced pricing on the priority your work is given. Put simply, busy lawyers don’t need to negotiate price. If you have enough work to offer to make the loss of that work significant, or if the law firm is wishing to grow, then the law firm may be open to negotiating their prices. Reducing the price means that the lawyer working on your matters will need to do more to achieve their budget. This may mean the lawyer is more inclined to do work on other matters ahead of yours! Tip 6: Understand how valuable you are to the law firm and negotiate accordingly

Other ways of charging In Australia lawyers are prevented from taking a share of the outcome of contested matters. For example if you are suing someone but unsure if there will be any recovery, you can’t have a deal with your lawyer to get a percentage of what is recovered. Lawyers can be engaged on a speculative basis, and the lawyer is not prevented from charging an uplift on their fees of up to 25% of their standard rates. Generally lawyers will only take on these types of matters if there are good prospects of recovery. Some firms offer ‘fixed fee’

arrangements for certain matters. Fixed fee arrangements are OK where the matter does not involve any other person, just the client and the lawyer – for example a review of terms and conditions, drafting a standard document etc. Fixed fees do not work where the amount of time to undertake the matter is uncertain. For example in defended litigation you have no idea how long the matter is going to take so it is highly unlikely a law firm would agree to a fixed fee. Having said that, litigation can be divided into smaller pieces where fixed fees may work – eg fixed fee for preparing and serving a statement of claim, or a fixed fee until default judgment if the matter is undefended. I can tell you that a firm that charges a fixed fee has usually factored in the profit, and also an amount of risk that the time taken to finish the matter will be less than the fixed fee divided by the usual hourly rates. If you have a significant number of matters, the lawyer may consider a monthly retainer. This is where a fixed amount of fees are paid each month regardless of how much work is done. In my experience this can work well where the retainer amount matches the amount of work the lawyer would do at hourly rates, and the lawyer and client should meet regularly to review how the level of work and payment are going. Beware of January though – when it seems like the lawyer is on holidays and nothing is getting done, the retainer should still be paid because it is likely the lawyer was doing over and above in the lead up to Christmas. Tip 7: Ask your lawyer if they are open to other ways of charging – see if there is something that works for both you and the lawyer. *Paul Hunt MICM Principal Solicitor Hunts.Law Tel: 1300 048 687 Email: p.hunt@huntslaw.com.au

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

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Nick Pilavidis FICM CCE CEO, Australian Institute of Credit Management

AICM

Insolvency

RISK REPORT

2020

Wednesday April 22, 2020 11:00 am - 12:00 pm

ICM CEO Nick Pilavidis will be joined by ARITA CEO John Winter to discuss the impacts of the COVID-19 pandemic. The following topics will be explored: – The temporary exemption to insolvent trading – Application of the safe harbour defence – Preference payments and what you should be looking out for.

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Stuart Musgrave Consulting Manager, Equifax

Tuesday April 28, 2020 11:00 am - 12:00 pm

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redit risk management is a leading issue faced by professionals and is being rapidly elevated due to the COVID-19 pandemic. AICM and Equifax credit risk experts Stuart Musgrave and Nick Jenkins discuss how economic controls and government stimuli are influencing trends in retail credit environments in Australia. Stuart will elaborate on the ways customer behaviours and industry responses are evolving and how they could develop as the economy moves towards recovery.

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Wednesday May 6, 2020 11:00 am - 1:00 pm

he postponed national insolvency seminars were reformatted into a webinar to ensure you have the tools available to achieve better returns, get the best outcomes from informal arrangements and navigate the uncertainty of the COVID-19 pandemic. Panel 1 – How to get the best outcomes from informal arrangements Panel 2 – How to use the tools available to you to achieve better returns.

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Ashleigh Mason MICM CCE 2019 National YCP Winner & Commercial Collections Manager QLD, National Collection Services

Balveen Saini MICM CCE 2013 National YCP Winner & Associate, BBW Lawyers

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Monday May 11, 2020 3:00pm - 4:00 pm

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Gregg Odlum LICM CCE 2010 National YCP Winner & Shared Services Manager, Automotive Holdings Group

Sunny Sharma MICM 2018 National YCP Winner & Senior Credit Business Partner, Viva Energy Australia

n the lead up to the 2020 YCPA, join us and a panel of past winners to see where they are now, the lessons and insights gained in their careers, how they maximise their value to their employers and the ‘WHIFM’ (what’s in it for me) in applying. The YCPA program is the largest and most prestigious Youth Credit Award program in Australia and provides opportunities for young credit professionals to gain recognition for themselves and their employer. For the past 23 years, the AICM has supported, developed and recognised young professionals within the industry with the YCP Award.

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Collection & vulnerability strategies amid COVID-19

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Southern Steel Group

Wednesday May 20, 2020 3:00pm - 4:00 pm

Anna Taylor MICM

AnnaPrincipal, TaAynlonraM TaIyClM or MICM ResultsLegal Principal, Principal, ResultsLegal ResultsLegal

AICM Webinar Series

How to fight an unfair preference claim during COVID-19

Grant M Gorarrn National Natio Cre Southern SouS

James Neate LICM CCE James NPartner, eate LICM CCE Lynch Meyers Partner,Lawyers

Lynch Meyers Lawyers

s insolvency risk increases during COVID-19, more of the payments you receive are now are at a greater risk of an unfair preference claim. Join insolvency, legal and credit professionals to explore: – Where are preference claims likely to arise – What to do to prevent and defend them – Will preference claims be different under COVID-19.

To go to this Webinar please

click here

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

AICM Webinar Series

The Inaugural Insolvency Risk in Australia Report

Brad Walters Head of Product and Rating Services, Equifax

John Winter CEO, Australian Restructuring Insolvency and Turnaround Association (ARITA)

Kirk Cheesman MICM Managing Director, National Credit Insurance (Brokers) Pty Ltd

Nick Pilavidis FICM CCE CEO, Australian Institute of Credit Management

Wednesday May 27, 2020 11:00 am - 12:00 pm

roduced amid the most rapidly changing economic conditions imaginable, the inaugural Insolvency Risk in Australia report provides a valuable resource for the interpretation of emerging trends along with insights central to determining how these may impact your credit operation. Join contributors to discuss insolvency trends, the methodology behind the report, the establishment of a baseline in insolvent activity and how these experts expect COVID-19 to impact credit professionals.

