Credit Management in Australia - July 2019

Volume 26, No 5 July 2019

The Publication for Credit and Financial Professionals

IN AUSTRALIA

l Comprehensive Credit Reporting – where are we at? l Changes afoot for e-invoicing – what’s all the fuss? l Using set off defence to defend unfair preferences l Bumper around the divisions mid year review REMINDER:

Conference early bird closes 31 August

A Comprehensive Accounts Receivables Solution Request a Demo

Create, manage and renew your PPSR registrations

Customer on-boarding

Access commercial credit reports to assess credit risk

Due diligence & Monitoring

Monitor customers to be alerted when important changes occur

Assess individuals behind a business and their cross-directorships

Our suite of KYC tools ensures you remain compliant with legislation

Analysis Cleanse and append data for a healthier database

Analyse your entire customer portfolio to identify credit risks and prioritise collections

Volume 26, Number 5 – July 2019

8 Patrick Coghlan

6

Message From the President

Credit Management

8

Why a little KYC doesn’t hurt

By Patrick Coghlan

10

Trading on open account? Annual review of international DSO’s gives interesting insights

10 Chris Doubé

14 Mike Laing

By Chris Doubé

14

A new era of consumer credit data has arrived and more changes are yet to come

By Mike Laing

17 Legislation Update

Robyn Erskine

17 Adrian Hunter

17

The case of the Dodo and the Phoenix

By Robyn Erskine and Adrian Hunter

Insolvency

20

Liquidator replacement – when to shoot the messenger!

By Andrew Spring

22

Welcome to the Island

20 Andrew Spring

22 Clare Venema

By Clare Venema

25

Fair pay for fair work – registered liquidators’ claims for remuneration

By Thea Eszenyi

25

Technology

29

AML regulation is the gift that keeps on giving to the credit sector, if the opportunity is seized

Thea Eszenyi

29 David Langeveldt

By David Langeveldt

Automating the collections process Reducing working capital to accelerate growth

32

By Eric Maisonhaute

36

What is all of this fuss about e-Invoicing

By Trevor Middleton

32

36

Eric Maisonhaute

Trevor Middleton

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

3

ISSN 2207-6549

DIRECTORS 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

41

41

Phoebe Pitt

44

Mark Wenn

Melissa Jarvin

CHIEF EXECUTIVE OFFICER Nick Pilavidis MICM 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

44

46

Daniel Turk

PUBLISHER Nick Pilavidis | Email: nick@aicm.com.au CONTRIBUTING EDITORS NSW – Sev Indrele MICM CCE Qld – Carly Rae MICM SA – Lisa Anderson MICM CCE WA/NT – Rowan McClarty MICM CCE Vic/Tas – Donna Smith MICM CCE EDITOR/ADVERTISING Andrew Le Marchant LICM CCE Phone Direct 02 8317 5052 or Mob 0418 250 504 Email: andrew@aicm.com.au

48

John Gdanski

Maxime Ampe

Legal Have you been served yet? Making an application to set aside a statutory demand

41

By Phoebe Pitt and Mark Wenn

Setoff Defence – A very useful tool to defend an unfair preference claim

44

By Melissa Jarvin and Daniel Turk

46

Commercial leases

By John Gdanski

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, 2019.

JOIN US ON LINKEDIN

International Why you shouldn’t write off your outstanding European invoices

By Maxime Ampe

For advertising opportunities in

Credit Management In Australia

Contact: Andrew Le Marchant

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

Ph: (02) 8317 5052 E: andrew@aicm.com.au

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Volume 26, Number 5 – July 2019

52

56

NSW: NSW Councillor Rachael Hurrell was a fantastic emcee of

Qld: First place Left to Right Team NCS – Bill Simon (Aurizon),

WINC.

Stacey Woodward (Councillor), Ashleigh Mason and Alex Croce (both National Collection Services).

58

61

SA: Alice Cooper (Lynch Meyer) presents the first session of the

Vic/Tas: Vic/Tas Council WINC Committee: Robyn Erskine,

seminar.

Mary Petreski, Lou Caldararo, Catrina Galanti, Sherif Hussein, Katheryn Kershaw and Sunny Sharma.

Training

50

Training calendar

Around the States

New Members

52 56 58 61 65 68

Credit Marketplace

69

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

65 WA/NT: Byron Savage (WA Health), Bob Jacobs and Paul Cockburn (both Auxilium Partners) Greg Proust and David Hurt (both WA Insolvency Solutions).

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

5

aicm

From the President

Trevor Goodwin LICM CCE National President

W

elcome to the new financial year

commence last November which is a “one-stop shop”

and an interesting business year

to streamline complaints process for consumers. All

it will be. The 2019 financial

financial firms, including superannuation funds, will be

year was quite successful for our

required by law to be members of AFCA.

Institute with excellent attendances at our events in each of the divisions and good revenue achieved

in the Banking, Superannuation and Financial Services

through our professional development courses,

Industry, was publicly released in February 2019. The

RTO, networking functions, membership, national

final report made 76 recommendations and 24 referrals

conference and sponsorship.

for potentially criminal conduct, including three of the

The Board, supported by the Divisional Councils

major banks. It represents an opportunity for lasting

and National Office staff look forward to working

change and will have substantial implications for the

diligently in the new financial year and implementing

finance industry.

strategic plans to assist in the ongoing growth

With a changing financial landscape we are also

and success of the Institute. This includes helping

seeing the world of technology evolving fast along

our members and their organisations rethink their

with consumer expectations. Advances in technologies

credit management services in an era of technology,

including artificial intelligence and machine learning;

automation, globalisation and rapidly changing

chatbots, voice interfaces, authentication, open

customer expectations.

banking and blockchain will have an impact on the

It is certainly an interesting and demanding time to be involved in credit management. Despite Australia

finance and payment processes.

The digital reality we live and work in has changed

being highly regarded as a strong economic player we

how we connect, how we operate, and how we

have recently seen the Reserve Bank announce a rate

develop. While technology has undoubtedly improved

cut for the first time in almost three years, reducing the

business processes, an equally necessary attribute is

cash rate to a record low 1.25%, and leaving the door

strong decision making when responding to business

open for a follow-up rate cut later this year.

problems or when proactively addressing a changing

The financial landscape is clearly changing in

market or industry that requires business turnaround.

Australia. We have seen the establishment of ‘Open

Credit professionals will need to stay on top of their

Banking’ which will give you greater control of the data

game in a changing business and finance world to

that banks and other financial institutions currently

perform their duties in an efficient manner and provide

hold on you. Open banking will allow you to direct your

essential support to management.

data to be sent to other banks, financial institutions and authorised organisations when you want to.

Another recent finance development has seen the Australian Financial Complaints Authority (AFCA)

6

The Australian Royal Commission into Misconduct

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

With all this in mind it is important to stay involved in the AICM through professional development, the national conference, the credit management magazine and our networking functions.

See you at AICM’s It is a great opportunity for the AICM to expand further into the consumer space and the Board has seen the value on appointing a new board member with a background in consumer credit and business.

The ideal candidate will add to the current board’s skills and experience and the person will have a unique opportunity to contribute to the growth of the AICM and credit profession. This position will play a driving role in representing members in the consumer credit sector and building the presence of the AICM in the broader community.

In July divisions will hold their interviews of the Young Credit Professional Award which is sponsored by illion.

I congratulate all finalists and wish them well with their application and interview process. State winners will be announced at their divisional Awards Dinners which are always enjoyable evenings, and the winners will then go through the national judging process at Gold Coast conference in October.

July is 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. I encourage members to consider nominating for divisional council as it very rewarding and can assist with career development, while working with like-wise credit

2019 N A T I O N A L

CONFERENCE

professionals in a friendly team environment.

I also encourage members to register for the National Conference as it will be an action packed program for both commercial and consumer credit professionals.

16th - 18th October 2019 Marriott Gold Coast

– Trevor Goodwin LICM CCE National President

CLICK HERE FOR MORE DETAILS

Credit Management

Why a little KYC doesn’t hurt

By Patrick Coghlan*

For those working in large financial organisations, Know Your Customer (KYC) compliance is something that must be done in order to comply with AUSTRAC’s Anti-Money Laundering and Counter Terrorism Finances (AML & CTF) Act 2006.

However, KYC is beneficial for all entities regardless of their industry and customer base. Any extra bit of due diligence never hurts, especially for companies that operate in risky industries like construction, retail or manufacturing.

KYC is the process or steps taken by an organisation to verify the identities of their clients and assess any potential risks of doing business with them. The goal of KYC is to prevent organisations from being used, intentionally or not, for money laundering and other illegal activities.

As KYC is performed during the onboarding process and is made up of a few steps of customer due diligence (CDD), this is a great way for any entity to get to know who they are dealing with better. Let’s take a look at the steps of KYC and how they could apply to other areas of credit risk management: Collect and verify the entity’s information – This includes the full name of the company, associated addresses, and details of the directors. How it can help every business: Verifying the company’s information and details of directors is an important step of any due diligence. Is the company legitimate?

Are the ABN and ACN correct? Are directors illegally operating even though they are bankrupt? Are there

1

Patrick Coghlan

8

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

any adverse cross directorships? This is information that every business should be aware of in order to mitigate risk.

Identify the Ultimate Beneficial Owner (UBO) – Identifying the UBO is a crucial step to KYC compliance. A beneficial owner is an individual that either directly or indirectly owns 25% or more of the business. However, some businesses have complicated structures (see example of chart) and it is often time consuming and costly to determine the beneficial owner. How it can help every business: Identifying a beneficial owner can help mitigate risk when working with complex corporate structures, trusts, international entities or high-risk industries. Once the beneficial owner is identified, further reporting can be done on the individual in order to identify risk of corruption, poor debtor behaviour, or to ensure the individual is who they claim to be. It is also useful to monitor the individual for cross directorships changes.

2

Complete a Verification of Identity – Identity fraud affects millions of Australians each year. A Verification of Identity (VOI) is a high-level identification process that enables businesses to ensure they are dealing with the correct individual or beneficial owner. How it can help every business: A VOI will ensure that the individual is who they say they are. This can be useful before approving a large line of credit, obtaining a personal/directors guarantee or a PPS registration.

3

Credit Management

Typically, this involves verifying government documents like a passport or drivers license.

Perform a Politically exposed person (PEP) or Sanction search – Check to see if the beneficial owner is a politically exposed person (PEP). A PEP presents a higher risk for potential involvement in bribery and corruption due to their influence and power of position. Sanctions are restrictions imposed by Governments and International bodies like the United Nations. How it could help every business: An AML screening can identify if the individual is conducting money laundering, involved in corruption or has appeared in adverse media. This also is true if a customer has become a PEP since they onboarded. PEP and sanctioned entities are high risk for money laundering and other adverse activities. PEP and sanctions lists should be reviewed regularly.

4

Ongoing Customer Due 5 Diligence (OCDD) – Once the due diligence has been performed, it is a requirement to keep all records and ensure processes are up to date and maintained. Customer information should be reviewed regularly, for example using monitoring and alerts, to ensure the beneficial owners are the same, and to identify adverse actions or behavior. How it could help every business: Just because a customer is in the clear when they are onboarded does not mean that it will stay the same. Choosing to monitor and receive alerts for adverse data is one of the most important steps a business can do to mitigate risk and perform due diligence. An annual Datawash is another great way to review the customer’s details, ensure that they are correct and identify any adverse or concerning changes.

Checking for adverse cross directorships or bankrupt directors are other beneficial ways to continuously stay on top of ongoing

Customer PTY LTD

25%

50%

Individual A

C Trust

Individual G

60%

20%

Individual Y

40%

Individual Z

20%

Individual H

due diligence and protect the business from any pitfalls.

Finally, KYC isn’t just about mitigating risk and satisfying regulatory boundaries. KYC and the technologies around it also provide a way to obtain insightful data on services and customers. In order to be successful, it is important to really get to know your customers. KYC and AML technologies are also a way to keep up with digital disruption

B PTY LTD

A PTY LTD 80%

80%

25%

and constant changes in policies and procedures. Innovative technologies provide businesses an advantage, allowing them to stay compliant and adapt to new forms of credit management.

*Patrick Coghlan MICM Managing Director CreditorWatch Ph: 1300 50 13 12 www.creditorwatch.com.au

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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Credit Management

Trading on open account?

Annual review of international DSO’s gives interesting insights

By Chris Doubé*

Chris Doube

10

Euler Hermes has issued its annual review and forecast of global average Days Sales Outstanding (DSO), based on a sample of 25,000 listed companies across 20 sectors and 36 countries. Days Sales Outstanding (DSO) is a measure of how long it takes companies to collect cash from customers – the ratio is calculated by dividing the accounts receivable by the total revenue of a company on one year and then multiplying it by 360.

Euler Hermes’ study shows that after hitting a 10-year high in 2017, global average DSO fell by -1 day to 65 days in 2018, a sign of companies becoming more cautious in line with the global economic slowdown. As the world’s GDP growth decelerate this year to +2.9% y/y compared with +3.1% in 2018, Euler Hermes expects DSO to reach 64 days in 2019.

Nordic countries and North America successfully maintained their customers’ payment discipline.

Despite usually having levels structurally lower than the rest of the world, in 2018, Canada and the U.S. still managed to reduce their DSO to 52 days and 51 days, respectively.

This reflects cultural preferences but also shows that cash-rich companies in these countries can adapt rapidly to changing trends in global growth.

In spite of weakening economic conditions, Norway (53 days),

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Sweden (57 days), the UK (52 days), Germany (54 days), Poland (59 days) and Belgium (59 days) all managed to lower their DSO, anticipating an upcoming deceleration of growth and adapting to rising difficulties in the car industry.

In line with the economic slowdown, we are seeing a trend of companies preemptively reduced payment delays, except for Mediterranean countries. Italy, France, Greece and Spain saw their average DSO lengthen by +5 days, +2 days, +2 days and +1 day, respectively, in 2018.

Recording the longest average payment term in the world at 92 days (27 days above the global average) once again is China, despite reducing its DSO by one day in 2018 vs. 2017.

This means one in four companies is paid after four months! This trend reflects their important role as “invisible banks” at a domestic level and for major trade partners, reflecting its less mature and less open financial system.

Debt collection in China has been notoriously cumbersome. Its court system could be complex and suffers from a lack of transparency, delay and high costs. As enforcement results are poor, Euler Hermes recommends amicable or non-litigation collection as the preferred option. In addition, liquidation is often the default procedure in China’s insolvency framework.

Credit Management

29 58 67 50 47 51 52 54 40 62 51 30 130 67 63 66 65 60 55 124 43 48 81 39 102 50 56 83 102 142 64 61

47 46 44 28 61 55 60 44 65 72 57 57 66 54 46 54 93 48 56 51 57 87 90 61

40 58 55 58 51 57 63 59 55 64 70 62 61 34 64 69 68 54 75 47 22 79 96 72 71 58 120 85 68 99 55 66 104 97 92 65

63 83 52 73 74 77 52 49 67 24 69 47 47 88 73 59 72 43 40 75 87 101 69 74 72 80 87 79 81 72

28 57 66 86 63 64 72 50 36 75 68 59 55 99 64 55 69 66 87 33 85 54 110 72

56 73 54 69 60 77 64 70 65 64 63 66 87 76 63 66 74 64 134 87 94 77 70 109 93 71 80 93 120 133 95 119 114 73

54 58 48 77 64 74 73 69 51 58 149 98 100 76 102 47 146 74

76 61 69 69 52 63 69 54 72 67 108 67 93 49 107 91 112 134 83 71 100 64 74 95 130 90 87 103 82

52 48 50 50 36 58 63 63 50 40 15 48 54 59 59 69 61 58 67 62 82 76 82 81 78 109 90 64 67 96 113 102 88 92 102 119 82

72 56 45 62 59 58 64 60 69 53 58 58 64 70 61 82 66 86 97 71 73 79 78 78 87 109 87 97 95 103 108 96 114 128 86

99 62 51 60 56 62 54 51 72 61 63 67 75 79 70 90 67 84 66 40 72 89 79 101 81 98 174 91 75 135 89

Country average

39 21 82 54 65 62 55 53 70 56 63 49 47 34 91 59 50 68 73 66 83 57 107 70 122 35 43 100 17 93 61

Electronics

Paper

51 46 46 38 32 48 31 44 45 51 79 46 53 55 65 56 49 73 92 58 59 59 67 66 59 89 60 73 81 94 68 58

Machinery

Utilities

42 31 40 68 43 40 38 47 37 63 48 44 76 43 40 42 78 56 56 76 99 49 62 80 63 44 58 101 42 68 69 79 66 58

Construction

Energy

32 40 52 33 47 37 34 33 61 52 46 40 43 68 53 55 65 43 40 47 60 75 91 56 55 76 43 63 86 89 72 57

Pharmaceuticals

Household goods

52 38 75 43 47 43 35 38 45 54 36 60 30 55 86 50 40 72 75 37 85 42 102 75 83 54

Aerospace

Leisure goods

39 48 49 22 39 36 42 51 52 35 37 50 44 31 27 43 61 55 52 43 34 49 64 65 51 100 54 40 94 52 33 107 66 38 55 49

Technology

Metals

59 49 60 39 34 38 41 48 49 48 41 44 50 39 48 52 51 58 43 47 63 42 87 36 47 55 57 47 46 73 68 62 60 103 40 47

Automotive

Telecom

24 39 42 37 28 43 32 54 43 79 29 45 43 17 35 51 50 38 40 54 31 35 21 57 38 37 60 80 32 47 75 81 71 96 68 64 47

Chemicals

Transportation

28 35 20 17 22 24 23 18 15 6 28 28 22 24 35 40 73 35 34 64 59 30 42 39 24 15 35 38 31 29 24 49 62 48 26 30

Business services

Agrifood

New Zealand South Africa Austria Switzerland Finland U.S. Denmark Canada United Kingdom Netherlands Norway Germany Australia Russia Sweden Poland Belgium Chile Hong Kong South Korea Bulgaria Brazil Romania India Singapore Japan Portugal France Taiwan Saudi Arabia Spain Turkey Morocco Italy Greece China Sector average

Other services

2018

Retail

Summary Heatmap

47 48 49 50 51 51 52 52 52 53 53 54 55 56 57 59 59 61 63 63 63 64 66 67 69 71 73 73 74 77 78 79 84 86 90 92 65

Source: Euler Hermes

In spite of weakening economic conditions, Norway (53 days), Sweden (57 days), the UK (52 days), Germany (54 days), Poland (59 days) and Belgium (59 days) all managed to lower their DSO, anticipating an upcoming deceleration of growth and adapting to rising difficulties in the car industry.