To go to this Webinar please

click here 56

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

AICM Webinar Series

Insights from credit industry leaders - Part 1

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Wednesday June 10, 2020 11:00 am - 12:00 pm

To go to this Webinar please

he Insights from credit industry leaders series will contain 3 webinars leveraging the AICM’s network to present a range of experiences, tips and predictions to ensure you are informed with the current best practice for managing your credit function amid COVID-19. The panels will cover a range of topics with opinions from credit, legal, insolvency and technology professionals. Topics will evolve with each session and based on the latest news including: - Impacts of COVID-19 - The Path out of COVID-19 - Opportunities COVID-19 enabled.

click here

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

AICM Webinar Series

Insights from credit industry leaders - Part 2

Daniel TurDkaM niIeClM TurDkaM niIeCl M Turk MICM Eric MaisoEnrihcaM utaeisM oEnIrCihcM aM utaeisM onIChM aute MICM Daniel Turk MICM Eric Maisonhaute MICM D aD nHead iaePractice nl iTeul r-TkuCommercial, M rkHead IM CM ICM EricErM ica-M iAccount saoinsh oanuhta-eReceivable uAccount M teIM CM ICMReceivable Practice Head Practice - Commercial, - Commercial, Director -Director Account Receivable Director Practice Head – Commercial, Director – Account Receivable TurksLegal TurksLegal TurksLegal Solutions, Solutions, Esker Solutions, Esker ANZ Esker ANZ Practice Practice Head Head - Commercial, - Commercial, Director Director - Account -ANZ Account Receivable Receivable TurksLegal Solutions, Esker ANZ TurksLegal TurksLegal Solutions, Solutions, Esker Esker ANZ ANZ

Fiona Doherty MICM CCE

Gail Crowder MICM

Malcolm Field MICM

ohFeiortnyaM DIoChM FeiorCtnyCaEM DIoChM erCtyCM E ICM CCG E ail CrowG dearil M CrIoCw MG dearil M CrIoCw Mder MICM Malcolm FMieald lcoMlm ICM FiealldcoMlm ICM Fiel AICM QLD Councillor & SA Director & Executive Director, SV Partners FioFniQLD aonDao D hCouncillor e& orhtCredit eyQLD rM tyManager, IM CCouncillor M I& CM CCredit CC E CHanson ESA&Director GaG ilSA aCi& rlDirector oCredit Cw rDirector, odw erde M r&IM CExecutive M ICM MaM lcaolcDirector, molFmieFldieM ldDirecto IM CM ICM DAICM Councillor AICM CreditSA&Director Executive Executive Director, Director, Director, Credit Director, Solutions Manager, Hanson Construction Manager, Hanson Construction Hanson Construction Credit Solutions Credit CreditDirector, Solutions SV Partners SV Partners SV Partn AICM AICM QLD QLD Councillor Councillor & Credit & Credit SA SA Director Director & Executive &Solutions Executive Director, Director, Director, Construction Manager, Manager, Hanson Hanson Construction Construction Credit Credit Solutions Solutions SV SV Partners Partners Monday June 15, 2020 3:00pm - 4:00 pm

he Insights from credit industry leaders series will contain 3 webinars leveraging the AICM’s network to present a range of experiences, tips and predictions to ensure you are informed with the current best practice for managing your credit function amid COVID-19. The panels will cover a range of topics with opinions from credit, legal, insolvency and technology professionals. Topics will evolve with each session and based on the latest news including: - Maintaining high performance during high volatility - What panellists see in the short term and long term - Opportunities for the credit management profession.

To go to this Webinar please

click here 58

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

AICM Webinar Series

Discover insights into consumer spend & the state of the credit markets

Simon Bligh Chief Executive Officer, illion

Wednesday June 17, 2020 11:00 am - 12:00 pm

n this time of unprecedented change, credit professionals need to make informed decisions. Our firms and stakeholders are hungry for the latest trends in consumer and small business behaviour. illion, through their exciting partnership with AlphaBeta, is at the forefront of interpreting these trends and has been active in the media with their insights. In this webinar, you will hear illion’s CEO Simon Bligh give his key takeaways from their recent work. Join with other credit professionals to ask your questions based on your businesses experience, help identify trends, develop tools to measure and thereby manage.

To go to this Webinar please

click here

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

AICM Webinar Series

Insolvency regulatory update: Changes and trends to appointments & the state of the credit markets

Paul Shaw

PaPualuSlhSahwaw National Manager of Regulation National National Manager ManagerofofRegulation Regulation and and and Enforcement at Australian Enforcement Enforcement atAustralian Australian Financial Financial FinancialatSecurity Authority Security SecurityAuthority Authority (AFSA) (AFSA) (AFSA)

Monday June 22, 2020 3:00pm - 4:00 pm

To go to this Webinar please

n this time of unprecedented change, credit professionals need to make informed decisions. Our firms and stakeholders are hungry for the latest trends in consumer and small business behaviour. COVID-19 has caused changes to the insolvency processes via temporary changes and others that may be longer-lasting. In this webinar, the regulators of personal and corporate insolvency will provide an update on the changes that impact you. This session will include discussion on: - Temporary changes to insolvency processes due to COVID-19 - Practices credit professionals should be alert to and introducing - How to detect the involvement of an unregulated (illegal phoenix) advisor - Emerging trends in appointments and other activity.

click here 60

Thea Eszenyi ThTehaeEasEzsezneyni yi Senior Executive Leader Insolvency Senior SeniorExecutive Executive Leader LeaderInsolvency Insolvency Practitioners, Australian Securities Practitioners, Practitioners, Australian Australian Securities Securities and Investments Commission and andInvestments Investments Commission Commission(ASIC) (ASIC) (ASIC)

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Mark Logue MICM Debt Collection Specialist and Joint Managing Director, AMPAC Debt Recovery

Raffaele Di Renzo MICM Director, Nova Legal

Sherif Hussein MICM CCE AICM VIC/TAS President & Billing & Credit Manager, Interactive

Troy Mulder MICM CCE AICM WA President & Manager, Customer Operations at Alinta Energy

Wednesday June 24, 2020 11:00 am - 12:00 pm

To go to this Webinar please

AICM Webinar Series

Insights from credit industry leaders - Part 3

ith the anticipated easing of COVID-19 restrictions, this session focuses on the end of government stimuli and our predictions for the future. Join credit industry leaders as we discuss their experiences and tips to ensure you are informed with the current best practice for managing your credit function amid COVID-19. The panel will cover a range of topics with opinions from credit, legal and debt collection professionals including: - Potential tsunami of insolvencies - What you are considering in the short and longer term - Positive outcomes of COVID-19.

click here

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

aicm Training News The importance of continual learning throughout your credit career In today’s conditions of strong competition and sustained high costs, the competitive advantage of an organisation often rests with its people. Highly skilled employees can provide a competitive edge and influence both survival and growth. Having the right people with the right skills starts with a plan for the workforce based on identified goals and is sustained through the learning and development culture fostered in most organisations. It is important for employers to focus on continual professional development of their staff, but individuals should also take the time to think of what training they may need in their roles. This training could be formal via nationally recognised qualifications or professional development programs such as industry webinars or short courses.

exist today) have a moderate to high likelihood of disappearing in the next 10 to 15 years (Australia, 2015). Many of the jobs of today may be replaced by artificial intelligence (AI) and other technological advancements in the future. There is no question that you will need a new or an updated set of skills if you expect to remain relevant in the workplace of tomorrow. Innovation and development of technology has changed the way we live, communicate and do business. Such change has disrupted traditional industries so much that it is redefining what new skills employees should now possess. This is particularly true for those working within the credit industry. In addition there is also an increased demand for more customised individualised service, products and services which drives the need for continual learning.

Keeping up-to-date

How to adopt a continual learning mindset?

Staying ahead of technological change is vital for companies and individuals as can be seen from research conducted by Committee for Economic Development of Australia1 found that more than five million jobs (almost 40% of Australian jobs that

1. Recognise your own personal interests and goals 2. Make a list of what motivates you and where you see your career heading 3. Work out how to get started 4. Structure the learning into your normal day-to-day life 5. Make a commitment.

How continuous learning can benefit you and your credit team? 1. Expand your skillset You can acquire new skills, as well as refreshing and updating your knowledge. Although you may already feel confident in your current abilities, completing a qualification or part of a qualification allows you to expand your current knowledge on the latest industry changes. 2. Open doors to other courses and qualifications After completing a qualification, you then have access to

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

aicm Training News more courses and qualifications that have prerequisites. For example, you may undertake the Certificate IV in Credit Management qualification and then decide to complete further studies at the Diploma level.

What it means for you? It is important to start thinking about what skills will be required in the future within your role and within the credit industry. As part of the research process it is worth collecting as much information on current and

3. Broaden your career opportunities In completing further studies more career opportunities become available, giving you variety in your career choices. Being qualified for a variety of different positions gives you more chances of finding a position that you are most suited. It not only benefits your career growth, but also shows employers you are eager to learn and grow.

emerging roles via industry and government reports, social media platforms such as LinkedIn, thought leader periodicals, job search sites such as Seek or via education and professional associations such as AICM to gain an understanding of what your future role may look like. FOOTNOTES: 1 Source: Committee for economic development Australia

Recent graduates AICM would like to congratulate its recent graduates:

FNS51515 – Diploma in Credit Management Kulvindar Tiwana

NSW

CSR Building Products

Kayla Woods

QLD

Laminex Group

Kirsty Gray

QLD

Stoddarts SE Queensland

Martina Vucak

VIC

Kingspan Insulation

Sharon McGrath

NSW

Epson Australia

FNS40115– Certificate IV in Credit Management Stefanie Patane

NSW

ParaQuad

FNS30415– Certificate III in Mercantile Agents Garth Jackson

NSW

Triton Pool & Spa Inspections

Statement of Attainments Swati Sanan

NSW

FNSRSK401 Implement risk management strategies FNSCRD503 – Promote understanding of the role and effective use of consumer credit FNSCRD401 – Assess credit applications

Emma Leoni

QLD

FNSCRD403 – Manage and recover bad and doubtful debts

Michael Wynne

FNSMCA302 Repossess property FNSMCA303 Serve legal process FNSMCA402 Initiate legal recovery of debts

Melissa McPherson

VIC

BSBINN601 Lead and manage organisational change

Paul Carapetis

FNSMCA303 Serve legal process FMSMCA304 Locate subjects

Richard Mumford

NSW

BSBCNV506 Establish and manage a trust account

Gateway Container Park

Selection Steel Trading

Investigate You

AICM is committed to helping busy credit professionals study anywhere, all our credit course are offered as online courses, should you wish to utilise this time to progress your studies or undertake a new challenge by completing one of our qualifications.

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

South Australia

1989-90 – Division Council.

1990 – Guests in colonial themed costumes at the National Conference.

1990 – Questions from the floor at the National Conference.

1990 – Guests at the National Conference cocktail party in colonial theme.

President’s Report

The South Australian participation in the webinars has been terrific. A special thanks to Trevor Goodwin and Gail Growder for their valuable contributions to the workshops. In these turbulent political times, we in the SA Division are grateful for the positive steps that we have seen towards re-building our vibrant community from the AFL season opening, the allowance for regional travel and the re-opening of our bars and restaurants. I hope to see everyone supporting our local businesses to help them get back on their feet, and look forward to hopefully, when safety permits, our next AICM face-to-face event. Due to my growing family commitments, this will be my last report as SA Division President. I welcome the incoming SA President to oversee the next exciting era with the economy reopening at last.

Having weathered the storm of the COVID-19 pandemic, we are pleased to see that South Australia appears to be coming out on the other side of these difficult times. With more workplaces returning to work in-office, it appears as though the credit industry may be busier than ever in the upcoming months. Accordingly, it is pleasing that so many members have taken the initiative to reap the benefits of the online workshops that the AICM has offered during the isolation period. Namely, I have heard glowing reviews from members who attended Linda Murray’s leadership workshop, from the Athena Leadership Academy. Future and current credit leaders were provided with useful tools relating to resilience, stress management and team building. We look forward to future partnership with the Athena Leadership Academy. 64

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

– Nick Cooper MICM SA Division President

South Australia

1990 – SA Council at a colonial themed cocktail party at the National Conference.

Though we may not be soaking up the sunshine at the Gold Coast like at last year’s National Conference, we can look forward to celebrating our resilience in the face of the adversity with our friends and colleagues when time permits.

The Australian Institute of Credit Management welcomes our Partners for 2020. 1990 – Questions from the floor at the National Conference held in Adelaide.

National Partners

Trusted Insights. Responsible Decisions.

Reminiscing In light of the upcoming changes the AICM faces with respect to this year’s National Conference following the COVID-19 pandemic, it is fitting to take a walk down memory lane, and reflect upon a simpler time. The AICM’S National Conference was held in Adelaide in 1990, and by the looks of the photos, SA’s claim to being the “Festival State” is rather fitting. The SA Division’s former president, Shelia Witcomb, provided a glowing review of the conference in this magazine’s 1990 edition. Furthermore, Ms Witcomb refers to the “turbulent economic times” (evidently referring to the impending recession), which is clearly paralleled in these current times. An important note to draw from this comparison, is that the recession eventually subsided, just as this too shall pass. In any event, even in the face of economic turmoil, it is clear that members had a fun and informative time at the conference. We are fortunate that technology has allowed this year’s National Conference to proceed in a safe and responsible manner to facilitate the safety of our valued members.

Divisional Partners

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.

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

1990 – Guests at the National Conference dinner.

DIVISION REPORT

Queensland

1981 – Les Crook (Treasurer and National Councillor) presents his AGM report.

1984 – Left to right: Donald Fenwick (Qld State President), Neville Harper (Justice Minister) and Brian Hoskin (National President).

1981 – Dick Moore presenting guest speaker Bob Ansett with thank you gift at November State Seminar held at the Gold Coast.

1984 – Qld Division Council.

Presidents report I hope everyone has had a good EOFY close. This year would have seen us really adapt to a lot of different changes in market conditions, laws and people management. As always, the AICM has had a lot of great content out there to share other professionals’ thoughts and what they are experiencing and seeing. If you haven’t already, I would encourage you to watch the recordings on the AICM website and don’t forget to let us know so we can update your CCE points! Forms are available on the website otherwise, don’t hesitate to reach out to your councillors or Head Office team for more info. Although we have had a very challenging few months with many states opening up, we have endeavoured to ensure that we continue to provide members with as many opportunities as possible. One of these is the Young Credit professional of the Year award (YCP). I am pleased to announce that we have had a few ambitious 66

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

professionals step up to the challenge. Good luck to you all in the judging process. We will support our winner with a ceremony, we are just unsure what this will look like during the current climate, so please keep an eye on your emails for more details. I would also like to thank the YCP councillor for organising this and making the phone calls, and to our judges for agreeing to take some time out to be a part of identifying the QLD YCP. Another update has to do with the Conference, WINC and Pinnacles, we are currently working with head office to see what we can deliver and how it will be delivered, as everyone can imagine it is challenging due to the ever evolving nature of our response to COVID. Rest assured, we see value in recognising, promoting, educating and celebrating our members and will aim to do so in coming months. Keep an eye out. Again, as what seems like the longest year flips over into the 2nd half, the council looks forward to hearing

Queensland

1981 – Keith Wilson (Councillor, elected National President).

1984 – Roy Boff, Marion Hintz (President) and Peg Crook (Registrar).