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

➤

11

Credit Management

There is already pressure affecting more and more traditional “bricks and mortar” retail outlets from online competitors and changed purchasing trends.

What does this means for Australian retail sector?

Chris Doube, CEO of Euler Hermes Oceania explains: “The retail sector is one already under pressure in Australia. There is already pressure affecting more and more traditional “bricks and mortar” retail outlets from online competitors and changed purchasing trends. Should a reduction in DSO in Australia be sustained, to counter this, potential pressure could be placed on suppliers to the sector and increase their overall receivables asset by way of growing DPO, impacted by tighter lending requirements by their bankers as confidence in the sector diminishes”.

Retail has to be monitored carefully even though globally, it shows the lowest DSO level compared to all other sectors. Retail’s DSO plummeted by -5 days on average last year. As the sector’s business model is dramatically evolving, it has strongly tightened up its overdraft facilities. This tightening might go upstream to affect the main supplying sectors by possibly forcing them into granting higher Days Payable Outstanding (DPO) to retailers. From a DSO perspective, this research points towards an interesting dynamic effecting the retail industry, one of the underperforming sectors in Australia.

Recent major insolvencies In addition, Euler Hermes’ Q1 2019 major insolvencies report,

DSO level and dispersion by country in 2018 140

135 25% of companies are paid after

122

25% of companies are paid before 108 109

Country average 96 86

83 66

80

61 56 57 59 59 55 54 53 53 50 51 52 52 52

67 64 65

71 73

58

40 37

35

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

40

44

38 39

54 55

43

43

31 30

China

Greece

Japan

India

Global average

Brazil

Chile

Poland

Belgium

Sweden

Russia

Australia

Germany

Netherlands

Sources: Bloomberg, Euler Hermes

12

31

36 36

91 92

23 20

Norway

Canada

23

Denmark

UK

U.S.

Switzerland

0

33

31

29

27 27 25 25

South Africa

20

38

77 78 79

Italy

48

66 68

77

84 86

Morocco

60

66 67

70

74 73

73

89

Turkey

62

72

72

113 113 105

97

Spain

80

100

France

Number of days

100

Saudi Arabia

120

Credit Management

which focused on companies with a turnover exceeding EUR50mn, indicates a high frequency of major insolvencies. Based on their financials, Euler Hermes calculates that these insolvent companies represented a combined turnover of EUR45.5bn (+4% compared to Q1 2019). This suggests a worsening severity of global insolvencies, which in turn, could have adverse effects of providers along the supply chains. Asia posted a significant increase (+20 cases), compared to -14 cases for Western Europe, -19 for Central and Eastern Europe. In terms of sectors, we are seeing most insolvency cases in Construction (60), Retail (56) and Agrifood (32).

Chris adds, “in our view, the upside trend in insolvencies will continue in 2019 (+6% y/y). This outlook reflects the universal reason, which is the softening of the global economy to a sluggish pace of growth.”

Euler Hermes expects economic growth to gradually become insufficient to sustain their production costs, (re)financing costs and structural challenges. De facto, the lowering demand is increasing the vulnerability of companies with high-fixed costs and firms with larger inventories or working capital requirements issues. At the same time, the end of easy financing is increasing the vulnerability of debt intensive sectors and more globally of most indebted companies.

Conclusion Euler Hermes remains cautious on sectors such as Retail, Construction and Services in Western Europe; Construction in Asia and Central and Eastern Europe and Retail in North America. These reflect a wide range of challenges (indebteness, input prices, overcapacity, digital disruption, cyclical exposure) and suggest more discrimination by risk managers.

*Chris Doubé MICM Australia and New Zealand CEO Euler Hermes www.eulerhermes.com

DSO and change in DSO by sector (20 sectors) 100

Electronics

90

Machinery Pharmaceuticals Construction

80

Technology

DSO (number of days, 2018)

70

Chemicals

Aerospace

Automotive GLOBAL

Global average (65 days)

Energy

60

Metals

Business services

Paper

Utilities

Household goods

Leisure goods Telecom

50

Transportation Agrifood

Other services

40

Retail

30

20

10

0

Dwindling DSO

-6

-5

-4

-3

Sources: Bloomberg, Euler Hermes

-2

Rising DSO

-1 0 1 Change in DSO (2018 vs 2017, in number of days)

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

2

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Credit Management

A new era of consumer credit data has arrived and more changes are yet to come

By Mike Laing*

Mike Laing

14

The retail credit industry achieved a major milestone earlier this year: more than 50% of consumer credit accounts are now being reported under the comprehensive credit reporting (CCR) framework.

Australian Retail Credit Association’s (ARCA) Credit Data Fact Base has been tracking progress of CCR for two years, and our most recent market report shows CCR reporting has grown from just 8% in March 2018, to 50% in March 2019.

That means 50% of all consumer credit accounts in Australia now have CCR data reported, with monthly repayment history information and updates.

The pace of participation in CCR is not about to slow down. Under the Principles of Reciprocity and Data Exchange (the industry rules that facilitate exchange of CCR information), credit providers must provide CCR data on at least 50% of their consumer credit accounts from the first day of participation.

After that, the credit provider has a 12 month “transition period” to start contributing CCR on their remaining accounts. Given many of the credit providers (including three of the major banks) currently reporting CCR have not yet passed that 12 month deadline,

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

we have a further 26% of accounts committed to being reported by the end of 2019. Add to that a number of new credit provider participants and all up, we’re predicting 80% of consumer credit accounts in Australia will have CCR data supplied by end of the year.

It’s an understatement to say that this progress has been welcomed by industry participants. However it is also worth emphasising that Government and regulators share the sentiment, realising that CCR data helps improve competition between lenders and the efficiency of lending processes, while also supporting responsible lending obligations.

With CCR well and truly underway in Australia, credit providers that have been sitting on the sidelines need to get into the CCR game or risk being left behind.

We have further work ahead in developing a mature CCR system. But looking through a wider lens, there is another significant development in consumer credit data taking shape on the horizon – Open Banking, or the Consumer Data Right (CDR).

The CDR Bill has not been passed but we know that government has made it a priority and industry is pushing ahead. Government’s

Credit Management

Credit providers’ CCR rollout timeline

SOURCE: ARCA Credit Data Fact Base (Vol 6), May 2019, Australian Retail Credit Association.

implementation timetable announced earlier this year started with product level data for transaction accounts being available from the 4 major banks (and any other ADI that opts in) from July this year. The timetable goes on to require individual customer data (and data about their accounts

and transactions) is required to first become available from February 2020.

The coverage of Open Banking in terms of product types and ADIs then expands over time, so that by July 2021 all products and ADIs must participate. At that time, any other

entity (e.g. a finance company) that holds relevant data and has become an Accredited Data Recipient must also make its product and customer data available.

This means that if the CDR Bill – assuming it is passed – aims to keep to that timetable, or even if ➤

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July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

15

Credit Management

industry opts to strive towards that initial timetable in the absence of the CDR legislation, then we can expect consumer credit data to be available within the next six months.

Virtually all stakeholders involved in the CDR discussion recognise Open Banking has the potential to empower consumers, and to create a market with more innovation and greater competition. We also see a clear case for Open Banking forming part of a strong and efficient credit risk and credit management framework.

For this reason, ARCA has proposed that industry should develop some standardised consents for high volume, sensitive and highly regulated activities such as responsible lending – we believe this would be good for both industry and consumers, and would encourage use and trust in the Open Banking regime.

There’s no denying we are at the start of a new era of data for Australia’s consumer credit industry.

Taking a step back, it’s remiss to talk about these huge changes to industry without acknowledging the consumer side of the consumer credit industry.

Uptake of CCR and the introduction of Open Banking create a new and pressing need for specific consumer education.

ARCA and our members recognised this in early 2018, as industry began CCR in earnest. Since then our industry-funded consumer education campaign, CreditSmart, has made a great impact on consumer awareness and understanding around credit reporting and credit health.

CreditSmart tracking research shows nearly 1 in 3 consumers are now aware of recent changes to credit reporting, compared to fewer than 1 in 5 before our education campaign kicked off. And awareness is highest among those with a real need to know, with 1 in 2 consumers who plan to make a significant purchase in the next 12 months knowing about the changes to credit reporting.

While there’s a long way to go

16

Awareness of CCR changes

SOURCE: YouGov Galaxy research conducted for ARCA in March 2018 and March 2019

Virtually all stakeholders involved in the CDR discussion recognise Open Banking has the potential to empower consumers, and to create a market with more innovation and greater competition. on the consumer education front, the recent CreditSmart survey shows real progress. From our perspective, we’ve also learned a lot through the CreditSmart initiative and we are anticipating our experience will help us overcome similar challenges we’re bound to face in educating customers on Open Banking. The lessons from CreditSmart are that educating consumers is a multi-year initiative, takes significant resources, will face competing messages, and most importantly, is best done collaboratively.

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

To that end, we’re pleased that our members have supported an ongoing commitment to the Creditsmart initiative and a widening of its scope to include education on credit health and Open Banking. With such significant changes to the consumer credit industry underway, it’s critical to bring consumers along on the journey. *Mike Laing Chief Executive Officer Australian Retail Credit Association Ph: 61 3 9863 7859 Email: mliang@arca.asn.au, www.arca.asn.au

Legislation Update

The case of the Dodo and the Phoenix

By Robyn Erskine and Adrian Hunter*

Robyn Erskine

Confused about the status of the announced insolvency reforms – well you are not alone!

With the dissolution of Parliament in the leadup to the May election, various pieces of legislation that had been sitting in Canberra for what seemed like forever fell to the parliamentary cutting room floor.

Some we expect will never return whereas others may either be reborn in their original form or adjusted to reflect the passing of time.

Readers will recall that during 2017 and 2018 we were reading and hearing about various initiatives that were aimed at deterring illegal Phoenix activity and non payment of tax and superannuation.

However knowing what became law and what did not is wildly confusing. Let’s look at what did not make it:

1) Illegal Phoenix Activity:

Adrian Hunter

The ‘Combating Illegal Phoenix Activity’ exposure draft which sought to introduce such measures as: —— Making directors personally liable for GST, WET and Luxury Car Tax liabilities as part of extended director penalty provisions; —— Disallow backdated director resignations; and —— Extend the penalties that apply to

those who promote tax avoidance schemes to capture advisers who assist phoenix operators.

2) Superannuation Guarantee (SG) Integrity Package This package was announced on 29 August 2017, and aimed to introduce criminal penalties for non payment of superannuation and if introduced was to allow the ATO to disclose to employees when their superannuation was not being paid by their employer.

3) Director Identification Number Schedule 2 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2018 sought to amend the Corporations Act to introduce a unique director identification number (“DIN”) for each director.

This legislation was to require all directors to confirm their identity and be assigned a unique identifier. The DIN was then to have been recorded against every company in which the individual was an officeholder to enable the tracing of inter-company director relationships and prevent fictitious identities being used to avoid detection where illegal or unethical activity was identified. ➤

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Legislation Update

On the balance of probabilities of all of the draft legislation that was before the parliament we think the reintroduction of the proposal to reduce the period of Bankruptcy from three years to one is the one that is the least likely to be re introduced.

4) Disclosure of non-payers of tax The ‘Transparency of Business Tax Debts’ was first announced in December 2017 and was warmly welcomed by the Credit Profession.

It advanced all the way to an Exposure Draft but never quite made it through to law. The intention of this initiative was to allow the Australian Taxation Office (ATO) to report to registered credit reporting agencies the tax debt information of businesses that failed to engage with the ATO to manage their taxation debts and where those debts exceeded $100,000. Initially the size of debt before disclosure was able to be made was only $10,000 however this was increased to $100,000 when it was ascertained that many businesses at any one point in time had tax debts over $10,000.

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5) One Year Bankruptcy The proposed Bankruptcy Amendment (Enterprise Incentives) Bill 2017 was to amend the Bankruptcy Act 1966 to reduce the default period of bankruptcy from three years to one year.

Sadly none of the above, despite having been announced with great fan fare, made it through parliament and therefore none made it into law.

Due to the election these initiatives have now fallen away. The question everyone is now asking is: “will the Morrison Government pick these ideas up and reintroduce the bills?”

Given the ongoing desire by the ATO to rein in the ever increasing amount of tax debt that is owed by the Australian businesses particularly those in the SME sector, we would hope that the legislative reforms associated with points 1) to 3) above

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

would soon make their way back into Parliament for approval. However the timing of the re-introduction of the legislation can only be guessed.

While, each of the above represents a significant step forward in both addressing poor director conduct and increasing tax recovery, none appear to be ‘headline’ grabbing for the Government and therefore may not be high on the government’s priorities.

The introduction of a one year bankruptcy was a particularly polarising topic. The AICM and ARITA both pointed out to government the potential for abuse if this initiative was adopted as it could lead to very poor credit behaviors. Surprisingly though at the same time however there were equally strong voices welcoming the reduction of bankruptcy to one year on the basis the current

Legislation Update

Australian bankruptcy regime was draconian when compared with other jurisdictions around the world and was seen as a deterrent for people wishing to start a business operation in Australia.

On the balance of probabilities of all of the draft legislation that was before the parliament we think the reintroduction of the proposal to reduce the period of Bankruptcy from three years to one is the one that is the least likely to be re introduced.

Given it was closely tied to the Innovation Agenda championed

by Former Prime Minister Malcolm Turnbull it is something that can quite easily be left behind with few to mourn its passing.

There was one piece of good

news though as one initiative did make it through and that was the Automatic Director liability for Superannuation.

From 1 April 2019 Directors will be automatically liable for any unreported and unpaid superannuation once the lodgement due date for an SGC Statement has passed. Prior to the passing of this legislation, directors only became automatically liable for unreported and unpaid superannuation three (3) months after the SGC Statement was due. This three month ‘grace’ period remains applicable to unpaid and unreported PAYG. The one-month SGC and threemonth PAYG director liabilities are known as Lockdown obligations.

So is insolvency law reform a Dodo or a Phoenix?

Ultimately which of the above insolvency reforms will be embraced and which will fall away is unknown.

Some will go the way of the dodo and disappear forever others will rise from the ashes like the mythical phoenix and be reintroduced but which one is which is anyone’s guess. Credit professionals will just need to watch this space!

*Both Robyn Erskine MICM and Adrian Hunter MICM are Registered Liquidators within the practice of Brooke Bird – Restructuring, Turnaround and Insolvency Specialists.

Ph: 03 9882 6666 Email: info@brookebird.com.au www.brookebird.com.au

Kemps Petersons help Australian businesses stay in business w

Our experienced team recovers 85% of debt without taking legal action.

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July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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Insolvency

Liquidator replacement

– when to shoot the messenger!

By Andrew Spring* When is it the right time to consider the replacement of a liquidator (or administrator)?

Before answering that, perhaps we first need to consider the relationship that exists between the credit and insolvency communities, which like step-siblings raised in different households, still share a lot of the same DNA. In the background (e.g. appointment types, investigation programs and compliance red tape as long as Mr Fantastic’s arm) is a commonality between creditors and liquidators that is often overlooked, underappreciated or misconstrued.

We both want transparency … and to get paid. Unfortunately, in some cases when dealing with our customers, despite our best efforts at utilising our processes and systems, we get caught out with a “bad debt”. It just so happens that each one of those bad debt scenarios for creditors is only the beginning of the story for the liquidator. Or in other words, like

Andrew Spring

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‘grandpa’s BBQ sausages”’ charcoaled beyond recognition, timing makes the relationship difficult to swallow. And it is worth noting that liquidators have, on occasion, been caught with bad debts as well.

In the majority of instances, both creditors and liquidators have had no hand in the demise of the corporation they are exposed to. Creditors have undertaken due diligence into the potential customer’s business and its management in order to determine the credit worthiness, as well as continued monitoring of the relationship to the extent permitted within the boundaries of commercial relationships and the law. Liquidators, similarly, have performed an initial assessment of the individuals who have sought their assistance, as well as an analysis of the financial circumstances of the company in question – within the regulatory guidelines that bind them. In both instances, the parties are rarely paid for this work, and the consequence of getting the assessment wrong can lead to disaster.

Likewise, once initiated, the relationship with the debtor is a difficult one to exit. A creditor has often scaled their business to meet the debtors demand for their goods or services and therefore would be required to find an alternative purchaser should the relationship be exited. Once appointed, the liquidator is unable to walk away from that appointment without a valid reason (such as ill health), and if required must find an alternate to accept the role in their stead.

Similarities aside, there exists the ability for creditors to make a determination on the continued appointment of a liquidator.

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Commonly, the initial stages of a debtor-initiated liquidation process will catch a creditor by surprise and whilst most sophisticated creditors understand the nature of the business lifecycle within the prevailing market conditions – i.e. we can’t control it all – it is never news that is cause for celebration. Indeed, anecdotally I have even heard that there may be an emotionally charged profanity or two directed at certain elements within the failed relationship. It is therefore unsurprising that there is an element of animosity at the initiation of the relationship between the creditor and the liquidator. After all, in a business sense, creditors have recognised that their relationship has soured and the liquidator is hopeful about the beginning of a new relationship.

Unfortunately, the circumstances and the regulatory requirements often mean that like trying to order anything from a Parisian waiter, there is simply a breakdown in effective communication. Therefore the question remains, when is it appropriate to replace a liquidator?

Like all elements within the role of a credit professional, it could be argued that the decision is based on a mixture of investigative knowhow and intuitive genius. But, equally, it is just as good to have a bit of a checklist to fall back on. Below are some observations on when it may be appropriate to consider a replacement.

Do we have the votes?