1984 – Joyce Punter (Councillor).

1983 – President Dudaniec presenting award to Mary Cunningham.

1985 – David Carmichael Close (Councillor).

1984 – Michael Watkins (Councillor).

1983 – Roger Knight receiving award from Peg Crook (Registrar).

1984 – Robin Keith Richardt (Councillor).

DIVISION REPORT

1983 – Murray Scanlan with Marion Hintz (Vice President).

1985 – Blue Menzies (Councillor).

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

Queensland 1990 – Queensland’s first honorary member Peg Crook. At the “Special Evening for Peg” on July 7th, in company with friends, members and family, the Australian President, Bill Duncan, presented Peg with her plaque, as a permanent reminder of the Members’ esteem.

1984 – Robert Burns (Councillor).

1984 – John Moore (Councillor).

1984 – John Pearce (Councillor).

from and keep supporting our member base in these very turbulent times. If you have anything you need from us, please reach out. I wanted to thank all of our members who contribute to this amazing community of professionals and to our event supporters, state and national sponsors. We look forward to working together into the foreseeable future. I had way too much fun looking back at the old AICM magazines, the photos, the articles! So much has changed and yet some still the same, we are still discussing policies, ways to improve collections and how to better utilise technology. As most of the country has been in isolation these last few months, we haven’t been able to get out and about as we usually would networking and catching up with our credit friends. Instead we’ve been seeing each other through Zoom meetings, sometimes in our pyjamas or activewear, with a ‘business type jacket over the top’ or was that just me? I wanted to share some articles and photos that I found interesting and still relatable today. At the state seminar in 1985 on Straddie, Mr Earl Bailey made a comment which I think rings true today and especially during this time when you need to be able to motivate your teams from a distance, “Without selfmotivation, there is no point in attempting to motivate others, or even think that it is possible to succeed” – Roger Masamvu MICM Queensland Division President

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

1985 – Mason Frederick (Councillor).

The Australian Institute of Credit Management welcomes our Partners for 2020. National Partners

Trusted Insights. Responsible Decisions.

Divisional Partners

Official Division Supporting Sponsors

Victoria/Tasmania

1989 – President Roger Penfound, Carol O’Connor with 3 top students of 1988 Class.

1998 – Councillors eligible for re-election at the August AGM. Paul Pattison, Lyn Harris and Terry Piazza.

President’s report During the new world of COVID, I’d like to thank our Vic/Tas councillors for their continuous hard work for our success as a committee and working towards our goals to grow our membership, CCE, professional development, publications and promoting the online events. Please take the opportunity to nominate your team as the 2020 Credit Team of the year. This prestigious award recognises your team for their outstanding efforts and achievements in 2020, applications close 31 July 2020. Encourage your team to refresh their skills and to incorporate their professional development with our virtual classrooms held by AICM. Upskilling our team during COVID-19 will give us the tools to promote ourselves as credit professionals and take the lead within our organisations. We look forward to announcing the winners for VIC Young Credit Professional of the Year. The quality of candidates is once again excellent. The Young Credit Professional of the Year award allows the candidates to gain recognition for both themselves and their organisation. Welcome to all our new members in VIC/TAS. Please feel free to reach out to my councillors, as we

DIVISION REPORT

1987 – Paul J. Cooney, Life Member.

1992 – Maurie Marchant, Life Member.

1998 – Bill Stanton chats with Pat Clark (Executive Officer) while John Cooper (State President) and guest speaker Peter Sallmann exchange views.

are here to help you at any time. If you have any questions reach out to us. We may not be able to engage with you in Victoria face to face, however, we are available via other means. Don’t be a stranger, reach out to us. Thank you to all our members who have engaged with us via the virtual world over the last couple of months. We would love to hear from you if you have any ideas to help us make the virtual world more engaging. – Sherif Hussein MICM CCE VIC/TAS State President

A time for reflection and reminiscing During these times we all have so many questions. For example; Should there be a COVID safe period for collections? Is it better to instigate a DOCA (deed of company arrangement) vs liquidation? Will liquidators go to town on preferential payment? If I enter into a payment agreement where do I stand in terms of PPSR? While these questions are yet to be answered and fully understood let’s take some time to reflect and reminisce. I thought it would be good to hear from two of our life members that have survived the GFC and have a wealth of knowledge to share during these times.

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

Victoria/Tasmania

October 1990 – The AGM included the election of two new councillors to our division. Trish Thompson (Federal Mogul) will take up the functions portfolio and her innovative approach will become evident at the forthcoming dinner scheduled for December 5. Her creativity will be shown to full advantage in the coming twelve months and we welcome her enthusiasm.

1989 – Gordon Allan (Councillor).

1994 – Steve Willcocks.

1994 – Carmel McEwan.

1994 – Elizabeth Speirs.

Alec Finney (Stanley Tools) was also elected and will be concentrating on the TAFE/Victoria College portfolio. Alec brings a wealth of experience both as a practising credit manager and educator. He will be heavily involved also in the Traineeship scheme.

Roger Penfound The day I spoke to Roger, he was literally directing a removalist as he and his wife Carol were moving to QLD that day. Perfect timing I think, given Victoria’s second round of COVID lockdown. Roger’s career as a Credit Manager and Credit Controller spanned companies such as Impress Roger Penfound Australasia, Wormald, Toyota, Connect Internet and Laurens & Co. Below are his responses to some of my questions;

connected and to keep abreast of everything. As I am moving to Brisbane I’m hoping to be more involved as I was quite rural in Victoria. I love the credit industry, and it has been a delight to be part of the institute. The information you can gather from other members/friends now is invaluable. Sharing of knowledge and “just in time information” is so powerful. What advice could you give to a new person in credit that is looking to accelerate their career?

This isn’t the first serious recession but many of our fellow members don’t have this experience, what’s the best approach?

Get involved in the AICM, the friendships you make and the knowledge you gain is invaluable.

My main area was the building industry – recession hit hard, but money was still coming in due to government contracts. With COVID and it’s added government restrictions, I can see now that in this case money and cash flow is fairly tight. My advice would be to make sure you have some fairly hefty guarantees to be paid on time. Now is the time to really get to know your customer. To be ahead of the game, ask the important questions of your customers like, why are you ordering and if you are, can you pay or are you trying to make ends meet? Monitor everything and be very quick to turn off supply and not let them get off with excuses. To be a Credit Manager thesedays, you must be very careful and assured that you have the paperwork and terms and condition in place.

Any final words?

How have you enjoyed credit and your involvement with the institute?

I enjoy reading the magazine, it allows me to stay 70

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

A big G’day to all the Victorian members in my era. I’m thinking of you all often.

Raymond Wright Living in Tasmania, he turned 85 this year and now volunteers at a local museum. His advice to AICM members during these times is to keep the mind and body active and to “GET INVOLVED”. After Raymond retired, he became a life member of the Tasmania Chamber of Commerce and Industry (TCCI) and still attends the annual general meeting. He said that walking every day is helping him get through COVID, as he is dearly missing playing indoor bowls. *If you have lost contact with either Ray or Roger our magazine editor Michelle Carruthers is happy to pass your details onto them for you to reconnect on 0431 312 064 or Michelle.Carruthers@CreditorWatch.com.au

Victoria/Tasmania With Covid-19 restrictions on meeting up we value the support of our partners and sponsors more than ever. We thought it timely that we catch up with two key partners and their Divisional Representatives. AMPAC – Divisional Partner Divisional Contact –

Paul, is a lovely guy and very easy to talk to, we reminisced about our days at Monash University and how some things have changed like the car parking, food and facilities, while others like the landmark Menzies building is still cold in winter and very hot in summer. If you see Paul, please make him feel welcome and introduce yourself. To give you a few topics starters I’ve asked Paul a few “get to know you questions”

Steve Moloney How long have you been working at Esker? 12.5 years and How long have you been working at AMPAC? 8 years

AMPAC just celebrated their 10 year anniversary in November 2019. AMPAC’s clients include some of Australia’s highest profile private and public sector Steve Moloney organisations where credit risk management and the recovery of overdue debt is a priority. What is your position? Sales Director What gets you out of bed each day? Right now, it’s all

about helping our customers get their cash flow back on track and navigating through these difficult times.

in the software industry (SAS) for my entire career. The tech landscape has changed dramatically over the past decade. The biggest change is how accepting businesses are of technology and allowing the software to help create efficiencies. What is your position? Southern Region Manager What are your passions aside from work? I’m a doting

Grandfather to 10 month old baby Edie. I also love and hope to see you at the golf day next year. He says he is happy to have an offsite meeting with you while practicing golf swings. What is an interesting fact about yourself? I previously worked at Wang Laboratories and got to travel with Dr Wang, the computer genius from Harvard.

What is one thing you have changed since COVID? More

zoom meetings and having to cease playing golf during the worst of the lockdown. What are your passions aside from work? In addition to

golf, I enjoy Snowboarding, I’m excited to hit Mt Buller, I love the rush of it all. An interesting fact about yourself? In 1982 I was sacked

The Australian Institute of Credit Management welcomes our Partners for 2020. National Partners

Trusted Insights. Responsible Decisions.

by Michael Malthouse at the Western Bulldogs (what would he know about football?). Divisional Partners Esker – Divisional Partner Divisional contact –

Paul Butler We’re proud to welcome our new Divisional Partner in 2020 ESKER. Esker is an automation, cloud-based platform that transforms the way customers and suppliers interact with an Paul Butler organisation. Our contact in Victoria is Paul Butler who’s face you will see around at our events as soon as we begin to have face to face events again.

CREDIT MANAGEMENT SOFTWARE

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.

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

Divisional Partners in the Spotlight

DIVISION REPORT

New South Wales

1976 – Claude Baxter (NSW President).

1980 – Arthur Weston (Division President).

1981 – Jeanette Talbot (Magazine editor).

NSW Presidents Report We hope you are all keeping well and have got through the end of financial year unscathed. Most of you are probably transitioning back into the office as you do your very best to reasonably adhere to social distaining. In NSW we are closely following the issues unfolding around COVID-19. The health and safety of our councillors, members and broader community is of paramount importance. The National office have been working tirelessly in delivering a uniform, consistent and seamless service offering by way of the Webinars.

1982 – Bruce Kay (NSW Vice President).

1982 – Alan Burton (Councillor).

That is, there is continued success in delivering quality educational sessions to our members which has transpired as a result of the Webinars. The feedback has been terrific, and really elevated the value of being involved with the AICM for both our members and sponsors. As always, thank you to our National and Divisional Partners for their continued support in ensuring that the AICM, as an institute, can provide its members with a valuable and educational professional experience. Optimistically, I look forward to sharing with you any upcoming professional development and networking events over the coming months. – Balveen Saini MICM CCE AICM NSW President

Meet a NSW Councillor James Smith James Smith is currently Recoveries Manager at ARMA Group for 5 years. 1990 – Marie Addamo (Chairperson Functions, Publications, Monthly Meetings & Seminars).

1990 – Leanne McNamara (Chairperson, Education Functions, Monthly Meetings & Seminars).

1990 – Greg Brookes (Director and Vice President).

1990 – Daniel Byrne (Councillor).

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

James started his journey in Credit as a Collector and then moving onto Dispute resolution manager at Panthera, and then onto working for ARMA first as Consumer Team Leader James Smith and now his Key Account Manager/Compliance & Training Manager. He loves to add value back to the industry. James has been a member of AICM since 2017 and was introduced to YCP program as a youngster. This filled him with much excitement and pride to be recognised in any small way within the industry. He then was a finalist for YCP in 2016, 2017 and took the title as winner in 2018. James has gained a lot of value being a member at AICM through personal development of the YCP program and participating in events and education.

New South Wales I like riding my bike or running with my daughter, supporting my son at soccer, cooking and gardening. An interesting fact about yourself.

I worked in different countries and moved the full house inside containers 9 times over 6 years. Looking at staying where I am now.

Credit Quote of the Month 1989 – Eddie Watts (NSW Division President).

1990 – Michael Devine (Chairperson, Membership Applications, Branches and Membership Development).

“Never stop doing your best just because someone doesn’t give you credit”.

The Australian Institute of Credit Management welcomes our Partners for 2020. National Partners

Trusted Insights. Responsible Decisions.

1990 – James Reid (Vice president, Chairperson, Membership Development and Special Projects).

1989 – Theo Lianos (Editor, Credit Management in NSW Chairperson, Publications Committee, Public Relations and Special Projects). Divisional Partners

James is passionate and loves spending time cooking, motorbike riding and classical cars. He loves history and travels and hopefully already planning his next holiday! Aha moment

“Stop shrinking yourself to fit places you’ve outgrown”

NSW Meet a Sponsor

CREDIT MANAGEMENT SOFTWARE

Official Division Supporting Sponsors

Eric Maisonhaute How long have you been working at Esker?

I started working at Esker in 1996, left in 2012 and worked for 2 other companies before re-joining the Esker family in 2018. All of this between France, Australia, US . What is your position?

Eric Maisonhaute

I am the Director of Accounts Receivable solutions, a portfolio of solutions including credit management, e-Invoicing, collections management, customer portal, online payment and cash allocation .

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

What are your passions aside from work?

DIVISION REPORT

Western Australia/Northern Territory

1987 – Ron Ryder (President), Bunty Paramor, Jim Crockett, Maggie Duff, Bill Walter (Councillor), Stephan Borton and Bob Blakiston (Councillor).

1990 – Steve Mitchison (Division President).

1991 – Lesley King (Top student in Credit Management).

Presidents Report It all seems rather surreal that I am penning yet again another President’s Report (literally felt like I did this just yesterday) in a time when the world seems to be in a holding pattern and there still exists a very real uncertainty as to what the world is going to look like in another few months. Just when we thought there was light at the end of the tunnel, and restrictions started lifting, we’ve been plunged back into the grips of COVID again with outbreaks and further lockdowns in Melbourne and now Sydney – we really feel for our east coast brethren during this time, having been able to taste the relative freedoms that we all take for granted, before having them taken away again. For the west, we can gloat (guiltily) that we are all almost back to normal, and can now enjoy an afternoon at the football or a quiet beverage on a Sunday afternoon, but we must not rest on our laurels as the recent Victorian experience is a stark reminder that this is very real and very dangerous if not treated with the respect that it deserves. Whilst our AICM activity on the West has been restricted, it has been fantastic to see the great work 74

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

1991 – Course participants: (seated L-R) Diane Cowl, Patricia Wilson, Tracey Williams and Ruth Stubberfield. (Standing L-R) Tony Christensen, Jane West, Donna Olney, David Almeida, Keith Upton, Carlo Borrelli, Lisa Wood, Michelle Taylor and Steve Thomas (State President).