In order to replace an incumbent liquidator, creditors must have a majority in number and value voting in favour of the motion at a duly convened meeting of creditors.

Insolvency

A meeting can be convened at the request of creditors: zz Within 20 business days of the liquidator’s appointment to a Creditors’ Voluntary Liquidation, if the request is from unrelated creditor/s representing at least 5% of the value of creditors. zz At any time if: a. The creditor/s represent at least 25% of total creditors. b. The creditor/s represent 10 to 25% of total creditors and they provide security for the cost of holding the meeting.

Have we raised our concerns with the liquidator?

As mentioned above, there is a clear timing mismatch. As such, it may take the liquidator a little longer to understand the full circumstances of the various relationships, including those areas of concern that are more apparent to creditors who have had a longer period of time to assess the behaviours of the key stakeholders within the business. Initiating communication verbally and/or in writing can be an invaluable resource to building a positive relationship with a liquidator.

Is the liquidator being transparent?

If the goal is to provide transparency in relation to the affairs of the debtor prior to the insolvency, has the liquidator been transparent in providing a response to any queries that you have raised as a creditor, bearing in mind the requirements of the law? [NB: Creditors do not have an automatic right to request the books and records of the debtor]

Is the “proof in the pudding”?

Is the output and quality of work consistent with the level of fees that are being applied to the liquidation process? How do you know? If there is doubt, then consider a conversation with fellow creditors, legal advisers or an alternate liquidator. If the doubt is shared, creditors can seek the

“In order to replace an incumbent liquidator, creditors must have a majority in number and value voting in favour of the motion at a duly convened meeting of creditors.” appointment of a Reviewing Liquidator (costs borne by the debtor) by: i. Applying to ASIC. ii. Applying to court. iii. Passing a resolution proposed by the liquidator at a meeting or by correspondence. iv. One or more creditors without a proposal, provided the liquidator agrees with the appointment [NB: costs to be borne by the creditor in this situation]

Is funding required to undertake further investigation or actions?

If the liquation is without funds, creditors should consider the appetite to fund the work of a replacement liquidator or support a proposal from an external funder. In most instances, the claims brought by liquidators are complex and contested. Liquidators are unlikely to be able to achieve their objective without appropriate levels of funding.

Is the liquidator independent?

There is a lot of focus by regulators on the “perception” of independence.

Rightly so, as creditors must be confident in the transparency of the process. However, it is important to

note that the majority of liquidations are initiated by debtors, saving creditors the cost of enforcement.

Given the available options for creditors to scrutinise the work of the incumbent liquidator, creditors should consider the merits of the incumbent liquidator, their credentials and previous experience before jumping to any conclusion on bias. It is unlikely that a liquidator will expose their livelihood by pushing the boundaries of their independence for a debtor.

In summary, like all business decisions, the decision to replace an incumbent liquidator should be balanced and not made emotionally.

Perhaps the short-circuit for the credit professional and insolvency professional is to begin the relationship before the arrival of the debtor, so a positive relationship between stepsiblings can be developed. As always, Insolvency Intel for Credit Managers, powered by Jirsch Sutherland, is available to AICM members to act as a sounding board on the practicalities faced by creditors in all types of insolvency appointments. *Andrew Spring MICM Partner, Jirsch Sutherland Ph: 1300 265 753

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Insolvency

Welcome to the Island

By Clare Venema* Are the time tested methods of insolvency practice still relevant, or will the Digital Natives vote you off the island?

The Millennial generation (born between 1982-2002) is the fastest growing segment of the workforce according to recent studies.

Commonly characterised as “Digital Natives” Millennials are known to demonstrate comfort and facility with digital technology, with a digital presence so deeply entrenched with daily life, that 83% of the cohort admitted to sleeping with their smartphones in a recent study.1 The art of good insolvency practice is a matter of contention among scholars, and a mismatch between some theories and the current position of the law proves to be oppositional. However, there are core values that underpin good insolvency practice that are timetested in their effectiveness, providing a common ground among opposing theories. Specifically, efficiency, expertise, accountability and fairness are all elements of good insolvency practice.

As the infiltration of the Digital Native population into the workforce is at its genesis, it is not yet known if the “Me” generation will carry on these values, or perhaps introduce values of their own. In short, the infiltration of Digital Natives into insolvency practice will likely change the face of practice management, however is this a welcomed change?

The tribe has spoken?

Clare Venema

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Generational diversity has become the norm in insolvency practice, with organisational behaviours changing to adapt to each generation.

Managers are having to familiarise

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

themselves with the work ethic of the emerging cohort, which is unique when compared to their generational predecessors. The Trophy Kids have grown up, armed with technological savviness unlike any cohort who have come before them. This aptitude for using technology as a tool and a platform has branded this group as “Digital Natives”.

The Digital Native is distinguishable from the “Digital Immigrant”, which is a term coined

by Mark Prensky in 2001 to describe anyone who grew up prior to the digital age.2 In the Digital Native population, there is a much celebrated sub-group comprising of those who witnessed the digital era develop, who didn’t grow up with the digital tools, but witnessed their invention and evolution.3 As such, it is often thought that this sub-category of Millennials represents an idealistic class of “Digital Colonialists”. Specifically, unlike the tech-dependant younger population of Millennials, Digital Colonists have learnt the adaptive skills of digital assimilation and are not wholly reliant on technology as a problem-solving mechanism.

The different characteristics of the various cohorts and sub-cohorts applies to insolvency practice, when considering the fact that many firms boast of being a “paperless” office space. The paperless office is an emerging trend, where the use of paper is completely eliminated or reduced by converting documents into a digital form, otherwise known as “Digitisation”. As such, the question of whether or not the tribe has

Insolvency

“Commonly characterised as “Digital Natives” Millennials are known to demonstrate comfort and facility with digital technology, with a digital presence so deeply entrenched with daily life, that 83% of the cohort admitted to sleeping with their smartphones in a recent study.” spoken, and traditional insolvency practice has become irrelevant is no longer the issue. It is the island itself that is shifting, and the question now is whether or not its former inhabitants can survive?

There are numerous considerations at play when answering this question.

Firstly, while Millennials are assumed to be tech-savvy, there are other skill sets required to meet a competent standard of digital file management, which are not universal among the cohort. It is the ability to comprehend and apply, which is a skill seen to be lacking in practical studies of Millennials, demonstrating “little understanding of what goes on behind their screens (and couldn’t care less)”.4 It could even be argued, that the Digital Immigrant/Colonist population has the upper-hand when it comes to digitised file management, as they have learnt to adapt to

revolutionising technologies, which at their genesis were not very userfriendly.

The use of internet search engines as a research method is a further consideration. Studies have indicated that Millennials lack resourcefulness and applied skills when it comes to database research.5 It is the quality of digital wisdom that lends to expedient and effective research, which is fostered from the constant exposure to technology. In short, preMillennials who lack tech-savviness will eventually be assimilated to tech-culture in varying degrees. The question that remains, is whether the Natives, Immigrants and Colonialists can co-exist harmoniously?

Mind the Gap The Millennial population is different from other generational cohorts based upon opposing behavioural

characteristics, value systems and preferences.

Period events and trends often leave a particularly deep impact on young adults because they are still developing their core values. It is not yet known which formative experiences Millennials will carry forward throughout their life-cycle.

From a value-based perspective on workplace ideals, Millennials have exhibited preferences towards producing meaningful work, receiving immediate feedback, and achievement recognition.

Unlike their predecessors, Millennials are often characterised as narcissistic and impatient, which is evident in the use of social media as a platform for self-promotion and gratification gained from peer approval. However, it should be noted that on the flipside of these undesirable traits, Millennials display ➤

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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Insolvency

propensity towards tolerance and consideration to minorities. With respect to the workplace, the majority of research concludes that the Millennials are unique to their generational predecessors, adopting a preference towards the worklife balance trend and a focus on individual advancement.

As previously mentioned, Millennials have been maligned by the “Trophy Kids” title, used to describe the trend of mere participation in sporting activities gaining an award.

The general ideals associated with the stigma is demonstrated in the workplace ideals of Millennials. For instance, studies have indicated a tendency to switch jobs on a frequent basis, particularly if there is slow mobility towards career progression within a firm’s hierarchy.

Some researchers even proclaim that the characteristics of Millennials may complicate and potentially disrupt workplace interactions with members of other generations, thus negatively affecting co-workers and organisational processes.

However, the vilification of Millennials should be avoided, as they also bring some positive influences to the workplace such as a tolerance of diversity and propensity towards teamwork. It is noted however, that the opposing traits of Millennials can make their workplace capabilities difficult to predict. The socialisation of Millennials into the firm culture is highly dependent upon the tolerance and acceptance of their peers through ongoing interactional communication processes among members, otherwise known as “membership negotiation”.6

As such, insolvency “old-timers” should try to not be dissuaded by the overly confident and inappropriately demanding appearance of junior practitioners, rather than simply despairing, “Who do they think they are?”7 Specifically, Millennials entering insolvency practice may bring a welcomed change to firm culture, such as an emphasis on a work-life balance and open communication.

However, based on the conditioning of the Trophy Kid era, frequent praise has led Millennials to expect evaluation of their work to be based on the outcomes they produce, not based on the age, experience, or tenure of the person who produced it.8 Ultimately, Millennials must heed the hierarchical nature of firm structure and demonstrate a willingness to listen and display respect to senior members of staff.

The changing face of insolvency From its genesis, insolvency practice hinges on an extensive diversity of interests, and is not merely confined to creditor wealth maximisation or a collectivised debt collection device. Namely, practitioners must consider the casualties of commercial dependants, diagnosing and treating imminent insolvency where possible, and commanding respect and observance to protocols, however also allowing for sufficient flexibility to cope with change. It remains, that there is no simple solution to balancing the multiple interests in insolvency practice.9 Can the emerging cohort of Digital Natives cope with such demanding, competing interests?

This remains to be seen. The

“With respect to the workplace, the majority of research concludes that the Millennials are unique to their generational predecessors, adopting a preference towards the work-life balance trend and a focus on individual advancement.”

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CREDIT MANAGEMENT IN AUSTRALIA • July 2019

future of good insolvency practice hinges on the cohort’s membership negotiation process when entering into practice, which will hopefully lead to information sharing and mutually enhancing relationships with their predecessors.

On a multigenerational basis, practitioners are becoming more proficient with digitised file management and research methods through the constant exposure to technology. It follows, that the gap between the technological skills of a Digital Native and Digital Immigrant is slowly reducing through the digital assimilation process. In short, men resemble the time more than their fathers.

*Clare Venema File Accountant Worrells Solvency and Forensic Accountants, Adelaide Email: Clare.venema@worrells.net.au Ph: 08 8214 0513 Mob: 0435 636 969

FOOTNOTES: 1

Lauren Keating, Survey Finds Most People Check their Smartphones before Getting out of Bed in the Morning, (2 March 2017), Tech Times, https://www.techtimes.com/ articles/199967/20170302/survey-findspeople-check-smartphones-beforegetting-out-bed.htm

2

Mark Prensky, “On the Horizon”, (2001), 9, MCB University Press, pp 1-6.

3

Sharon Stoerger, The Digital Melting Pot: Bridging the Digital Native-Immigrant Divide, (6 July 2009), First Mind, https:// uncommonculture.org/ojs/index.php/fm/ article/view/2474/2243#17a

4

George Lorenzo & Charles Dziuban, “Ensuring the Net Generation is Net Savvy”, (2006), 2, ELI White Paper Series, p.8.

5

Sharon Stoerger, The Digital Melting Pot: Bridging the Digital Native-Immigrant Divide, (6 July 2009), First Mind.

6

Karen K. Myers, “Millennials in the Workplace: A Communication Perspective on Millennials’ Organisational Relationships and Performance”, (2010), 25, Journal of Business and Psychology, 2, pp 225-238.

7

Ibid.

8

Ibid.

9

Vanessa Finch & David Milman, Corporate Insolvency Law: Perspectives and Principles, (Cambridge University Press, 3rd Ed, 2017), pp 28-34.

Insolvency

Fair pay for fair work – registered liquidators’ claims for remuneration

By Thea Eszenyi*

Thea Eszenyi

Registered liquidators (RLs) perform a vital role in recovering company assets to maximise dividends to creditors of failed companies. They also help ASIC identify, act on and punish misconduct, and are entitled to be fairly paid for this important work.

RLs are usually paid from company assets unless another party has agreed to meet their costs, for example under an indemnity arrangement. If there are no funds available in the external administration, the RL does not get paid.

The Corporations Act 2001 states that RLs should be paid before unsecured creditors, reducing the funds available to pay dividends to creditors. Creditors have a primary role in approving RL remuneration – either at a meeting of creditors or by the statutory mechanism that permits a proposal to be passed by creditors without a meeting.

However, if creditors do not approve remuneration, the RL may incur additional costs seeking court approval for remuneration, which also takes priority over creditors.

It is important that creditors actively participate in creditor meetings and remuneration approval processes. When creditors exercise their right to approve fair remuneration, they can positively influence how RLs claim remuneration and report to creditors. In turn, this will help build trust and confidence in the Australian insolvency regime.

This article outlines the RL’s

entitlement to remuneration and provides practical tips to help creditors assess the reasonableness of the remuneration claimed.

Entitlement to remuneration RLs are entitled to reasonable remuneration for necessary work that is properly performed, and must establish this entitlement accordingly.

The mere fact that work is done is not enough. It must be necessary work undertaken as part of the RL’s duties and functions. Further, reasonableness is not determined solely by the length of time spent performing tasks and the RL’s hourly rates.

Recent court decisions have confirmed that remuneration claimed should be proportional to the external administration, considering factors like: zz the quality and complexity of the work zz the value and nature of the asset or property dealt with zz the importance of the task and the context in which it is performed zz the benefit to be obtained from the work.

For example, an RL claiming remuneration for $15,000 for asset realisations might appear high if the only asset is cash of $25,000 held in the company’s bank account. In this instance, creditors might need further information about these costs to assess whether the remuneration claimed is reasonable.

Although proportionality is a relevant consideration, an RL can ➤

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Insolvency

claim remuneration for work they are required to carry out even though the work will not increase funds available in the administration. An example is the statutory duty to investigate and report potential breaches of the law to ASIC. This is something the RL must do regardless of the available funds.

Further, an RL who acts reasonably in pursuing recoveries can be paid for this work even though they may ultimately fail in making any recoveries.

RLs are often hindered by poor or no company records, and the lack of cooperation by directors, company advisers and other parties.

This can mean they must spend additional effort and time to do the most basic tasks. It is therefore even more important that the RL clearly explains why they performed certain tasks and workstreams (which are the major areas of work such as pursuing a particular legal action, large asset recovery actions, trading on, selling a business, etc), and why creditors (particularly those who are unfamiliar with these practical and legal difficulties) should approve the time taken on those tasks.

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With this background, how then do you consider the reasonableness of the remuneration claimed?

Factors for you to consider when approving a claim for renumeration RLs must provide creditors with a remuneration report before remuneration can be approved, either at a meeting or using the process to pass a proposal without a meeting. Note that remuneration can only be approved via a proposal without a meeting if the external administrator was appointed on or after 1 September 2017 – otherwise a meeting must be convened.

The remuneration report will usually be provided with the RL’s report to creditors, setting out the circumstances of the company and how the RL has dealt with it. Both the report to creditors and the remuneration report can be detailed and complex. Also, the remuneration claimed can sometimes appear large and often includes a claim for ‘future remuneration’, for work yet to be completed.

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

The report to creditors and the remuneration report need to be read together. They should explain: zz what work has been done zz what has been achieved zz the cost of that work zz the future milestones.

Standard remuneration reporting templates that simply list tasks performed and the RL’s hourly rates may not provide enough information to assess whether the tasks listed were necessary, properly performed, and that the remuneration claimed is reasonable.

Claims for future remuneration (even if the amount claimed is capped) raise concerns for creditors, particularly where the amount claimed is large and/or the claim is made early in an administration. The information sent to creditors should make it clear what work is to be performed and explain why it is appropriate for creditors to consider approving prospective remuneration.

When considering information in the report to creditors and the remuneration report, you might ask yourself:

Insolvency

Question

Considerations

Has the remuneration claim data been reviewed to ensure it is correct?

Before sending the remuneration report to creditors, has the RL said that they reviewed the work-in-progress entries to ensure they are only for necessary tasks, properly performed?

If not, why not?

If yes, has the RL confirmed they have written off all time recorded for tasks that were not necessary or not properly performed?

Do I have enough information to decide whether the remuneration claim is reasonable?

Does the report to creditors, or the remuneration report, provide enough information about the tasks performed and key workstreams (e.g. debt collection, other asset sales, recovery actions, breakdown of time investigating different aspects of the company’s affairs)?

Was I provided with a generic template document?

If a template remuneration report is used, has it been tailored for the administration?

Does the information provided allow you to assess: zz why the work was performed? zz whether it was necessary to undertake this work? zz whether the time spent on those different workstreams was reasonable?

Are the tasks performed and workstreams consistent with other information provided by the RL about the company’s affairs and the work or investigations that needed to be performed?

If not, why has the RL claimed remuneration for these tasks?

Can I tell from the reports that all the work undertaken was necessary?

If the remuneration report includes tasks or workstreams that appear unnecessary (e.g. debt collection costs when the liquidator hasn’t reported any debts are owing to the company), why has the RL claimed remuneration for this work?

Does it appear that the work was done by staff at appropriate levels?

Was a large portion of work completed by very senior staff?

Are the costs for each task or workstream reasonable?

Does the cost of work performed for each task or workstream appear reasonable given the nature and complexity of the work?

Did the tasks require senior staff expertise or could the work have been completed by junior staff at a lower cost?

If not, what additional information do you need to assess reasonableness?

What about claims for time spent on investigations that may appear high?

If remuneration is claimed for investigations, is there enough information to satisfy you that the investigations have been conducted?

What are administration tasks?

Is there a significant amount of time allocated to administration?

What is this claim for future remuneration?

If remuneration for future work is claimed, does the claim for future remuneration set out what work is to be performed and why, and the milestones that will be achieved?