1991 – Steve Thomas (Life Member) at the Credit Toolbox on 6 May.

1991 – Glenda Jeffrey at the Credit Toolbox on 6 May.

that the National Office has continued to do in face of these challenges, and a testament to the engagement of our members with record numbers attending the virtual webinars, seminars and training activities held on line. Certainly, the Insights from Credit Industry Leaders webinar in which I had the privilege of sitting on the panel for, was very well attended and well received and certainly insightful in terms of how the credit impacts of Covid-19 are being addressed and more importantly, how we are continuing to support our people on this time of uncertainty. Locally, we are planning on holding our WinC event in August at Crown Perth (dependant on ongoing COVID developments and safety considerations) – this has always been a very popular event and well attended so hopefully we can proceed as planned. We also look forward to hosting our AGM in August and will make attendance available to all members via physical (if appropriate) or virtual means, and I really encourage all members to attend to have their say. We are always looking for members with an interest to join our Council and the AGM is the perfect opportunity to put yourself forward. In closing, a warm welcome to all our new members

Western Australia/Northern Territory

1991 – Bill Walter.

1992 – Education Evening, Certificate Presentation: Kevin Allen (Life Member) and Stewart Risbey.

1991 – Lesley Dabelstein.

1992 – Education Evening, Certificate Presentation: Roy Haagman.

1992 – Eight finalists with State President: Con Crista, Carmen Woodhouse, Vicki Horlock, Jan Barrett, Narelle Lewis, Diane Cowl and Steve Thomas.

and returning group members and it would be great to see as many of our Western Australia members at our WinC event on (TBC) and the upcoming AGM. In the meantime stay safe and be good to yourself, and each other. – Troy Mulder MICM CCE AICM WA Divisional President

Sponsor in the spotlight It’s been a while since we caught up with WA Division Partner and resident legal expert – Raff Di Renzo. For those who don’t know Raff let’s learn about him and his response to the pandemic. Your Name, Position, Time in the legal profession?

Raffaele Di Renzo; Legal Practice Director, Nova Legal Completed Bachelor of Laws in 1997, commenced articles in 1998 with Paul Tottle who is now the Honourable Justice Tottle of the Supreme Court of WA, I was admitted as a practitioner of the Supreme Court of WA in 1999 and Raffaele Di Renzo the High Court of Australia in 1999, I worked for a national firm for approximately 7 years, I was a founding director of Nova Legal and started that

1992 – Basic Credit Course: Glenda Birch, David Almeida, Bobbie Bonham, Verna Brookes, Natalie Davies, Eleana Dimartino, John Dabelstein and Maria Evangelista.

practice in 2012, I was awarded AICM’s Legal Practitioner of the Year award in 2018 as part of the WA Pinnacle awards. How are you finding work different these days with lock-down and social distancing?

Work is different primarily because meetings are held with clients via Zoom video conferences and court hearings are attended by teleconference. Have you found that the legal/regulatory sector is getting more online/electronic now that physical paper is less in demand?

Yes agreed. However, some documents are still required

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

1991 – Margaret McIlwraith at the Basics of Credit Control on 26 April.

DIVISION REPORT

Western Australia/Northern Territory

1992 – Twilight Seminar: Nick Bentuelzen, Carol Longman and Warren Myers.

1992 – Twilight Seminar: Chris Tollis, Rochelle Hambleton, Felicity Hutson and Yvette Hawley.

to be signed in person as opposed to electronically signed. Physical storage of those types of documents is still required.

Recommendation is to make sure updated agreements are in place with all customers.

Have you noticed any increases in credit related friction?

Definitely. From our perspective – many of our clients require longer payment terms of out accounts. We have also entered into a few arrangements with clients who are unable to pay outstanding fees. From our clients’ perspective – more chasing up of unpaid debts. How is your office preparing for the insolvency phase of this crisis?

It’s more wait and see how things pan out post COVID-19. Given that the government seems to want to protect debtors from failure, which precedent cases are likely be most pivotal in protecting creditors’ rights? Can you provide a quick rundown of the gist of those findings?

There are no case authorities that I am aware of. The government’s protection to creditors are contained in schedule 12 of the Corona Virus Economic Response Package Omnibus Act 2020 (Cth). Three main points: 1. The minimum threshold sum at which creditors cab issue a statutory demand has been increased from $2,000 to $20,000; 2. Debtor companies will have 6 months to respond to statutory demands, rather than 21 days; and 3. Directors will have temporary relief from the risk of personal liability for insolvent trading where the debts of the company are incurred in the ordinary course of business. Can you describe any common traps or pitfalls that our members may encounter in their dealings with customers? What general recommendations do you have to avoid or prepare for these disagreements?

A common trap is not to have solid credit agreements and guarantees with charging clauses in place. 76

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Finally, for a bit of levity, have you had any opportunities to attend online hearings with only your top half dressed suitably – like those reported lawyers in Florida? Obviously tricky these days with winter just around the corner.

Yes, our hearings are held via teleconferences. I have attended those hearings with either jeans or track pants. But, never with no pants as seems to be the case with Florida lawyers.

The Australian Institute of Credit Management welcomes our Partners for 2020. National Partners

Trusted Insights. Responsible Decisions.

Divisional Partners

Official Division Supporting Sponsors

New members DIVISION REPORT

The Institute welcomes the following credit professionals who were recently admitted to membership in May and June. New South Wales Tavoi Aiono Graincorp pty ltd Richard Azar SpotMe Finance Pty Ltd Andrew Bowcher RSM Australia Karen Buckpitt SMYA Alicia Chinery Snap On Tools Demi Clark Vodafone Hutchinson Australia Pty Ltd Kerrie Delpech SMYA Sarah Fergsuon GrainCorp Limited Timothy Gumbleton RSM Australia Jaspreet Kalra Talent International Pty Ltd Thi Lan Anh Le Rentokil Initial Pty Ltd Haydee Elena Martinez Diaz Hawker Pacific Pty Ltd Julianna Motyka-Carver SMYA Assumpta Murphy Steel Supplies Pty Ltd Jason Soto Rentokil Initial Pty Ltd Brooke Taylor Metcash (Ltd) Joanne Turnbull GFG Alliance Sophia Yang Ecolab Australia Pty Ltd

Queensland Natalie Aldridge Sarah Anderson Sabrina Armstrong-Syberg Melissa Bartley Wayne Bryant Simone Burke Belinda Eason Brandon Erasmus Megan Galloway Scott Gasson Denise Geddes Leanne Hess Katie Hodgson Lauren Jones-Growden Adarsh Devi Kishore Sharon Lancey Nicole Leung Georgina Mackie Douglas McAlpine Grant McCoola Jamie McGeachie Mischka McGrath Leonie Mead

Ergon Energy Queensland Ergon Energy Queensland Heritage Bank Limited ERM Power Retail Pty Ltd Queensland University of Techonology Ergon Energy Queensland Brisbane City Council Collection House Limited Bunnings Group Limited Heritage Bank Cleanaway Finance One Finance One Ergon Energy Queensland Heritage Bank Ltd Heritage Bank Cleanaway Ergon Energy Retail Collection House Group Heritage Bank Finance One Ergon Energy Retail Brisbane City Council

Christine Moss Leanne Muller Ron Murphy Stuart Paterson Maree Pearson Murray Porter Rosemarie Price Jenna Pulman Lisa Ramsay Dean Redshaw Chris Samuelsson Ebony Scott Kanani Seiuli Sarah Singh Alexandra Walsh Lisa Ward

Heritage Bank Heritage Bank Brisbane City Council ERM Power Ergon Energy Queensland Brisbane City Council Ergon Energy Qld Boom Logistics Pty Ltd Brisbane City Council Brisbane City Council Energy Queensland MRG Custodians Bunnings Group Ltd Hastings Deering Finance One Ergon Energy

South Australia Mario Acquaviva Northline Robyn Anderson Northline Tobias Blair SV Partners SA Pty Ltd Laticia Bouzoudis Northline Peter Burrows Northline Rebecca Coates SV Partners SA Riley Dunemann SV Partners SA Georgia Fischetti Northline Andrew Francis Northline Dillon Haydon Northline Alison Hoggan RM Williams Pty Ltd Ishank Kataria Northline Lachlan Scott SV Partners SA Breanna Wandel Northline Madison Watts National Credit Insurance (Brokers)

Tasmania Hamish McLeod Coogans Group Pty Ltd

Victoria Marsiha Akhir Daniel Alley Karla Ardeljan Peter Bendeich Marcia Blignaut Linda Buchanan

PPG Industries Australia Pty Ltd Reece Group Ansvar Insurance Ltd PPG Industries Saputo Dairy Australia

➤

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

DIVISION REPORT

New members AICM Membership

Paul De Bolfo

Saputo Dairy Australia Pty Ltd

Khai Du

Saputo Dairy Australia Pty Ltd

Sandra Edwards

Australian Rollforming

Manufacturers Pty Ltd

Andrea Forryan

Simplot Australia Pty Ltd

Emma Gardiner Mariska Grimshaw

Aggreko Generator Rentals Pty Ltd

Rahul Grover

illion

Shanker Gunasekaran

PPG INDUSTRIES Australia Pty Ltd

Mario Hanna

Reece Group

Sharon Hart

Bluescope Steel

Alex Hawtin

Metcash Trading Limited

Alan Izra

McMahon Fearnley Lawyers

Mark Johnson

Oakbridge Lawyers

Jacquie Kernick

PPG Industries Australia Pty Ltd

Millen Kunanayagam

Viva Energy Australia

Rebecca Lee

McCain Foods (Aust) Pty Ltd

Sabrina Matthew

PPG Industries Australia Pty Ltd

Pauline McCarthy

Saputo Dairy Australia

Ciara Murray

Reece Group

Puvanesvari Mutaya

PPG INDUSTRIES

Matthew Oppy

N/A

James Orr

illion

Marie Chantal St Mart

Simplot Australia Pty Ltd

Brent Witnish

Saputo

Lingtao Xu Sophy Yankovski

Saputo Dairy Australia

Faye Yeo

PPG Industries

Sharene Young

GWA Group Ltd

Rukan Zaman

illion

Amanda Zieba

N/A

Western Australia Elizabeth Blackwell

Bunnings Group Limited

Brendon Grant

illion

Hannah Koay

Capricorn Society Limited

Lidia Ladeira

Capricorn

Charis Ludemann

Bunnings

Jennifer Newby

Refuel Australia

Erin Stoker

Bunnings Group Limited

Chandramohan Raju

PPG Industries Australia Pty Ltd

AICM is focused on improving the credit industry by providing useful, practical information and guidance to members, which helps them to meet the high professional standards that the AICM sets and upholds. Members have access to a range of training and CPD events and resources that have been developed specifically for the credit industry, including the annual National Conference and a forum for networking with peers and sharing their expertise.

Individual Membership AICM members are entitled to use the post-nominals MICM and, after one year of membership, able to work towards the Certified Credit Executive qualification through CPD activities and assessment. Members are also eligible to be elected to their relevant Division Councils.

Employer-sponsored membership For the full benefits of membership at discounted rates, employers can sign up any number of their staff. Additional benefits for the employer include: z Significant savings on costs of membership z Improvement of the credit management maturity of the company z Incentives for staff retention z Simplified access to expert knowledge through AICM resources z Improved education of employees through discounted attendance of AICM meetings, seminar and formal training

Retired membership Retired membership allows AICM members who are no longer working full time to keep in touch with industry developments and continue to have access to AICM resources, events and training.

Student membership Student membership is available to full time students who are not employed. We encourage students who are interested in credit to become involved and understand the credit profession.

Employer Sponsored (Group) Membership The program offers employers the opportunity to enrol multiple employees as members of the AICM at a discounted rate. The more members, the greater the discount from the standard cost of $415.00 for a new member.

International Wendy Miller

JR Simplot Company

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

To find out more about AICM Membership go to www.aicm.com.au

AICM Marketplace Directory of services For information, options and pricing please contact Andrew Le Marchant on +61 2 8317 5052 or E: andrew@aicm.com.au ADVISORY AICM Divisional Partner

SV Partners Suite 7, Ground floor, 26 St Georges Terrace Perth WA 6000, GPO Box 2527, Perth WA 6001 Tel: 08 6277 0026 Fax: 07 3229 7285 Email: perth@svp.com.au SV Partners is a national specialist accounting and advisory firm, with offices in the metropolitan and regional areas of each state, across the eastern seaboard. Our expert accountants and advisors have the skills and experience to assist across a wide range of areas, including insolvency, turnaround and advisory services for accountants, financial institutions, corporations, financial and legal advisors, and their clients.

COLLECTIONS

COLLECTION SYSTEMS

DISTRIBUTION & PRINTING AICM Divisional Partner

AICM Divisional Partner

Esker Australia Pty Ltd Suite 1502, Level 15, 227 Elizabeth Street, Sydney NSW 2000 Tel: 02 8596 5126 Email: info@esker.com.au Web: www.esker.com.au Cash is the heartbeat of your business, so give your AR department the tool they deserve! Esker’s AR solution help companies reduce costs for invoice delivery, accelerate their cash collection process and automate the reconciliation of payments. Contact us to easily achieve your cash collection goals, tackle root causes of payment delays and reduce collection disputes while improving customer relationships.

AICM Divisional Partner

Lane Communications Tel: 08 8179 9900 Web: www.laneprint.com.au Lane are widely regarded as one of the largest and most technologically advanced print production and distribution companies in Australia. We are an industry leader in digital and offset print, point of sale signs, complex embellishments and print finishing, storage, kitting and mailing. With innovation at our core, our services extend beyond transactional mail and promotional print production to include SMS, bulk email communications, and electronic billing solutions. Lane are your partner in print and multichannel communications.

INFORMATION

AICM Divisional Partner CREDIT MANAGEMENT SOFTWARE

CreditorWatch

OnGuard AMPAC Debt Recovery Level 5, 35 Clarence Street Sydney NSW 2000 Tel: 1300 426 722 Email: info@4ampac.com.au Web: www.4ampac.com.au Trust AMPAC, we guarantee to give you the right advice…… AMPAC provides a complete range of debt recovery and receivables management services to big business, government and thousands of SME’s nationally, so next time you are deciding how to deal with that difficult customer, pick up the phone and call us. We are ready to help you too.