Has the result of these investigations been adequately reported to allow you to assess if the remuneration claimed appears reasonable?

If so, are the administrative tasks adequately explained? If not, what tasks does this include?

Does the claim for future remuneration include a cap? If not, why not?

Have I already approved remuneration for the tasks claimed under future remuneration?

If remuneration is claimed for future work, have creditors already approved remuneration for this work?

Has remuneration been approved previously?

If yes, is the total remuneration claimed (including the amount now claimed) reasonable given the nature and size of the administration?

If so, why is the liquidator requesting approval again?

Have they used the earlier approval to draw remuneration for other tasks?

If the previous remuneration approval included approval for future remuneration: zz have the tasks performed and the time spent been adequately explained? Has the work performed been reconciled against the tasks that were said to be performed under this previous approval?

If not, why not and what are the reasons for the difference? zz has the current remuneration claim been reconciled with the previous future remuneration claim?

If not, why not? zz does the information provided justify the claim for additional remuneration? zz have the milestones given when the remuneration was approved been achieved?

If not, does the report explain why not?

It might be that changing circumstances have resulted in the RL undertaking other tasks and workstreams than those initially anticipated. If so, the reasons for this should be set out in the information the RL provides.

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Insolvency

Importantly, if you need further information to assess whether the remuneration is reasonable, you have the statutory right to ask the RL to provide it before you decide whether to approve the remuneration. This might include information about: zz why tasks were performed zz why tasks continued to be performed after it had become apparent no future benefit would be achieved by continuing with the work zz the cost of that work.

You might request access to the workin-progress report. This report should include details of who performed the tasks, the time taken, and explanations of what work was done.

You might also consider asking the RL to table your request for further information, and the RL’s response, at the creditors’ meeting (if that is where the remuneration claim will be determined).

If you are not satisfied with the information provided by the RL (including their response to your

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requests for further information), you can: zz vote against the remuneration resolution at the meeting zz respond by objecting to the proposal being passed without a creditors’ meeting being convened.

It is important that AICM members who are creditors, or act for them, actively participate in the remuneration approval process considering that an external administrator is entitled to fair pay for fair work. Exercising creditors’ rights to approve fair pay will promote best practice in remuneration claiming and reporting.

Conclusion Remember, once approved, reasonable remuneration for necessary work that is properly performed by RLs is a priority payment from the assets of a company.

Before payment of this remuneration, creditors or the court must validly approve this remuneration. To approve

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

remuneration, the RL must provide you, as creditors of the company in external administration, with the information you need to decide whether that remuneration is reasonable and necessary. Therefore, your feedback to RLs about the information you need will help them to provide the necessary information to all creditors, as well as to creditors in future administrations.

Remuneration in an external administration can have a significant impact on the funds available for distribution to creditors. We encourage you to attend creditor meetings or vote where there is a proposal for a resolution without a meeting where remuneration approval is sought.

Only by actively participating can you influence the behaviour of RLs and have some control over the remuneration charged. *Thea Eszenyi Senior Executive Leader, Insolvency Practitioners, Australian Securities and Investments Commission Ph: 03 9280 4401, Mob: 0411 514 373 Email: thea.eszenyi@asic.gov.au

Data and Technology

AML regulation is the gift that keeps on giving to the credit sector if the opportunity is seized

By David Langeveldt*

David Langeveldt

Phase two of the Anti-Money Laundering and Counter Financing of Terrorism Act, marked the beginning of a new era in AML history. The industry responded with a surge of new AML technology solutions, designed for compliance, yet conveniently tailored towards the credit management sector, providing credit professionals with a golden opportunity.

How was this perfect partnership formed between an unlikely duo?

AML legislation and the credit industry have common interests.

Both parties depend on the robustness of customer duediligence (CDD) protocols to aid them in their decision-making.

As a consequence, both require access to reliable and trustworthy databases holding identity details at both national and international scales. Lastly, both need an adequate method of confirming the authenticity of the person providing the information.

Digitalisation of the AML process Advancements in AML-technology has flung open doors of opportunity, digital channels now pave the way to trustworthy and reliable electronic databases, and a competitive market presents reporting entities with a variety of solutions. Credit professionals now have the means to perform deeper data dives; rigorous background checks and examinations of an individual’s credentials, and; have better capabilities to track individuals.

Technology in the palm of your hand, literally Remote-onboarding technology (RO) changed everything – for businesses and customers alike.

Affected businesses up until recently, have not had the peace of mind that the customer is in fact who they are claiming to be and now, they no longer have to feel the burn of AML regulations in their wallet to get this security. ➤

A more competitive market is beneficial to the consumer; competition drives evolution.

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Data and Technology

Advancements in AML-technology has flung open doors of opportunity, digital channels now pave the way to trustworthy and reliable electronic databases, and a competitive market presents reporting entities with a variety of solutions.

The digitalisation of due diligence brought the freedom to onboard new clients, no matter where they are in the world. For customers, due diligence procedures, once an inconvenience, is now a pleasurable, somewhat entertaining, experience. RO is already a standard part of the procedure in many businesses, and on the trajectory to becoming the golden-standard.

Biometric authentication Just as there are many roads to Rome, many programming methods can build a digital ID system. However, different systems do not all lead to the same neighbourhood; of the available technologies, biometric technology reigns supreme.

Biometric authentication – bio meaning life, and metrics meaning measurement – is a method of identifying people using measurable characteristics of the human body.

The concept is based on the fact – yes, fact – that we are all different.

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Identity authentication systems ask the question who are you?

Biometric authentication systems also ask, are you whom you claim to be?

Facial recognition systems cover both as the person requiring authentication has to be present during the process, minimising the opportunity for identity fraud. From an AMLcompliance standpoint, biometrics provide a significant advantage as both questions are mandatory for CDD. Biometric verification work by prompting the user to take a short video of themselves; filmed by their selfie camera; directed by audio prompts; written and produced by biometric technology specialists. Biometric analysis of facial measurements from extracted images in the provided identity document determines whether the images match, to a high degree of accuracy, and the user’s identity is either authenticated or rejected.

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Fake and tampered IDs not accepted thanks to fraudulent document detection Phase two brought more than facial recognition technology; it prompted the development of fraudulent ID detective tools with recognition better trained than the human, in the hands of consumers. Document checking now incorporates a multistep anti-fraudulent framework and uses the results from all to make the final decision, providing the final touch to a sound verification system and relieving the element of human error from the document checking process.

As consumers expectations increase, OCR information capture is becoming a nonnegotiable Optical Character Recognition technology (OCR) is designed to provide an exceptional on-boarding experience and reduce the

Data and Technology

on-boarding drop off for your customers. OCR technology scans documents for required information, and, once detected, extracts and places it in the relevant data fields.

OCR plays an essential role in the identity verification procedure by lifting the burden from the customer, eliminating human error, and ensuring that data is accurate before being sent for verification checks.

The scope of the new market, delving into the range of choices The new suite of AML-technology empowers affected-businesses, putting consumers in charge, which changed the lay of the market’s landscape. A more competitive market is beneficial to the consumer; competition drives evolution. The co-evolutionary race between, all striving to release next revolutionising AML-solution tool,

drives product prices down, quality up, and options out.

The market offers a variety of services and tools, reportingbusinesses can now control how involved – or how little – they want to be in the CDD compliance procedure.

By and large, your options will fall within one of these categories of tools and solutions. zz Develop a custom and fully integrated on-boarding solution.

These solutions are the ultimate in customer experience, compliance and business efficiency. Tailor the capture of information to your needs and seamlessly integrate the feedback of these details into your current processes. Harness the power of tried and tested technology with the custom look of your brand, providing the

most sophisticated and effortless experience for your customers. zz Using an in-house solution.

Customer-centric on-boarding tools enable you to maintain control of the procedure, and minimise the money and time spent on administration. zz Outsource the entire AML process. Outsourcing the entire CDD process to a third party company may be an attractive option but can be costly, detrimental to your relationship with your customer, and less efficient than using an in-house solution. Platforms that identify whom you need to verify and store the appropriate records. *David Langeveldt Chief Technology Officer, OriginID Ph: +64 800 555 219 www.originid.co.nz

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Data and Technology

Automating the collections process Reducing working capital to accelerate growth

By Eric Maisonhaute*

In recent years, the Working Capital Requirement (WCR) of companies appear to have stabilised throughout the world, despite an increase in Days Sales Outstanding (DSO) in 2017. In Australia, several studies1 have shown that while Days Working Capital (DWC) has slightly decreased in 2018, it has remained in line with the longterm trend that the number of days it takes to convert sales into cash has increased. By improving their billing and collections processes, companies can improve their Working Capital (WC) and, as a result, free up cash to finance their growth.

What are the current issues related to working capital management?

Eric Maisonhaute

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To finance their need for WC, businesses can use bank loans and benefit from current interest rates that are near historic lows. Nevertheless, as banks are subject to financial ratios, they have no choice but to be more than cautious, limiting access to corporate credit, particularly for small medium businesses (SMBs)2.

The spread of interest rates on small business loans relative to the cash rate has remained persistently high since the 2008 global financial crisis.

Additionally, by soliciting a loan to finance their WCR, companies are deteriorating their financial balance while at the same time limiting the borrowing capacity they need for

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

their growth. In this context, the issue of financing the WCR remains crucial, especially given that in Australia, late payments are a recurring subject.

A 2017 survey conducted by the Office of the Ombudsman found Australia to be a global laggard on payment times, with invoices paid on average 26.4 days late.

In November 2018, the Australian small business and family enterprise ombudsman (ASBFEO) announced that it would conduct a new review of the payment behaviours3 and, in parallel, Prime Minister Scott Morrison announced that the Australian government will be “taking action to ensure small businesses are not being used as a bank.” The reality is that many companies continue to pay their invoices late because they are themselves being paid late by their customers. The lack of focus on improving collection processes compounds an uncontrolled increase in the WCR of these companies, which limits their available scope for growth and viability in the long run.

What actions can businesses perform to better control their WCR? Improving WCR is a key issue that affects most departments within a company. It requires effective control of all economic processes, inventory management, supplier credits and customer payment/

Data and Technology

settlement periods, otherwise known as Days Sales Outstanding (DSO).

It’s important to note that efforts to manage DSO cannot be strictly limited to the collections process.

A customer who pays late is often an indicator of errors or inefficiencies in the order management process, goods or services delivery, billing, and the invoice delivery process. The ability to minimise DSO results from an efficient and seamless order-tocash (O2C) process, which starts well before the invoice due date.

When drafting the terms and conditions it is important to take into account factors such as Incoterms, title-retention clauses, payment terms and methods, as well as managing payment delays and late fees. Customer credit approval and monitoring are also very important in the O2C process. The role of the credit manager is also essential, as credit managers will assume the role of arbitrators to secure revenue while preserving customer relationships.

An invoice paid on time is also the result of good customer relationship and an effective errorfree order management process.

The coordination of all departments involved in the O2C process is key to ensuring consistency of process throughout the company.

Next comes the billing process.

Billing in accordance with negotiated contractual terms is a prerequisite for effective accounts receivable (AR) management. Factors such as invoice delivery method (e.g., paper, email, via a portal, etc.), format (e.g., PDF, signed or not), sending frequency, reference to a specific order, invoice details by site or by business unit, etc., must correspond precisely to the expectations of each customer to ensure negotiated deadlines are met. The more a company follows the billing constraints required by its customers, the greater its chances of seeing its payment deadlines met.

However, what may seem simple at first may be much more complex in ➤

When drafting the terms and conditions it is important to take into account factors such as Incoterms, title-retention clauses, payment terms and methods, as well as managing payment delays and late fees.

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Data and Technology

terms of the different billing methods and regulatory requirements (e.g., paper, PDF signed, EDI, government platforms, web portals, etc.). The complexity is multiplied when the demands of hundreds, even thousands of customers must be taken into account.

That being said, business process automation solutions provide efficient customer order processing and support improved customer relationship. They enable customised and automated invoice generation to respond to formal customer requests and regulatory constraints with reduced labour activities.

Is debt collection the next step?

Once the invoice generation process has been revamped, the company must focus on its debt collection process, which requires collaboration between various departments. The collections process must be part of a company’s business strategy of improving its ability to control its cash generation. Efficient collections management requires planning and a systematic approach.

As previously mentioned, a late invoice is often a symptom of a weakness, whether it’s related to the goods or services themselves or to the ordering and/or billing process. The earlier these problems are identified, the quicker they can be corrected and their impact on invoice payment minimised. It is therefore crucial not to wait until payment is due to communicate with one’s customer and give them the possibility of raising an eventual problem. This task can be managed by different departments within the company (e.g., sales, technical or logistics

teams, etc.). It is nonetheless good practice to capture the dissatisfaction of customers as part of the collections management process. The first step in the process comes even before the payment deadline in various forms (e.g., account statements, advanced reminders, pre-collection calls, etc.).

Collections and customer relationship management are thereby linked for the benefit of all stakeholders.

In general, it is important to look at a customer and its payment behaviour in order to adapt the collections process accordingly.

For example, some customers may wait until they are reminded several times before paying. Additionally, payment behaviour may also depend on geography, industry sector, goods or services purchased, etc. The frequency and the timing must also be adjusted accordingly.

Finally, the management of a company’s DSO, especially for multinationals, is particularly challenging as it requires the standardisation of procedures and processes in all subsidiaries and high quality of intersubsidiary communication. Credit managers confronted with these issues must understand not only the difficulties involved, but also the implications for the company’s financial performance.

Businesses must put in place appropriate means, in terms of both systems and processes, to accelerate the invoice to cash process while maintaining customer satisfaction. As part of this approach, centralised management and internal collaboration between different departments (e.g., credit managers, accountants, sales, etc.) and externally with customers is essential. However,

this step is frequently neglected, with a surprisingly small number of companies making use of software solutions to manage their receivables.

An approach facilitated by the use of an automated collections management solution Beyond a certain invoice volume, it becomes inefficient to rely on Excel or hand-written notes to manage the collections process. Implementing specialised software solutions can optimise the entire collections process.

An automated collections management solution requires businesses to document and evaluate their collections policies. It also encourages them to analyse their customer base to determine similar groups in terms of risk levels or specific characteristics (e.g., payment habits, credit risks, sales relationships, etc.). The definition of a granular communication and collections strategy is essential to meet the billing needs of customers. An effective solution ensures that the defined strategy is followed without the risk of error, oversight, or overreliance on individual performance.

However, an effective collections management solution does not circumvent traditional AR teams. On the contrary, it capitalises on their skills and allows them to be more efficient and relevant in their work by removing low-value tasks. According to a recent study4, 30 percent of collections departments are devoted to managing and tracking activity.

Automation will free up staff to focus on improving company cash flow. A dedicated collections management solution will also encourage

In general, it is important to look at a customer and its payment behaviour in order to adapt the collections process accordingly. For example, some customers may wait until they are reminded several times before paying.

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Data and Technology

A dedicated collections management solution will also encourage collaboration between the different departments... It combines all necessary information and documents in a CRM-like database that all stakeholders can access and share. collaboration between the different departments around a shared goal of reducing payment delays. It combines all necessary information and documents (e.g., invoices, orders, statements, collection notes, disputes, customer data, messages, etc.) in a CRM-like database that all stakeholders can access and share.

Through custom task management, it’s possible to assign and track tasks involving different departments, offices or subsidiaries. It becomes the central collaboration system for all stakeholders in the collections process (e.g., sales, sales admin, finance, credit management, accounting, etc.).

A dedicated portal gives customers access to all their account information (e.g. invoices, credit notes, orders, etc.). The same portal also ensures that all communications with different departments and collections teams within the company are tracked. A customer can ask

questions online, negotiate payment deadlines, and even pay before the due date if discounts on prepayment are appealing.

It’s also important to highlight that an automation solution provides a greater level of visibility into the collections process. It’s not always easy for credit managers or CFOs to have accurate data on the effectiveness of collections efforts: Are all reminders processed? Why are customers paying late? What is our dispute rate? This becomes even more complex in a global, multisite or multi-subsidiary context. How does a company go about improving a process that is not measured?

Centralising this function with a dedicated solution provides full visibility and allows a company to define the right actions to take. By gaining in productivity and efficiency, a collections department can focus on customer relationships rather than

time-consuming low-value tasks.

The end result? Financial objectives are achieved, customer relationships improved and employees valued. Thanks to effective and powerful automation technology, collections departments can concentrate on customer satisfaction and improving productivity, making the department’s work more valued.

A win-win situation for everyone. *Eric Maisonhaute MICM Director – Accounts Receivable Solutions Esker Australia Pty Ltd Ph: +61 2 8596 5126 Email: eric.maisonhaute@esker.com.au www.esker.com.au

FOOTNOTES: 1 PWC Working Capital Study. FTI Consulting. 2018 Working Capital Report.

McGrathNicol. Working Capital Report 2018 2 Reserve Bank of Australia. Bulletin – September 2018 Access to Small Business Finance 3 Smart Company Australia. November 2018 4 AFDCC, French Credit Managers Early bird ticket Association

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Data and Technology

What is all of this fuss about e-Invoicing

By Trevor Middleton*

There is quite a bit of a buzz going around about “e-invoicing”. Just like all technology advances, there is as much hype as there is potential.

The purpose of this article is not to suggest that you should be on the bleeding edge of that technology.

The article is written to provide knowledge in advance – allowing you to be prepared to take advantage when the capability matures. Advance knowledge also helps you to position yourself in the best place to make the most of the opportunity when it presents itself.

How did e-invoicing come about?

Trevor Middleton

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Australian small businesses are collectively owed $26 billion in unpaid invoices at any given time.

Of all late payments, over 20% result from errors on invoices, and over 20% from the invoice being sent to the wrong recipient following manual data entry. With over 1.2 billion invoices exchanged in Australia annually, savings to our economy are estimated to be $28 billion over 10 years.

The Australian Government is therefore committed to delivering e-invoicing. In March 2018, the Prime Ministers of Australia and New Zealand agreed to take practical action on adopting common approaches to e-invoicing, as a means to progress the Single Economic Market agenda. This agreement was formalised on 25 October 2018 by signing an international arrangement.

The procurement, accounts payable, accounts receivable and sales processes of any buyer and supplier

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are inextricably linked. Invoicing is only one sub-process of these broader processes.

While there would be significant benefits in trying to digitise the whole end to end process, overseas experience suggested to the Transtasman e-invoicing Working Group that it would be more effective (and achieve broader market adoption) if they focused on the invoice process as the first step.

Eventually, as the ecosystem matures, the entire procure-to-pay process will be digitised (Penttinen, 2008).

To show their commitment, the Australian and New Zealand governments (who themselves are significant buyers in their economies) are leading by example and have committed to using e-Invoicing themselves. If everything goes to plan, we could see the Australian or NZ governments use e-invoicing with their own supplier bases as soon as the end of 2019.

What are the benefits for businesses?

Technology is increasingly driving our lives and reducing processing effort and delivery times. Some of the benefits that business can expect from adopting e-invoicing are: Improved cash flow and quicker payments While e-invoicing brings efficiencies through simplifying and automating the exchange and processing of invoices, to be automatically processed in the business

Data and Technology

e-invoices are received directly into the business’s financial systems, so there is no manual point of failure in between. management software. E-invoicing standards will ensure that information reaches its destination quickly and reliably. That should enable businesses to make and receive on-time payments more reliably.

Easier processing and cost savings About 1.2 billion invoices are issued in Australia each year, ASBFEO research found that it costs roughly: zz $30.80 for processing a paper invoice zz $27.97 for a PDF invoice. zz $9.18 for an e-invoice By not having to manually handle, print and enter invoices, ie invoicing is approximately 70% cheaper to process an e-invoice than traditional paper or PDF invoices. This equates

to estimated shared savings (between the sender and receiver) of $21.69 each time an e-invoice replaces a paper invoice, and $18.49 when it replaces a PDF invoice.

The introduction of the common e-invoicing approach will make it easier for businesses on both sides of the Tasman to interact and transact with each other, and with government.

Fewer errors By removing manual handling and the re-keying of information, there will be fewer incorrect or lost invoices.

Direct and secure The risk of fake, unauthorised or compromised invoices is minimised

by using electronic validation of the sender and receiver. e-invoices are received directly into the business’s financial systems, so there is no manual point of failure in between.

Available for every business size E-Invoicing standards will ensure that all businesses in all sectors can access and benefit from e-invoicing, regardless of their size and the systems they currently use. Ironically the smaller businesses with cloudbased software are probably better placed to adopt this technology than larger legacy-system-based companies.

Since this is a common standard and platform in USA and Europe, that will also help our exporters.

So what exactly is e-invoicing?

Electronic invoicing is a broad term that covers the exchange of invoices between a supplier and a buyer in an electronic format. That could be through existing EDI or even via an emailed PDF. That is not new – it has ➤

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Data and Technology

been around for some time, and is in general use, although not universally.

However, when we talk about this new e-invoicing initiative, we are talking about the next level of automation. The automated, direct exchange of invoices between the supplier’s and buyer’s software systems, with no manual intervention.

E-invoicing relies on open standards and technology to exchange invoices seamlessly between disparate computer systems, without manual data entry. It removes the need to create paper-based or PDF invoices, scan, post or email them, or manually enter them.

You may say “so what?”

Many large businesses in Australia and NZ have been e-Invoicing for decades using electronic data interchange (EDI) technologies. Generally these traditional communities operate in what is called a ‘hub and spoke’ model. The large organisation (“gorilla”) can be thought of as the wheel-hub and their trading partners connect to their mandated hub, like spokes on the wheel.

The difference in the new e-invoicing is that this is a government initiative, where standardised government-appointed “hubs” manage a single, consistent platform of providers, processing a single, consistent electronic invoice format.

This reduces the pressure to present your electronic invoices in the (multiple) “standard” EDI formats of your (multiple) largest customers and suppliers (who often have different technology requirements).

E-invoicing relies on open standards and technology solutions

to exchange invoices seamlessly, without manual input. It removes the need to create paper-based or PDF invoices, scan, post or email them, or manually enter them. E-invoices can be sent directly to a customer’s software system, even if the buyer and supplier are using different systems. It is secure, safe and reliable.

Even though this is a systemto-system solution, PDF and other document types can still be attached.

E-invoicing not only includes selfgenerated original invoices, but also includes credit notes, copy invoices, amendment invoices and recipientcreated tax invoices (RCTIs).

Not all customers will be able to process all transaction types electronically. And their capability will change over time as they upgrade.

E-Invoicing allows the interrogation of the ABN/NZBN before delivery to tell you what types of electronic transactions each customer is able to accept (if any). That allows you to make intelligent decisions in your software. e.g. If this customer has e-invoice capability, send an e-invoice, otherwise email a regular PDF invoice.

E-invoicing also caters for “acknowledgment of receipt” of all of the above. That takes e-invoicing even closer to an Assured Delivery – and allows you to remove those excuses of non-payment due to “never receiving the invoice”.

the way for PEPPOL adoption, being the first country to introduce it back in July 2012.

So while this initiative is targeted for local use in Australia and New Zealand, it is also tying in with a common international standard which should also help exporters.

In some cases, exporters may already have this capability, either implemented, or inherent in their software.

Without getting too “techo”, this e-Invoicing data capability: zz is based on an international standard, with open participation and governance zz encompasses all, procure-to-pay documents (not just invoices) zz will enable the future extension to other elements of the procure-topay process zz has an established user base zz is open, royalty free and vendor agnostic, with open participation and governance zz allows development of tools that are easily available (especially since Europe has been using it since 2012) zz has interfaces with commonlyavailable business application systems zz enables connectivity irrespective of platform or solution used to exchange electronic business transactions.

What is the technology behind e-invoicing?

Technically, the platform that has been chosen is PEPPOL – an international standard. PEPPOL is already in use in 32 countries in Europe, plus Canada, Singapore and USA. Norway has led

How are e-invoices delivered?

E-Invoicing is the direct exchange of invoices between suppliers’ and buyers’ financial systems. Buyers can send an e-Invoice directly to their customer’s financial system through a digital ‘mail’ service.

E-invoicing not only includes self-generated original invoices, but also includes credit notes, copy invoices, amendment invoices and recipient-created tax invoices (RCTIs).

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Data and Technology

International standards allow these systems to ‘speak’ to each other, even if the two businesses are using different financial systems.

Businesses can send messages: zz directly to each other by implementing their own Access Points (without intermediaries), or zz via a mutual 3rd party Access Point (3-corners), or zz via two independent external service providers (4-corners).

As the digital economy grows, the trend in Europe has been toward the 4-corner model.

Are there any legal issues?

The trans-Tasman e-invoicing working group has reviewed the relevant Australian and New Zealand legislation, and have concluded that there are no legal or policy barriers to the implementation of a common trans-Tasman e-Invoicing approach.

The Australian and New Zealand governments at all levels have committed to reviewing legislation to

identify and recommend opportunities to remove any impediments or barriers to adoption.

What you need to do to get ready?

Understand your own systems’ capabilities To find out your next steps towards e-invoicing, start by contacting your software provider to see if you (and they) are digitally ready.

Ask your software provider about how they will offer e-invoicing and what you will need to do. Remember that this is both a “sending”(Billing/ Accounts Receivable) and a “Receiving” (Accounts Payable) requirement. Most likely, you will need to update your existing software, or add on an additional service or module. If you are looking to purchase new systems, ensure that the new system is (or will be) capable of processing e-invoicing transactions.

If you are already using a thirdparty B-to-B EDI Invoice provider,

find out from them what their capabilities are. You may not need to change anything in your existing EDI interface. They may be able to deliver e-invoicing already (or soon). And that would enable you to launch electronic invoices to more customers via your existing provider.

Also remember to: zz find out how solid their understanding and experience is in this area. zz find out what support they can offer you in making the transition zz subscribe to their communications to stay informed– emails, newsletter and web updates. zz stay in touch with AICM and similar groups who will be providing regular updates like this.

Start collecting your customers’ “digital addresses” E-invoicing uses a globally-unique identifier for each business. This could loosely be called their “digital address”. ➤

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Locally we will be using: zz Australian Business Number (ABN) This is the 11 digit number governed by the Australian Business Register Program zz New Zealand Business Number (NZBN) governed by the Registrar of New Zealand Business Numbers In the e-invoicing platform, the ABN/ NZBN is used to link to core business information (known as Primary Business Data). This includes things such as trading name, phone number and email.

That information also includes what type of electronic transactions they can accept (if any).

Therefore your financial systems need to know the ABN/ NZBNs of each of the businesses you deal with, so that it can direct and receive e-Invoices to the correct customer’s finance system, and can validate the sender’s information. zz obtain your own ABN/ NZBN if you don’t already have it as you will need it to access and send e-Invoicing zz Start sharing your ABN and NZBN with the businesses you work with. Such as including it on your customer invoices and accounts payable remittances zz Talk to your IT team or accounting software provider about including the ABN/NZBN in your customer and supplier databases. In addition, just because you have the customer’s ABN/NZBN that does not mean that they have the capability to process e-invoices.

You will need to include an option against their customer information: “send e-invoices?

Y/N”. You probably already have a flag against each customer that controls whether to print or email/ PDF invoices. That same flag will need another option added : Allow e-invoicing. zz Include the ABN/NZBN in your credit application process.

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Where will all of this end up?

E-invoicing is not mandatory – businesses will be free to take it up if they choose. Whilst there are obviously benefits to e-invoicing, our prediction is that uptake will be mixed.

As in life, it is easier to give than receive. Sending e-invoices is relatively easy. Processing e-invoices into Accounts Payable is more difficult and requires more systems integration effort, especially if the capability is not already available in your system.

As a result, like any two way communication, customers will have various stages of capability and adoption over time to both send and receive e-invoices. Ironically, mirroring the world’s technology paradigm shift, it will now probably be the smaller businesses with cloud based systems like MYOB and Xero that will be have the e-invoicing processing capability earlier. The larger organisations (whose legacy systems are more complex to enhance) will probably follow. Having said that, the e-invoicing platform is an international standard that has been in active use in Europe for some time, so e-invoicing software is relatively freely available. Our prediction and recommendations are: 1. if you have a lower-end customer base, or have a number of key customers with large volumes, who can support e-invoicing, this would be a valid cost-saving initiative to start 2. if you have central or local government as a customer, you ought to start looking at this now 3. major customers with existing EDI or electronic invoicing in place will be slow to change their existing offerings. If you have a more

developed EDI offering with more than just e-invoicing (e.g. purchase ordering, etc.) then you might be restricted in your ability to switch to this format.

4. if you have customers talking about introducing electronic invoicing, make sure this is the solution you go ahead with. Don’t adopt their proprietary system if you can help it.

5. IT teams are swamped with projects at the moment. Unless a really sound business justification is presented, this will be a tough new project to get across the line on its own. Use compelling and impending commercial events to enhance that justification.

As always, we welcome your feedback on this topic. Also, please do not hesitate talk to us at Cosyn if you need help with implementing e-invoicing, or if you need your existing customer database populated electronically with their ABNs and NZBNs.

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

REFERENCES https://ato.gov.au/einvoicing Https: //nzbn.govt.nz/e-invoicing https://softwaredevelopers.ato.gov.au/sites/ default/files/resource-attachments/The_ Trans-Tasman_e-Invoicing_Interoperability_ Framework.pdf https://softwaredevelopers.ato.gov.au/sites/ default/files/resource-attachments/The_ Trans-Tasman_e-invoicing_Implementation_ Guide.pdf http://tv.ato.gov.au/ato-tv/search?s=e-Invoicing

E-invoicing is not mandatory – businesses will be free to take it up if they choose.

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Legal

Have you been served yet?

Making an application to set aside a statutory demand

By Phoebe Pitt and Mark Wenn*

Phoebe Pitt

A recent case of the Federal Court of Australia has highlighted the importance of ensuring service of an application to set aside a statutory demand under s 459G(3) (b) of the Corporations Act 2001 (Cth) within the 21 day period provided, in the proper manner.

This case also serves as a timely reminder to professional services providers acting as the registered office of a company to act quickly to bring a statutory demand to the attention of that company.

In Sheraz Pty Limited v Rumsley [2019] FCA 493, the plaintiff (Sheraz) filed an application seeking to set aside a statutory demand served on it by the defendant Alan Rumsley (Rumsley), on the basis of an alleged genuine dispute over the debt.

Rumsley sought orders that the Court dismiss Sheraz’s application on the basis that it was not served within the 21 day period prescribed by section 459G(3)(b) of the Act.

Background

Mark Wenn

Rumsley issued a statutory demand on Sheraz on 24 January 2019 (Demand), which was served by

hand delivery to Sheraz’s registered office on the same date and provided a street address for service of any application under s459G(2).

It was common ground that Sheraz had until 14 February 2019 to comply with the Demand or seek to set it aside.

On 7 February 2019, Sheraz filed an application to set aside the Demand (Application).

At 5pm on 14 February 2019, a representative of Sheraz emailed Rumsley the Application and a supporting affidavit (together with a covering letter and outline of submissions).

Rumsley deposed that the Application did not come to his attention until 25 February 2019 – after the expiration of the 21-day period (whether by email or post).

The Court accepted that whilst the Application was filed within the requisite period (and therefore the Court had jurisdiction under s459G(1)), it was not received by Rumsley until 25 February 2019. The question then became whether the Application had been made within the relevant period. ➤

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

41

Legal

Principles The Court has no power to extend the period within which an application may be “made”. The Court will not act to subsequently cure the failure to make an application within 21 days with a retrospective substituted service order.

It goes almost without saying that service of an application and supporting affidavit is a requisite element of “making” an application under s549G(3).

The Court has found that a

document needs to come to the actual attention of the recipient and that email transmission cannot constitute service for the purposes of s459G(3) unless there was evidence before the Court that the documents transmitted electronically were either, first, actually received in a readable form or, secondly, the case fell within a special exception permitted by the applicable Court rules (in this instance, that service by email was permissible where an email address had been given as the address for service).

Decision The Court found that in the present case, the address given for service was a physical address and no email address was provided. In any event, the evidence did not support a finding that the Application came to Rumsley’s attention within the 21 day period required by the Act. Furthermore, the Court observed that there was no evidence of any agreement to the effect that Rumsley would accept service by email.

The Court has found that a document needs to come to the actual attention of the recipient and that email transmission cannot constitute service for the purposes of s459G(3) unless there was evidence before the Court that the documents transmitted electronically were ... actually received ... ” 42

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Legal

The Court acknowledged the significant risk on the part of Sheraz in purporting to serve the Application late on the final day for service provided by the Act, by a method of service not provided for in the Demand, and where the “movements of the email recipient, and so the prospects that the recipient will check emails, are unknown”.

In recognising the rigid and inflexible time frames provided by s459G, the Court found that Sheraz had failed to meet the onus required to establish service of the Application within that period (notably, because of the evidence that Rumsley had not received the Application within the period prescribed), and the Application was dismissed.

For that reason, the Court was not required to determine the substantive question of whether there was a genuine dispute in respect of the underlying debt identified in the Demand.

Interestingly, Counsel for Sheraz foreshadowed that, in the event of the dismissal of the Application, it intended to seek declaratory relief based upon the asserted non-compliance with the Demand including, if necessary, injunctive relief to prevent Rumsley from relying upon that non-compliance for the purpose of a winding-up application. It is well-established that the threshold for such relief is high, and it is only in exceptional circumstances that a Court will entertain actions of such nature. The matter is yet to return to the Court on this question.

Key takeaways A party which serves a statutory demand should be cautious to ensure that it has good and proper evidence of the service of the demand, to ensure that they can rely upon it (including in defending any application to set aside by a debtor, which may otherwise be proven to be made out of time).

A firm which takes receipt of a statutory demand as the registered office of a company should alert the company without delay of the receipt of the statutory demand...

From the opposing perspective, this case serves as a timely reminder to a party which receives a statutory demand (whether addressed to them personally, or served at their office as a registered office) to: 1. act swiftly after service of the demand, so that a demand recipient is not prejudiced from taking action if they believe there is a genuine dispute or other basis upon which to set it aside; 2. ensure that any application to set aside a statutory demand is filed (in the proper form) and served within the relevant period, at the address for service provided in the demand – whether physical or electronic; and 3. have sufficient evidence to substantiate any claims it has as to service of an application to set aside a demand.

A firm which takes receipt of a statutory demand as the registered office of a company should alert the company without delay of the receipt of the statutory demand, to ensure that the company is not prejudiced in any action it may wish to take to seek to set aside the demand. Public holidays and weekends are included within the 21 day period. Failure to comply within this period is highly likely to preclude a party from challenging the demand. As a practical tip, the company office would be welladvised to put in place a procedure for identifying the date and time at which any demand is received – this may become useful if the time

in which any application is made to set aside a statutory demand is challenged by the creditor.

If the issuer of a statutory demand agrees to accept by email service of an application to set aside the demand (despite having provided a physical address for service in the demand), it is advisable that this arrangement is documented in writing to which the Court can refer should the question of service be called into question.

Further, where effecting service by email, notwithstanding the applicable provisions relating to timing of receipt of documents sent by electronic communications, a prudent applicant may wish to apply a “read receipt” to any email effecting service, and exhibit the notification received to any affidavit of service.

If you have any questions about the process for serving a statutory demand, or are served with a statutory demand, we suggest that you seek advice at the earliest opportunity and inform your lawyer of the date on which you served (or were served with) the demand.

*Phoebe Pitt Senior Associate Mills Oakley Email: ppitt@millsoakley.com.au Ph: 03 9605 0931 *Mark Wenn MICM Partner Mills Oakley Email: mwenn@millsoakley.com.au Ph: 03 9605 0913

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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Legal

Setoff Defence

– A very useful tool to defend an unfair preference claim

By Melissa Jarvin* and Daniel Turk*

What is one of creditors’ biggest nightmares? The unfair preference claim brought by a liquidator under section 588FA of the Corporations Act 2001 (Cth) (Act).