Tel: 1800 123 613 Web: www.onguard.com OnGuard’s Credit management solution will help you hit your collection targets – each and every month. By working smarter and providing better visibility, OnGuard will help you reduce your DSOs. Why not give your staff a friendly solution that will make their life so much easier. Contact us to show you how OnGuard has made life a whole lot easier for our customers.

GPO Box 276 Sydney NSW 2001 Tel: 1300 501 312 Web: www.creditorwatch.com.au CreditorWatch is a leading commercial credit reporting bureau used by over 50,000 businesses across Australia. CreditorWatch offers a variety of products including customer monitoring/alerts, credit reporting, an indepth trade program and online credit applications to assist with customer onboarding and decisioning. Contact us today for more information or to organise a FREE TRIAL of any of products.

CONSULTANCY AICM National Partner

AICM Divisional Partner

Trusted Insights. Responsible Decisions.

Australian Recoveries and Mercantile Agents Tel: 1300 363 394 Email: info@armagroup.com.au Web: www.armagroup.com.au ARMA is a specialist provider of contingent debt recovery solutions, outsourced accounts receivables and litigation services. ARMA was started with the aim to have fewer customers and provide better service. We provide big agency expertise with a boutique service. The ARMA team has a wealth of experience in the debt collection industry across a diverse range of markets that was gathered from working at some of the largest collection agencies in Australia.

illion

Credit Solutions Unit 1/245 Fullarton Road Eastwood SA 5063 Tel: 08 8418 1450 Email: gcrowder@creditsolutions.net.au Web: www.creditsolutions.net.au Credit Solutions, a division of the Credit Clear Group. A debt collection partner you can trust. Working with some of the country’s leading providers of information management and data intelligence solutions. Since 1965 Credit Solutions has set the benchmark for providing quality collection and recovery services to South Australian businesses and government.

AICM MARKETPLACE

Tel: 13 23 33 Web: www.illion.com.au Dun & Bradstreet has changed. We are now illion. Bringing data, analytics and insights to life is at the heart of what we do, and we will continue to break new ground in the product development and innovation space. Our commercial and consumer databases enable Australian businesses and consumers to make informed decisions, based on real time data drawn from an extensive range of sources. We remain a reliable and trusted partner to a wide range of global organisations, who use our solutions for credit reporting, risk management, sales and marketing and receivables management.

July 2020 • CREDIT MANAGEMENT IN AUSTRALIA

AICM Marketplace Directory of services For information, options and pricing please contact Andrew Le Marchant on +61 2 8317 5052 or E: andrew@aicm.com.au INFORMATION AICM National Partner

TECHNOLOGY

LEGAL AICM Divisional Partner

CreditSoft Solutions Equifax

Nova Legal

Tel: 13 83 32 Web: www.equifax.com.au

Level 2, 50 Kings Park Road West Perth 6005 Tel: 08 9466 3177 Web: www.novalegal.com.au

Equifax is a global information solutions company, providing data and insights that help organisations and individuals make more informed decisions. As a leading provider of credit information and analysis in Australia and New Zealand, Equifax serves key markets in risk management, marketing services and HR solutions. Drawing from trusted sources to compile and process data, Equifax helps its customers see things and make connections that others can’t.

Nova Legal can assist with the recovery of problem debtors (large and small). Founding director Raffaele Di Renzo acts for creditors, debtors, directors, credit managers and insolvency practitioners in relation to solvency issues and dispute resolution.

AICM Divisional Partner

INSOLVENCY

Tel: 1300 720 164 Email: info@creditsoft.com.au Web: www.creditsoft.com.au TICA is Australia’s largest tenancy database, with over 7 million records and 7000 members. Using TICA, commercial members can have access to a debtor’s recent and historical application and tenancy records – making it the ideal tool for skip-tracing. The TICA Assist add-on also allows members to register their debtors and receive email alerts when they apply for a rental property.

TRADE CREDIT INSURANCE National Supporting Sponsor

AICM Divisional Partner

Results Legal

Vincents Level 34 Santos Place, 32 Turbot Street Brisbane QLD 4000 Tel: 1300 VINCENTS (07) 3228 4000 Web: www.vincents.com.au We live in a world of increasing complexities; the need for true expert advice is now more evident than ever. Established for more than 25 years Vincents is an Australian firm of accounting experts and business advisers specialising in assurance and risk advisory, business advisory, corporate advisory, financial advisory, forensic services, and insolvency and reconstruction. Gain insight and take control with Vincents.

Level 4, 183 North Quay Brisbane QLD 4000 Tel: 1300 757 534 Web: www.resultslegal.com.au Results Legal is a national firm with a focus on promoting and protecting the rights of trade creditors. Our clients are some of Australia’s largest trade credit companies who rely on our assistance for legal recovery, dispute resolution, preference claim defence and PPSA rights. Results Legal are the obvious first choice for companies seeking a national solution to resolve commercial disputes and pursue swift, successful and cost effective legal recovery action.

AICM National Partner

National Credit Insurance Brokers Tel: 1800 882 820 (freecall) Email: info@nci.com.au Web: www.nci.com.au National Credit Insurance Brokers (NCI) has established itself as the premier trade credit insurance broker in Australia, New Zealand and Singapore. Trade credit insurance is a highly specialised area of insurance and, with its 30 years of experience, National Credit Insurance Brokers has developed an unmatched depth of expertise in arranging the right protection at the best price for your particular trading needs.

AICM Marketplace – our new initiative TurksLegal Insolvency Intel Tel: 1300 265 753 Web: www.insolvencyintel.com.au Email: answers@insolvencyintel.com.au Insolvency Intel: a subscription-only provider of insolvency and turnaround services for credit managers. Backed by national firm Jirsch Sutherland, our friendly team is just a phone call or email away, providing members with practical, strategic advice about corporate and personal insolvency. Free initial consultation; networking opportunities; training and presentations; knowledge database access; regular newsletters. Register now for a free subscription.

Tel: 02 8257 5700 Web: www.turkslegal.com.au Contact: Daniel Turk TurksLegal is a specialist commercial law firm with 33 Partners and over 160 staff across our Sydney, Melbourne and Brisbane offices. We are proud to look after the interests of trade creditor suppliers and financial institutions in: l Portfolio debt recovery using our market-leading, real-time client interface, ‘TurksFocus’ l Resolution of complex debt disputes l PPSA recovery l Defence of unfair preference claims l Supply documentation and guarantees.

CREDIT MANAGEMENT IN AUSTRALIA • July 2020

Welcome to our new marketplace. We’re proud of the AICM and we want to let all credit professionals know those businesses that support the AICM. Thank you to these companies for their continued support and please consider them first when you’re looking for assistance in your business. We’ll also include these sponsors on our website so you can be sure to find them easily. For more information contact:

Andrew Le Marchant Direct: +61 2 8317 5052 Email: andrew@aicm.com.au Tel: 1300 560 996

AICM MARKETPLACE

The Publication for Credit and Financial Professionals

IN AUSTRALIA

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 www.aicm.com.au

Credit Management in Australia - July 2020

Articles inside

Western Australia/Northern Territory

Leveling the playing field for Aussie small businesses

Victoria/Tasmania

South Australia

How to engage with a lawyer cost effectively

Queensland

New South Wales

Legal

Leadership & High Performance