The bad news for creditors is that the unfair preference claim is not going anywhere (and perhaps may become even more prevalent in the future). The good news is, however, that there are defences available to creditors and one, in particular, that has made some headway in recent years; the setoff defence.

The setoff defence

Melissa Jarvin

Daniel Turk

44

If the setoff defence is available to a creditor, it could significantly reduce the amount of a liquidator’s claim against the creditor (or nullify it entirely) because it may allow the creditor to off-set any debt owing to it by the company, prior to the company being placed in liquidation, against the amount of the alleged unfair preference payments.

For example, if Creditor A was owed $100,000.00 by Company X and Creditor A receives $30,000.00 in preference payments, Creditor A can potentially claim a setoff of $70,000.00 (the amount still outstanding), which results in the preference claim being reduced to zero. On the other hand, if Creditor A is owed $40,000.00 by Company X but receives $30,000.00 in preference payments, Creditor A can potentially claim a setoff of the amount outstanding of $10,000.00, reducing the unfair preference claim

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

to $20,000.00 (meaning Creditor A would still be liable for this amount).

Stone v Melrose Cranes case The leading (and most recent case) on the setoff defence is the Federal Court case of Stone v Melrose Cranes & Rigging Pty Ltd, in the matter of Cardinal Project Services Pty Ltd (in liq) (No 2) [2018] FCA 530 (‘Stone v Melrose Cranes’). In that case, the Court confirmed that setoff, (under section 553C of the Act), is an available defence to a creditor in the context of an unfair preference claim but only if, at the time of giving credit to the company in liquidation, the creditor did not have notice of the fact that the company was insolvent. This is a higher standard than only having a suspicion of insolvency.

Notice of the fact of insolvency But what does “notice of the fact that the company was insolvent” really mean?

The relevant question is whether the creditor, at the time of giving credit to the company, had actual notice of the facts that would have indicated to a reasonable creditor, in that particular creditor’s position, that the company was unable to pay all of its debts as and when they became due and payable.1

The time of giving credit The relevant time to assess notice of insolvency is not the time the alleged preferred payments were received, but the time the creditor gives credit to

Legal

the company (which ultimately results in the unpaid debt the creditor seeks to setoff). The “time of giving credit” is the time in which the creditor allows the company buying goods or services to make payment at some future date (which is, for example, when the outstanding invoices were rendered or the goods were supplied).2

Facts indicating actual notice of insolvency In Stone v Melrose Cranes the Court found that Melrose Cranes was not entitled to a setoff as it had notice of the fact that the company was insolvent at the time of giving credit to the company. The following were, in summary, the relevant facts which led the Court to its conclusion: 1. The company’s numerous promises of payment that were not met despite persistent follow up

by Melrose Cranes, 2. The company’s credit account had been suspended in the past due to a large debt being owed outside of the 30 day payment terms and during the period relevant to Melrose Cranes’ setoff, the account was eventually frozen (and was never unfrozen before the company was placed into liquidation), 3. The company made payments to Melrose Cranes irregularly and in rounded amounts not referrable to any tax invoices, 4. Melrose Cranes entered into a payment arrangement with the company and, in doing so, required director guarantees as security (indicating Melrose

Cranes was protecting itself in the event that the company went into liquidation), and 5. Further services were only provided by Melrose Cranes to the company on the basis that payment was guaranteed by third parties.

The lesson

The creditor’s circumstances

Conclusion

Nonetheless, the existence of similar facts to the above (or at least, some of them) is not necessarily determinative of “notice of insolvency”. All of the circumstances present at the time, as known to the creditor, are relevant to the “notice of insolvency” assessment, which might include the character of the debt and the nature of the company’s business (and, perhaps, its cyclical nature).3 Similarly, the trading relationship and history of the creditor and the company must be considered alongside any potential insolvency indicators (at the relevant time) because the conclusion of insolvency must be “warranted” by the facts known to the creditor.4 For example, frequent delays in payment by the company, during the relevant time, may not mean the creditor had “notice of insolvency” if the company, throughout its trading relationship with the creditor (and before it was deemed insolvent), frequently paid late. Yet, if the company habitually paid on time and then, in the lead up to the company’s liquidation, it stopped paying on time; that would likely be an indication, to a reasonable creditor in the position of that creditor, that the company was insolvent.

While there haven’t been any superior court cases since Stone v Melrose Cranes, it is important that creditors are reminded, particularly in circumstances where the outstanding debt owing by the company in liquidation is quite significant, that the setoff defence can be, if understood and applied correctly, a very useful tool to defend an unfair preference claim.

“If the setoff defence is available to a creditor, it could significantly reduce the amount of a liquidator’s claim against the creditor (or nullify it entirely) because it may allow the creditor to off-set any debt owing to it by the company...”

The lesson is therefore that the “notice of the fact that the company was insolvent” test is to be determined on a case by case basis because each trading relationship between a creditor and debtor company is different.

*Melissa Jarvin MICM Senior Associate, TurksLegal Ph: 07 3212 6705 Mob: 0424 990 088 Email: Melissa.Jarvin@turkslegal.com.au *Daniel Turk MICM Partner, TurksLegal Ph: 02 8257 5727 Mob: 0408 667 220 Email: Daniel.Turk@turkslegal.com.au

FOOTNOTES: 1

Test set out in Jetaway Logistics Pty Ltd v Deputy Commissioner of Taxation (2009) 26 VR 657, approved by Stone v Melrose Cranes & Rigging Pty Ltd, in the matter of Cardinal Project Services Pty Ltd (in liq) (No 2) [2018] FCA 530 at [285] – [287].

2

Morton & Anor v Rexel Electrical Supplies Pty Ltd [2015] QDC 49 at [81].

3

Jetaway Logistics Pty Ltd v Deputy Commissioner of Taxation (2009) 26 VR 657 at [15] (approved by Stone v Melrose Cranes & Rigging Pty Ltd, in the matter of Cardinal Project Services Pty Ltd (in liq) (No 2) [2018] FCA 530.

4

See Jetaway Logistics Pty Ltd v Deputy Commissioner of Taxation (2009) 26 VR 657 at [22] (approved by Stone v Melrose Cranes & Rigging Pty Ltd, in the matter of Cardinal Project Services Pty Ltd (in liq) (No 2) [2018] FCA 530, where Robinson J said:

“…What is required is proof of facts known to the creditor which warranted the conclusion of insolvency….”

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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Legal

Standard form agreements and unfair contracts

- how commercial leases are a great example of the need to review your contract

By John Gdanski*

John Gdanski

46

Many small businesses lack the time, resources, expertise and bargaining power to negotiate changes to terms specified in standard form contracts. More often than not they find themselves trapped or at an economic loss as a result.

As the grantor of credit it is imperative to ensure that when you’re extending credit to small business that before any contract is executed both parties are given time to thoroughly review and negotiate terms before signing on the dotted line. This will ensure the contract is robust and allows it to be scrutinised for containing, amongst other clauses, unfair contractual terms.

For some time individual consumers have been protected from unfair contractual terms, with this protection now being extended to certain small businesses.

The Treasury Legislation Amendment (Small Businesses and Unfair Contract Terms) Act 2015 (Cth) (the Act) allows a court or tribunal to determine if a contract term is unfair and, if found to be unfair, provisions making such a term unenforceable or void.

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

For the Act to apply the following criteria must be met: zz One party to the contract must be a small business; and zz The contract is a standard form contract.

The Act will apply to contracts entered into or renewed after 12 November 2016.

What is a small business?

For the purpose of the Act, a small business is determined by two thresholds: 1. At the time the contract was entered into at least one party to the contract is a business that employs fewer than 20 persons; and 2. Either the upfront price payable under the contract does not exceed $300,000 or the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000.

There are some specific contracts that have been excluded from the Act. However, these are not relevant in the context of commercial leases.

Legal

What is a standard form contract?

Unfortunately, there is no clear definition for what a standard form contract is. However, a number of factors are taken into consideration including: zz The relative bargaining power and opportunity to negotiate upon the transaction taking place; zz If the contract was pre-prepared by one party; zz If the contract was presented as a “take it or leave it” contract; and zz If the terms of the contract either do not consider the characteristics of the parties to the transaction, or consider characteristics of a nonrelated third party.

Given that the determination of whether a contract is a standard form contract is largely circumstantial it is important to document all correspondence had during the transactional process.

What is an unfair term?

Ultimately, the court or tribunal will determine whether a contract term is unfair although consideration of the following will be had: zz Whether the term is transparent; zz If the term causes detriment; zz If a term would cause a significant imbalance in the rights and obligations under the contract; and zz Whether the term is necessary to protect the legitimate interests of a party who would be advantaged by such a term.

Further guidance as to what may be considered an unfair term can be found in the Competition and Consumer Act 2010, and Australian Consumer Law in addition to Australian Securities and Investment Commission Act 2001 (Cth).

The 2-year Review …

In November 2018, 2 years following the operation of the Act, the Treasury opened a review into the Act allowing for submissions to be made on the current thresholds set in addition

to the coverage of the Act. Multiple submissions were made from a variety of sources wherein key issues were identified with the operation of, and actual protection afforded by, the Act. It is anticipated that the Treasury will make recommendations which further expand the reach of the Act as well as the consequences of breaching the Act. However, no report has been published as yet.

Conclusion Whilst the Federal Government is ensuring that small businesses are afforded better protection when entering into contracts there is insufficient case law to provide clarity on whether a particular standard form commercial lease agreement’s terms are compliant. However there is a pervasiveness of standard form agreements in the commercial property sector.

As stated earlier it is always best practice to make sure that both parties have time and seek advice to ensure any contract entered into is

thoroughly reviewed and effectively negotiated before being executed.

For a supplier with standard form agreements we suggest it’s worthwhile to review agreements from the point of view of enforcement and ask: 1. Are there any standard terms?

2. Are there any client-specific terms?

3. Are the terms in line with the culture and practice of the business?

With the current difficult economic trading conditions, commercial real estate agreements and their associated suppliers will be impacted first. Moreover it is prudent business practice to have independent review of your terms and conditions on a regular basis to ensure both regulatory compliance and current best business practice. *John Gdanski Partner SLF Lawyers Email: jgdanski@slflawyers.com.au Ph: 03 9600 2450

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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International

Why you shouldn’t write off your outstanding European invoices

By Maxime Ampe*

Today, chasing debt has become the norm for most businesses. When dealing with local customers this can be tough but when it comes to international debt collection, the task is even more challenging. With many Australian businesses choosing to write off international invoices rather than chasing their European debtor, Head of European Operations at Bierens Debt Recovery Lawyers Maxime Ampe, sheds some light on why you should think twice about writing off your European business debts.

Debt collection and litigation in Europe

Maxime Ampe

48

A continent made up of more than 40 countries, each with their own legal system and language; it’s no wonder Australian businesses see Europe as a legal minefield. We often see that the physical distance between Australia and Europe has consequences in the sense that companies feel less entitled to pay their outstanding debts as the creditor is far away. Unfortunately, the European mentality is way too often ‘if you don’t chase, I won’t pay’.

For Australian businesses, unpaid invoices are annoying and frustrating, especially if they’re being disputed.

A disputed invoice means you either need to litigate or write it off.

Litigation can of course be timely

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

and cost money, especially if you’re trying to recover it 8000 miles from home, in a different language. This is what the majority of Australian businesses believe and as such their initial reaction is to write off the debt.

Well, this belief isn’t entirely true.

Debt recovery in Europe is actually far easier than in many other countries, mainly due to the civil law system.

Collecting out-of-court It goes without saying that collecting debt out-of-court is the most popular method in continental Europe where, in general, parties work on the principle of ‘No Win, No Fee’.

As to the collection of debt, most debtors won’t pay their invoice unless they’re chased. And they need to know you’re a company to be taken seriously. If you still find you’re not having much luck, consider using a debt collection solicitor. Debtors often take a solicitor or barrister more seriously as they don’t want to run the risk of going to court. On top of this, an international solicitor or barrister will speak the same language as your debtor making it much easier to communicate with them.

Litigation Due to this European mentality, Australian companies are often forced to decide whether to take legal action

International

against a European client, even for undisputed claims. Most unfortunate to your cashflow, this decision is often biased.

Key to the bias are the differences in legal systems between Australia and continental Europe. Whereas Australia is subject to the principles of ‘common law’, continental Europe has a ‘civil law’ system. The amount of (legal) differences between these systems go beyond the scope of this article, however there are two important elements to the predisposed decision making: time and money.

Money: ‘Litigation is expensive, the debt is too low, let’s write it off’ True and we agree. But which debt is too low? When dealing with clients from common law countries (most notably Australia, USA and the United Kingdom), we often see debts as high as AUD 150.000 written off ‘as it does not make sense to litigate’, something completely unimaginable

in most of Europe. Due to the nature of the different legal systems, the cost for litigation in Europe is easily ten times cheaper than in common law countries.

They key differentiator is the so-called discovery procedure.

Essentially, it means that parties need to give the other side all necessary documents and that solicitors from both sides will enjoy the coming weeks (or months) searching for a breakthrough. In civil law countries, this practice does not exist. Solicitors in civil law countries base their argumentation on the information at hand, enabling fast decision making and low costs.

Another major time-consuming measure is the examination of witnesses, another practice which is barely used in civil law countries within Europe.

As an indication as to the solicitor and barrister costs combined (so excluding stamp duty, translations, bailiff costs, disbursements, etc) in cases up to AUD $150.000, it is often

For Australian businesses, unpaid invoices are annoying and frustrating, especially if they’re being disputed.

possible to obtain a default judgment for as little as AUD $1.500. In the event of a disputed case, solicitor and barrister costs usually range between AUD $8.000 and $12.000 per instance. However, it should be noted that a claim can be made to the court to recover these costs.

Time: ’Fast track proceedings is also litigating.’

Quite often, we face clients with undisputed outstanding amounts ranging between AUD $14.000 and $25.000 in which the decision is taken to write off the debt as the matter would be too time consuming and not worth it. What is often forgotten is that plenty of countries have established ‘fast track‘ procedures for undisputed cases in which you can obtain a title in as little as 6 weeks at a fraction of the cost of regular proceedings.

Conclusion Collecting debt in Australia and Europe is a completely different ballgame, essentially due to the differences in their legal systems.

European clients often have the same thinking as Australian businesses when it comes to collecting debt in Australia. But for them, they actually are less able to litigate in common law countries due to the high costs.

However, when it comes to recovering debt in Europe, the task is not as daunting as it may first appear. In fact, collecting debt from a European debtor is potentially easier than an Australian debtor. So, before you think about writing off your uncollected European debt: think twice, think quickly and do your research. You’ll likely find you can litigate and collect your money more easily and cheaper than you believe.

*Maxime Ampe International Operations Manager Bierens European Collections Attorneys Email: m.ampe@bierensgroup.com www.bierensgroup.com

July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

49

aicm Training News 2019 August – December Face to Face Training Calendar – MELBOURNE, BRISBANE, SYDNEY New South Wales

Victoria

Monday, 12 August 2019 – Toolbox – Fundamentals of Credit

Thursday, 15 August 2019 – Toolbox – Collect with Confidence

Tuesday, 13 & 14 August 2019 – RTO – Understanding Legal Compliance

Friday, 16 August – RTO – Assess Credit Applications

Wednesday, 22 August 2019 – Toolbox – Collect with Confidence Monday, 16th September 2019 – RTO – Assess Credit Applications Tuesday, 17 September 2019 – Workshop – Understanding Corporate Insolvency Wednesday, 18 September 2019 – RTO – Understanding Consumer Credit Thursday, 19 September 2019 – Workshop – Hardship Monday, 23 September 2019 – Toolbox – Understanding Credit Risk

Tuesday, 20 August 2019 – Workshop – Understanding Personal Bankruptcy Wednesday, 21 & 22 August 2019 – RTO – Understanding Legal Compliance Friday, 6 September 2019 - RTO – Manage Bad and Doubtful Debts Monday, 9 September 2019 – Toolbox – Understanding Credit Risk Thursday, 10 October 2019 – Toolbox – Fundamentals of Credit Tuesday, 22 October 2019 – Workshop – Understanding Corporate Insolvency

Wednesday, 9 October 2019 – RTO – Manage Risk

Wednesday, 23 October 2019 – RTO – Understanding Consumer Credit

Thursday, 10 October 2019 – Toolbox – Fundamentals of Credit

Thursday, 24 October 2019 – Workshop – Hardship

Thursday, 7 November 2019 – Toolbox – Collect with Confidence

Thursday, 7 November 2019 – Toolbox – Collect with Confidence

Tuesday, 12 November 2019 – Workshop – PPS

Monday, 18 November 2019 – RTO – Manage Risk

Wednesday, 13 November 2019 – RTO – Manage Bad and Doubtful Debts

Tuesday, 19 November 2019 – Workshop – PPS

Tuesday, 19 November 2019 – Toolbox – Understanding Credit Risk

Queensland Tuesday, 6 August 2019 – RTO – Manage People Performance Monday, 19 August 2019 – Toolbox – Fundamentals of Credit Monday, 23 September 2019 – Toolbox – Collect with Confidence Tuesday, 24 September 2019 – RTO – Manage Bad and Doubtful Debts Wednesday, 25 September 2019 – Workshop – Understanding Corporate Insolvency Thursday, 26th September 2019 – RTO – Assess Credit Applications Friday, 25 October 2019 – RTO – Manage Risk Monday, 28 October 2019 – Workshop – Hardship Monday, 25 November 2019 – Workshop – PPS

Tuesday, 10 December 2019 – Toolbox – Understanding Credit Risk

Table of Explanation: C = Core Unit E = Elective Unit D = Diploma 4 = Certificate IV

Important Information: You do not have to be a current AICM student undertaking a full qualification to attend any AICM face to face training. You may wish to undertake a program for your Professional Development, or enhance and update your current skills and knowledge.

On the completion of the face to face training, you will be required to undertake the online assessment/s for the unit/s of competency, if you wish to receive a nationally recognised Statement of Attainment.

Please register your interest early, as there is a minimum requirement of 6 students to conduct face to face training.

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

50

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Unlock the potential in your credit career credit staff

Consider an AICM Qualification course If you aspire to achieve greater heights in your credit career or want to get the best from your credit staff, then a qualification course can help you achieve your targets. Offered nation wide, you can study in your own time (24/7), with support available.

If you have industry experience or prior education, you may be eligible for Recognition of Prior Learning (RPL) credits to fast-track your qualification. If you’re an employer, you may qualify for a training grant. Talk to AICM today to discover your course options.

Diploma of Credit Management

Certificate IV in Credit Management

Certificate III in Mercantile Agents

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

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

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

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

Call 1300 560 996 or vist aicm.com.au

AROUND THE STATES

New South Wales

NSW Councillor Rachael Hurrell was a fantastic emcee of WINC.

Josaphine Toliniu, Julia Timpano, Sonia Kewal, Jacqueline Hutson and Rachael Fink (all BOC).

Rebecca Bishop (NCI), Julia Fawcett (Gerard Lighting) and Sally Wilkinson (NCI).

Jacqueline Vander Meeden (Optus), Moses Samaha (Equifax), Theresa Brown (Optus) and Andrew Castledine (Equifax).

President’s report Hello to all, as I come back from being on maternity leave, and return to my role as NSW President. I am pleased to share that my husband and I have welcomed into the world a daughter, named Estelle. As new parents we are overwhelmed with happiness, and with a love like no other. Notably, I have been able to enjoy motherhood with the comfort of knowing that the AICM national staff, and the NSW Division, have supported one another during my time away.

In having been absent from my duties as NSW President, Andrew Smith, the current NSW Vice President, stepped into the role as acting President and with NSW Director, Peter Morgan, led the council through some extraordinary professional development and networking events.

In April, led by NSW’s professional development chair, Dave Hunt, and hosted at Matthews Folbigg Lawyers offices in Parramatta, was a professional development seminar regarding Payment Times and Conditions for Small Businesses. The speakers, Abdallah El-Haddad from illion, and Ben Holland from the Australian Small Business and Family Enterprise Ombudsman, kept attendees engaged as they 52

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

presented on understanding the strengths, challenges and future of small business and mandatory comprehensive credit reporting.

In lieu of the traditional NSW AICM Golf Day, NSW tried something different and hosted a fun- filled Holey Moley Golf Day on 16 May 2019. With naming sponsors ARMA and CreditorWatch leading the afternoon, the event attracted a broader demographic of members who were able to tee off in a casual, relaxed and fun environment.

The WINC luncheon was held on 24 May 2019 at The Establishment, with members declaring that it was the best WINC function yet. Thank you to the premium sponsor Equifax, supporting sponsors NCI and Results Legal and the WINC committee for your continued support of the WINC initiative.

As a Division, and as we review our KPI’s for the 2018/19 financial year, we are pleased to report that membership has increased by 5.7%, as we are now just short of 1,000 members.

The toolboxes and workshops have been very well received as NSW has reported record registrations by the current membership base. And, as a result of the high quality

New South Wales AROUND THE STATES

Anna Taylor (Results Legal) with Maria Pacheco (Winning Appliances).

NSW WINC Committee: Anna Taylor, Rachael Hurrell, Rochell Courtney (Share the Dignity), Debbie Leo, Beth Gray, Sue Day, Sev Indrele, Kellie Sloan (speaker) and Treacy Sheehan.

Anubha Hurley (Rocla), Georgia Barbera (Rocla), Ellen Singleton (Cosyn Software), Rodora Yates (Rocla) and Kim Wrobel (illion).

Jemma Boyle (Coface) and Karyn Chisholm (Accor).

educational services provided by the AICM, new external stakeholders have approached us to assist them in their respective organisations.

In moving forward to the second half of the calendar, the upcoming events to mark in your diaries are an economic breakfast, trivia night, end of year Pinnacle awards dinner and plenty of toolboxes and workshops, just to name a few.

As always, thank you to our National and Divisional Partners for their continued support in ensuring that the AICM, as an institute, are able to provide its members with a valuable and educational professional experience.

I look forward to seeing you at NSW’s professional development and networking events over the coming months.

Establishment in the city. What a fantastic turn out with over 170 attendees and 2 Guest speakers Kellie Sloan CEO of Life Education and previous News reader on channels 7 and 9. Kellie spoke on ‘Believing your way to the top – How to transform your career and succeed with purpose’. Rochelle Courtenay from Share the Dignity explained the work the charity does with all attendees being moved by her presentation. NSW Councillor Rachael Hurrell was MC and was excellent in her first outing in this role.

Again excellent food and service by the venue and thanks to our wonderful organising committee Treacy Sheehan, Sev Indrele, Sue Day, Beth Gray and Debbie Leo. Already looking forward to next year’s event!

– Balveen Saini MICM CCE NSW Division President

Credit Team of the Year WINC – Women in Credit This ever popular event is now in its 5th year. Our premium sponsor is Equifax with supporting sponsors Results Legal and NCI. This year the event was held on 24th May at The

Applications are now open for the Credit Team of the Year.

If you have great team of maximum 6 and minimum of 2 and want to celebrate your achievements I would highly recommend applying. There are great team development prizes and recognition within your company.

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New South Wales

Nicholas O’Connor, Luis Ormazabal, Andi Warda and Josh Mizzi (all BBW Lawyers).

Clara Streithorst and James Dunne (both Elite Collections) show off their Trace Personnel NAGA prize.

Winning team TIMG with Andrew Smith (NSW Division Vice President) and Matt Jackson (CreditorWatch).

Thabiso Rametsi and Kiera O’Brien (both TIMG) with Sean Collum (AICM).

Holey Moley Mini Golf

A huge thank you to the sponsors, ARMA and CreditorWatch and thanks to everyone who attended on the night, we took a chance on a new event and it paid off. We have had a lot of positive feedback and look forward to seeing you at the Holey Moley event next year.

This year we tried something a bit different and it was a hole in one.

For many years now the AICM has held an annual golf day in NSW, with overall attendance numbers falling we decided to try something new. This year we kicked it off at the Holey Moley Golf Club in Darlinghurst, a quirky state of the art minigolf course. The change in venue presented a more casual and interactive networking opportunity.

With almost 70 people hitting the green, the turnout was fantastic and the venue catered to both keen golfers and first timers alike.

Don’t think the casual vibe dissuaded people though, competition was strong with one outstanding performance in particular – a big congratulations to the winners from TIMG taking home first prize. Better luck next time to Elite Collections taking last place, quickly learning that the highest score is not how you win – although I’m sure the NAGA prize donated by Trace Personnel improved their mood.

We will all definitely have a chance to improve our game though as we look forward to hosting this event again next year and will certainly recommend that the other states include this in their calendar as well.

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MEET A NSW COUNCILLOR

Dave Hunt MICM Hi my name is Dave Hunt, you might know me from such selfhelp video’s as “Get Some Confidence, STUPID!” and such instructional video’s as “Dig Your Own Grave and Save!”.

But seriously (kind of) I am the Treasurer and I look after the Professional Development Calendar for the NSW Council.

I’m the National Credit Manager at Fujifilm and I’m also the Chairman of the Australian Credit Forum.

I have been in Credit so long now there really is no other option for me. It’s been a great career choice for me and I’m very proud to see my son James Hunt also now doing very well as a Collections Officer for Shield Mercantile.

Other stuff, I like rock music, ride a Harley Davidson and I might have a tattoo.

New South Wales

Toolbox and Workshop Training If you or your team are looking for a refresher or an introduction to credit, a great place to start is with our series of three Credit Workshops: zz Fundamentals of Credit zz Collect with Confidence and zz Understanding Credit Risk These are held regularly and attendances in NSW have been strong.

We’ve recently launched our workshop series which are interactive sessions with topics such as: zz Personal Bankruptcy zz Personal Insolvency zz Understanding Hardship Sessions are held at AICM office in St Leonards, or group sessions can be held at your premises.

Chris Hadley, Ethan Brawn, Nicholas Maiorana and Andrew Tanna (all Holman Webb).

The Australian Institute of Credit Management welcomes our Partners for 2019.

National Partners

Trusted Insights. Responsible Decisions.

Divisional Partners

What really gets my goat?

Administrators/Liquidators who send out a report to creditors electronically which only comprises a comment referring to an attachment and that attachment being a single page advising a report is available and providing details of the internet address and password. For goodness sake, just attach the report.

CREDIT MANAGEMENT SOFTWARE

Did You Know Who‘s relative recently and successfully defended an action in the High Court by ASIC for “poor credit practices” If you want to know who this is I’ll give you a few clues and you can ask HIM more questions when you see HIM. He was once the National president of AICM and is the facilitator for many Toolbox classes.

Official Division Supporting Sponsors

Credit Quotes of the Month Our winner this edition for sending in her “Credit quote” of the month was Rachel Jones from RJE Pty Limited.

“Due to current economic conditions the light at the end of the tunnel has been turned off.” – Anon Send your “Credit Quote” to NSW Division Publications and Social Media Chair Sev Indrele at sindrele@southernsteel.com.au All published Quotes will win a prize.

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.

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Sue Day (Manassen Foods) and Eric Maisonhaute (Esker).

AROUND THE STATES

Queensland

First place Left to Right Team NCS – Bill Simon (Aurizon), Stacey Woodward (Councillor), Ashleigh Mason and Alex Croce (both National Collection Services).

President’s Report Your council continues to review and develop new exciting ideas to support and encourage members and their guests to network. So, come along to an AICM event, have fun with some amazing people, and find out what else is happening in the world of credit. For the “home ground” AICM National Conference, the Qld Council will be holding an event on the Wednesday night – details will be released soon. Make sure you keep an eye on the flyers from head office.

More on the achievements by our team however: zz YCP Candidates – more than half a dozen have nominated.

This has been an excellent result thanks to Stacey and Ashley.

Qld are looking forward to strong challenges from the other states but are confident that our state winner will prevail. zz Discussion of new developments in the law and how to effect challenges and benefits from it. Given the national repercussions of the recent Amerind Case decision by the High Court, we will be looking to collaborate with other states on presenting a suitable paper to members on how to gain the most from its outcome. Thank you Mark Harley for raising this as a topics to share with all AICM members on a national basis.

Thank you again to all of our Partners for continuing their generous support of AICM Qld in what will be another successful year.

– Peter Mills MICM CCE, Qld State President

Member Milestones Our Members are the heart and soul of the Institute and are greatly appreciated for their interest and contributions over the years. AICM exists for its members, and one of the central goals is to make it easier to be a better credit manager and build a successful career.

A huge congratulations to each of these members on reaching such a significant stage of their membership with AICM, we look forward to presenting you with your pins at the next AICM event.

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Second place Team NCI: Shawnee-Ann Brelsford, Nathan McQuade, Stacey Woodward (Councillor), Liam Davies, Matthew Spann, Tilly Toger, Ashleigh Mason (Councillor), Michael Dunster.

Youth Network Trivia Night An annual event that is fast becoming a favourite on our calendars. Attendance continues to grow and with that we keep finding bigger and better venues. This year was held at The Pig ‘n’ Whistle Brunswick Street in their beautiful Cellar Bar which boasts heritage listed architecture and the food was nothing short of amazing.

We invited Think Trivia to host the evening for us and they did not disappoint. A lot of creative topic rounds with most of us bombing out in the politics section, we all invited a bit of creativity and humour for those answers. Thank you to everyone that attended, we had 9 teams all together and in the end it was a very close race! Congratulations to: zz 1st Place – NCI zz 2nd Place – Team NCI zz 3rd Place – Credit Solutions and Oakbridge Lawyers Start getting your teams ready for next years’ event, it is sure to be another sell-out!

We couldn’t run events without the ongoing support of our sponsors and in particular thanks to those who donated prizes for the night being: zz SLF Lawyers zz NCI zz Vincents zz Results Legal

Shirlene Arlidge

20 Years

Angove Family Winemakers

Micheal Elliot

20 Years

Bristile Roofing

Mark Joubert

20 Years

Brand Energy & Infrastructure Services Australia

David Rooke

20 Years

Elders Rural Services Australia Limited

Alison Beythien

25 Years

Iplex Pipelines Australia P/L

Mervyn Mahony

25 Years

GNS Wholesale Stationers

Christopher Mayo

25 Years

Elizabeth Morris

25 Years

Endeavour Foundation

John Saunders

25 Years

Shand Taylor Lawyers

Peter Ham

30 Years

Retired

Elizabeth Inglis

30 Years

Lesley Tooth

30 Years

ORORA Fibre Packaging

Warwick Ballantine-Jones

40 Years

Collection Works Pty Ltd

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Queensland

Keep an eye out on the AICM website and AICM Qld Facebook page for upcoming Toolbox sessions.

Third Place: Decia Guttormsen (University of Queensland), Samantha Goddard (Oakbridge Lawyers), Stacey Woodward (Councillor), Zandalee McKenzie (Oakbridge Lawyers) and Justin Watson (Credit Solutions).

Toolbox Series – Member Interview We sat down with

LINDA RIDSDALE, MICM, CCE – SPAR

Australia Ltd to discuss all things Toolbox!

Tell us a bit about yourself and why you choose to attend the AICM Toolbox Series?

I have been in various credit roles for the past 20 years. I am currently the Credit Manager for SPAR Australia Limited, and have been in this position for almost 3 years. I am a Certified Credit Executive (CCE) and currently in the process of completing my Cert IV in Credit Management. I find the toolbox series informative and very interesting, it’s also a good way to develop and maintain my skills/knowledge in the credit industry.

How would you rate the overall quality of these training sessions?

The sessions are always well presented, with the presenter being able to answer questions and explain different types of scenarios, depending on the industry you work in.

How has attending these sessions improved your knowledge or skills?

Sometimes we think we know about certain issues in the industry, for example Bankruptcy, I was unaware that there is a Part IX and Part X. By doing these Toolbox sessions, this has increased my knowledge and also made me aware of the correct way Bankruptcy documents need to be completed, which is very important as you could lose out on payments.

What is the most important learnings that you have taken away with you?

How to identify possible signs of bankruptcy and how to correctly complete a Proof of Debt.

Do you enjoy the face to face format over online courses and if so, why?

I personally enjoy the face to face formats, which I find I gain more from the interactions and discussions, than the on-line courses. By being face to face and having the opportunity to interact with fellow credit professionals, you are able hear what they have done in similar situations and learn from these experiences.

Conference sneak peek – new event Qld Council are so excited to be hosting this years’ Conference on the Gold Coast from October 16th – 18th at Surfers Paradise Marriot Resort and Spa. We hope you have all registered for what is expected to be a stellar year with some amazing speakers already announced and a new event on the horizon.

Work is still being done behind the scenes so we aren’t quite ready to announce the details but we can give you a teaser…

Whether you’re an aspiring pro, a total beginner or an absolute foodie, you’ll ‘have a ball’.

Early Bird Conference pricing available until August 31.

BOOK AND SAVE NOW – See you there!

The Australian Institute of Credit Management welcomes our Partners for 2019.

National Partners

Trusted Insights. Responsible Decisions.

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.

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What advice would you give to other Credit Managers who are considering attending for themselves or other team members?

Attending the AICM Toolbox Series is a really good way to develop and maintain your skills, broaden your knowledge, networking with other people in the industry and staying up to date with new or changing legislation.

AROUND THE STATES

South Australia

Alice Cooper (Lynch Meyer) presents the first session of the seminar.

Mike Hayes (Piper Alderman).

SA Vice President Alice Carter works the projector for Insolvency Seminar panel session with Anthony Phillips of (Heard Phillips Liberenz), Natasha Riach (Mansueto Legal), Joe Corbo (Bianco Constructions) with Moderator SA President Nick Cooper.

Presidents Report We have shaken off the winter blues by bringing AICM members a host of professional development and networking functions. On 16 May we heard from a range of experts at our AICM National Insolvency half-day seminar.

A special thanks goes to Alice Carter, our Division Vice President for her tireless efforts at coordinating this inaugural event and presenting the legal issues topics. Thanks also to James Neate (Lynch Meyer) for his usual, colourful role as emcee and our expert presenters, Alan Scott (BRI Ferrier), Mike Hayes (Piper Alderman), Joe Corbo (Bianco Construction & Industrial Supplies), Natasha Riach (Mansueto Legal), Anthony Phillips (Heard Phillips Lieberenz) and yours truly (Worrells).

On 20 June our Women in Credit luncheon was held at the Adelaide Pavilion. It was a great success, with participants hearing from industry leaders and networking with other credit professionals.

Our Young Credit Professional (YCP) awards are well underway, with 3 candidates so far from SA. Our candidates were introduced at a gin tasting and networking event on 4 July at The Stag Hotel.

We heard from Tim Boat, the distiller and co-founder of 58

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Adelaide-based Never Never distillery, and tasted a number of Never Never’s gins that have recently won international awards.

The YCP winner for SA will be announced at our annual awards dinner which will be held at the Kentish Hotel on 15 August. Registrations for the dinner are now open.

Finally our National Credit Team of the Year award is open.

It is a great opportunity for credit teams to be recognised for their work, result, culture and training. Applications close on 31 July and I encourage SA credit teams to nominate for this prestigious award.

Enjoy the many benefits of your AICM membership and stay warm this winter!

– Nick Cooper MICM SA Division President

National Insolvency seminar On 16 May, the SA Division Council held a very successful insolvency seminar. The seminar was part of a national roadshow that had already experienced success in many of the eastern states.

The Mayfair Hotel proved to be the perfect venue for our afternoon, which kicked off with a session led by our own

South Australia AROUND THE STATES

Amy Cooper and Angela Walden (both NCI).

Gail French and Debbie Costello (both Topcoat Asphalt).

Leona Adams (Results Legal) Tina Boffa (Bendigo and Adelaide Bank) Lisa Silver (Results Legal).

Janette Bretag (Samuel Smith) Nada Belson and Courtney Taylor (both Grant Thornton).

Vice-President, Alice Carter of Lynch Meyer Lawyers. Alice presented on terms and conditions, the PPSA and the Unfair Contracts Act. The session was jam-packed with lots of useful and important information. We then heard from Alan Scott of BRI Ferrier who spoke about creditor’s rights during the insolvency process. Alan, who is a very experienced Liquidator and Trustee, provided attendees with a number of tips and traps that creditors find themselves in during the insolvency of an entity. The final session was presented by Mike Hayes of Piper Alderman. Mike spoke to us about preferences and the defences that may be available to a creditor in the event they are pursued by an insolvency practitioner to pay money back to the company. Mike’s presentation was informative and lighthearted and was enjoyed by all.

Finally, our afternoon concluded with a panel discussion.

Our SA Division Council President Nick Cooper of Worrells, chaired the panel and he was joined by Anthony Phillips of Heard Phillips Lieberenz, Joe Corbo of Bianco Construction and Industrial Supplies and Natasha Riach of Mansueto Legal. Many of the attendees engaged with the panel for what was a lively and interesting discussion about all things insolvency.

Many attendees then stayed for networking drinks, which was a wonderful way to end the day.

We were grateful to have the involvement of such high calibre speakers and thank them for giving up their time to present. The afternoon was full of excellent and informative content and we hope to bring you a further national seminar event later in the year.

Women in Credit Our Women in Credit event was a standout success for the annual calendar with a fantastic venue, food and presenter.

Thank you to our premium sponsor Equifax and supporting sponsors Results Legal and NCI, without their assistance we wouldn’t be able to offer such amazing events.

Thank you to the SA WINC committee for your tireless efforts to organise the event and we thank the prize donors Kemps Credit Solutions, NCI, Results Legal and Worrells.

A word from the SA Committee Introducing our newest council member Gina Thorp of Elders Rural Services. Gina has worked in the Credit Industry for nearly 7 years, she started her Credit career at Grace Records July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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South Australia

Debra Foster and Julie Sobey (both City of Playfair).

Tammy Ktisti, Edwina Tideman, Gemma Haggett and Edith Chau (all NCI).

Tarissa Elmer, Lucricia van der Berg and Jenny Yuen (all Scottish Pacific).

Presenter Jo Marshall (Culturise) thanked by Matt Brennan (Equifax).

Management in accounts receivable then moved onto Credit Union SA as a member services officer. This is where she realised that her passion was within the Credit Industry and working at Elders has given Gina the ability and opportunity to deal with a diverse group of people from different backgrounds.

As a South Australian AICM New Councillor SA Council member, Gina’s goal is for 2018 YCP Gina Thorp. every member to get the most out of their membership as possible and being on council she believes this goal can be achieved. Prior to council membership you may recognise Gina as she is the South Australia’s Young Credit Professional of the Year for 2018.

The Australian Institute of Credit Management welcomes our Partners for 2019.

National Partners

Trusted Insights. Responsible Decisions.

Divisional Partners

Official Division Supporting Sponsors

Thought of the day “[Credit is a system whereby] a person who can’t pay, gets another person who can’t pay, to guarantee that he can pay.”

– Charles Dickens, Little Dorrit 60

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

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.

Victoria/Tasmania

Adrian Hunter (Brooke Bird), Allan Kawalsky (TurksLegal), Charlotte Thaarup (Mindfulness Clinic – speaker), Megan Kernick (Reece), Laura Freedman (Share the Dignity event charity), Robyn Erskine (Brooke Bird) and Sarah Ramsey-Caudle (TurksLegal).

Vivienne Wilkes (Mercedes), Lynne Jordan (Liberty Financial), Mark Thomas and Debbie Leo (both Equifax), Cathie Beeson and Lauren King (both Latitude Financial Services) Vik Nankany (Equifax) and Jess Chan (Liberty Financial).

Cathy Grinter (The Beddison Group) and Sia Patouras (CollectAU) practice their mindfulness techniques.

Presidents Report

Women in Credit Lunch

What an amazing few months since we last reported to the membership.

We’ve held a number of events not in the least a firm calendar favourite our Women in Credit Luncheon. We had the privilege of taking the time out of our busy day to take part in Charlotte Thaarup’s, Mindfulness Clinic with take away tips on how to remain calm during the chaos of our everyday lives.

We thank Debbie Leo at Equifax as our Premium Sponsor, Anna Taylor at Results Legal and Prudence Chang NCI Supporting Sponsors who continue to support the AICM to make this event successful and bigger each year.

Thank you to each one of you that attended and for the companies that donated the raffle prizes. Can’t wait to see you all next year.

Also a new calendar entry was the national insolvency seminar which was warmly received by the division and I’m sure will be a fixture for future years. Thank you to all for their planning of this event.

As I write the judging of the YCP for Vic/Tas is taking place and I’m excited to meet the future of credit management at the awards ceremony July. Thank you to all our members and sponsors for your ongoing support.

On May 10, 184 women and men joined us for the annual Women in Credit Luncheon, held at RACV in the heart of Melbourne’s CBD. Sponsored by Equifax, Results Legal, and NCI, this event is a cornerstone of the Melbourne credit networking calendar, and following this year’s event, it is bound to be for years to come.

Overlooking the skyline over the city around us, the slightly overcast weather added to the calmness brought to the event by our keynote speaker, Charlotte Thaarup.

Charlotte, the Principal Consultant with the Mindfulness Clinic, guided the attendees through a number of mindfulness exercises – no small feat! Her command over the room meant moments of complete silence, a new first for an event of this kind.

Over a two-course lunch, those moments of silence were fast forgotten, as conversations around the table got excited and new connections were made. Lipsticks from Equifax were traded across the table along with business cards and raffle tickets for the charity raffle.

This year, AICM is proud to donate their raffle profits to Share the Dignity. Share the Dignity is a charity dedicated to supporting homeless women, and those that are victims to domestic abuse, with the supply of personal hygiene products.

Every woman in the room could appreciate the importance of

– Sherif Hussein MICM CCE Vic/Tas Division President

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Vic/Tas Council WINC Committee: Robyn Erskine, Mary Petreski, Lou Caldararo, Catrina Galanti, Sherif Hussein, Katheryn Kershaw and Sunny Sharma.

AROUND THE STATES

Victoria/Tasmania

Christine McArdle (Vinidex) receives prize from Anna Taylor (Results Legal).

Crystal Lou (Asahi), Veena Albantow (Interactive), Tracey Costar (AGL), Sarah Shelly (Interactive), Alison Said (AGL), Sherif Hussein (Vic/Tas Division President), Gabriella Forte (Australia Post), and Felicity Boulter (Interactive), Irene Mahecha (Interactive).

this charity, and the donations were rolling in. The success can also be attributed to those who donated prizes for the raffle.

Thanks to their generosity, not only did many of us walk away with enviable prizes, but we were able to donate a total of $2,775 to Share the Dignity.

An event of this size could not go as smoothly as it did without the support of our Katheryn Kershaw sponsors. Thank you to Debbie Leo at Equifax as our premium sponsor, Anna Taylor from Results Legal and Prudence Chang from NCI as our supporting sponsors. Thank you also goes to the hardworking women on the planning committee of the AICM council, led by Amanda Borland, and of course you, our members. Thank you all, because of you, we can continue to offer such great events to our members and supporters and give so generously back to our community.

We look forward to hosting this event next ye ar, and no doubt bigger and better!

– Katheryn Kershaw MICM 62

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Pamela Sanhanga (Optus) asks a great question.

Jo Pollard (Haymes Paint), Renetia Davadoss (St Michael’s) Diana Sullivan and Peta Clark (both Haymes Paint), Dina Coutsodimitropoulos (CGU Insurance), Dawn Bayley (Moffat), Stephen Moloney (Ampac).

National Insolvency Seminar 23rd May 2019 This year the AICM in collaboration with the Australian Restructuring Insolvency & Turnaround Association (ARITA) held the inaugural National Insolvency Seminars across Australia. On the 23rd May I attended the Victorian seminar held at the Stamford Hotel in Little Collins St, Melbourne with over 30 fellow Credit professionals.

Our MC for the event was Victorian/Tasmanian Legal Councillor Mr Frank Gambera (Director at McMahan Fearnley Lawyers Pty Ltd). We were both educated and entertained by a truly great array of speakers.

Allan Kawalsky (partner at Turks Legal) presented on what our Terms and Conditions/Credit documents need to cover in line with all the new legislation that we as Credit professional face in this ever-changing world. He provided all attendees with very useful ideas on what we can and indeed should do to ensure we are in shape for any insolvency that we may face in the future.

Our second presenter was Adrian Hunter (partner at Brooke Bird and ARITA Vic/Tas Committee member) who explained what our rights are during the insolvency process.

What we should be looking for and provided some great information relating to administration. Including an explanation

Victoria/Tasmania

Allan Kawalsky (TurksLegal) presents on changes to credit legislation.

of when you can and/or should challenge the conduct of an administration.

Third presenter of our panel was Michael Lhuede (partner at Piper Alderman; ARITA Vic/Tas Committee member) who presented on the area of Unfair Preference claims. Michael’s insight into identifying preference claims and how we should work towards limiting our exposure plus ideas to defend these actions.

The day concluded with a panel discussion. Joining Michael Lhuede on the panel was Matthew Gollant (Principal at Courtney Jones & Associates; ARITA Vic/Tas Committee member) and Carole McTavish MICM CCE (National Credit Manager at Australia Post). With some interesting questions relating to the day’s presentation plus questions from our MC. Networking was held at the end of what was a great event.

UNDERSTANDING CREDIT RISK

Toolbox Series FUNDAMENTALS OF CREDIT I have presented many of these Toolbox sessions, and it is always great to see positive delegates interact with professionals from various different principles who all have the same interest in Credit.

This is a great session to attend, whether you are new to the credit Mary Petreski industry or have been part of the industry for most of your career. The session features introductory topics on Basic Legislation, Legal entities, Basic Procedures and more, all catered to best business practice.

Fundamentals of Credit, was last held in April at the Asahi Beverages office in South Melbourne. It was a great outcome for all attendees, discussing each topic freely and comfortably.

The group took valuable information back to the office, motivated to register for Collect with Confidence.

– Mary Petreski MICM CCE

On Tuesday May 21st I had the pleasure of presenting “Understanding Credit Risk” to some of our wonderful members. The session was held at our sponsor Turks Legal’ s office in the Rialto building.

Catrina Galanti The views out over Melbourne towards the bay made for a beautiful backdrop for our session. Toolbox 3 runs through 3 key areas: zz Understanding Credit Risk, zz Managing Credit Risk, and zz Mitigating Credit Risk.

Through this session our members learn how best to set themselves up for success in their roles.

This session’s attendees had various levels of experience from many different industries including; steel, construction and FMCG. Some with over 20 years’ experience, some just a few years. The team was very open and honest about the struggles they face in their roles as credit professionals and all were happy to share war stories and tips.

Having such a varied group provided for some truly diverse and engaging debates on how to best handle those delinquent debtors and also bring the management team onto the side of the credit team. The AICM provided morning tea and we shared “the craziest excuses ever heard” while we enjoyed our fruit and savoury muffins.

The Credit Toolbox series is a great way for those new to Credit to discover best practices and those who are experienced to get a refresh on the current legislation and strategies.

I have presented many Credit toolbox sessions and can say that each session brings a fresh perspective. These sessions are a wonderful opportunity for education and also to spend time with likeminded credit professionals who understand your dilemmas. I encourage everyone to give them a go, regardless of experience level.

– Catrina Galanti MICM CCE July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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Michael Lhuede (Piper Alderman and ARITA Vic/Tas Committee member).

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Victoria/Tasmania

Panel: MC Frank Gambera (McMahon Fearnley Lawyers Pty Ltd), Michael Lhuede (Piper Alderman and ARITA Vic/Tas Committee member), Carole McTavish (Australia Post), Matthew Gollant (Courtney Jones & Associates and ARITA Vic/Tas Committee member).

YCPA The Young Credit Professional of the Year Award (YCPA) program is the largest and most prestigious Youth Credit Award program in Australia and provides a great opportunity for young Credit Professionals to gain recognition both for themselves and their employer. illion (formerly Dun Amaran Navaratnam & Bradstreet) is the sponsor of the Young Credit Professional of the Year Award and has sponsored this National Award continuously for the past 22 years.

This year only 5 from Vic/Tas were selected from a large pool of submissions and the selection process can be very difficult for judges as each applicants’ submissions bring something different to the table.

The interviews will be held at illion’s office on 5th July and the presentation cocktail function will be held on 19th July at the Golden Gate Hotel in South Melbourne.

The panel judges for 2019 will be; zz Craig Brooks – General Manager Distribution illlion zz Alison Said – Credits & Payments Manager AGL zz Rex Cheng – Team Leader, Premium Admin & Credit, Customer Delivery – Intermediated Business Distribution IAG. By entering the YCPA program and discussing your career achievements and ambitions you will gain both valuable insight to the potential for your future advancement and support from young Credit Professionals like yourself and from experienced Credit Practitioners who are interested in assisting young Credit Professionals to achieve their potential.

I would encourage all credit professionals to attend the cocktail award evening to support the Vic/Tas finalists for 2019 and cheer on the State winner to the National Conference being held in the Gold Coast October 2019 to which the state winner will then compete for the National award.

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On behalf of Vic/Tas AICM Councillors I would like to wish all the finalists the best for this year’s state award. For more information on registration for the evening please email aicm@ aicm.com.au – Amaran Navaratnam MICM CCE

The Australian Institute of Credit Management welcomes our Partners for 2019.

National Partners

Trusted Insights. Responsible Decisions.

Divisional Partners

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.

Western Australia/Northern Territory AROUND THE STATES

Byron Savage (WA Health), Bob Jacobs and Paul Cockburn (both Auxilium Partners) Greg Proust and David Hurt (both WA Insolvency Solutions).

Jean Tholasse (Threat Protect) Lisa Marr (WA/NT Division President), Nicholas Mansfield (Price Sierakowski).

Panel Presentation chaired by Byron Savage with panel participants Nirupa Manoharan (Mills Oakley), Jason Louis (BGC) and Matthew Donnelly (Deloitte).

Presidents Report The AICM is all about the education and progression of its members. This can be seen through all of our activities such as: zz Toolboxes zz Roadshows zz Education Programs zz Networking Events zz Young Credit Professional Awards, zz Pinnacle Awards, and zz Women in Credit.

In May, we brought the Insolvency Road Show to town.

This half-day seminar featured formalities of credit applications, insolvency fundamentals and your preparedness for insolvency plus everyone’s nightmare – unfair preference claims. As noble as all of these topics were, the undisputed winner on the day was the panel discussion on making unfair preference claim fair.

Never a more lively and robust debate has been seen I’m sure.

We look forward to bringing another national roadshow series to the west in the near future.

This year we moved out to the suburbs in early June for the annual Women in Credit event. This year was one of the highest attended gatherings so far with 80 guests registered.

Yet again, our guest speaker was top shelf! Nicolle Jenkins from CCIWA was very well received. Her ‘Career & Stuff – What I’ve learned along the way’ was funny, engaging and thought provoking. Many learnings were taken away by all attendees. The raffles did very well and we raised $1,655 for Share the Dignity.

Moving into July, the economy was front and centre. Our first breakfast for the year was running a bit behind, however on July 3, we welcomed back Alan Langford to share his thoughts on the economy and the return of the Coalition to government.

Always informative from local and national perspective, we plan to have Alan back in his usual slot in 2020.

We look ahead to August where we will meet our YCP State Finalists. We return this year to Crown Perth for the Gala Dinner.

Please make a note in your diaries for Friday, 16th August at 7pm. Council is looking forward to seeing you all there. Don’t forget the AGM will be held prior to the event commencing and you are all welcome to attend.

Until next time, best wishes and I trust you were successful in your end of financial year collections!

– Lisa Marr MICM WA/NT Division President July 2019 • CREDIT MANAGEMENT IN AUSTRALIA

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AROUND THE STATES

Western Australia/Northern Territory

Debbie Leo (Equifax), Linsey Mallard (Wesfarmers Kleenheat) Kevin Allen (Equifax), Adam Reid, Stacey Kohr and Sheryl Tan (both Bankwest), Daniel Saccocio (Equifax) and Tina-Marie Innes (Keystart Home Loans).

Malcom Field (SV Partners) presenting on how to get the best possible outcome through insolvency

Raff Di Renzo (Nova Legal) ensures delegates knowledge on insolvency laws are current.

Gina Nofal (HHG Legal), Nicolle Jenkins (The Hub Marketing Communications – keynote speaker) Lisa Marr (WA/NT Division President), Cheryl Dickenson (Vinidex), Melissa McVey (Mix Telematics) and Kelly Turner (Auxilium Partners).

Katy Lunam, Maree O’Grady, Michelle Matthews, Julie Drakesmith (all Programmed Skills Workforce), Damian Barr (Ampac) Georgie Skinner and Fiona Wilde (both Lockton).

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CREDIT MANAGEMENT IN AUSTRALIA • July 2019

National Insolvency Seminar We held our first National Insolvency Seminar on 22 May 2019. It was a great success with very positive feedback from attendees.

The information provided during the sessions was very relevant, with the panel discussion on unfair preferences, in particular, being highlighted as the favourite part of the seminar.

Raff Di Renzo from Nova Legal presented the first session which was on tips to ensure that your terms and conditions and processes are up to date to deal with the latest changes in insolvency law. The next session was about your rights as a creditor and how to ensure that you get the best possible outcome from the insolvency process. This was ably presented by Malcolm Field from SV Partners.

The third session presented by Nirupa Manoharan from Mills Oakley was on unfair preference claims and how best to deal

Western Australia/Northern Territory

Elena Asenova (Department of Transport), Rowan McClarty (WA/NT Division Director), Meagan Ibbott and Anetta Cutler (both Department of Transport), Frank Vredenbregt (Automotive Holdings Group), Alice Eves (Department of Transport).

with them. The final session was a panel debate on unfair preference claims from the points of view of a Credit Manager, an Insolvency Practioner and a solicitor, made up of Nirupa Manoharan from Mills Oakley, Jason Louis from BGC, Matthew Donnelly Oakley from Deloitte and chaired by Byron Savage from East Metropolitan Health Service.

Kelly Dunlop (Capricorn Society) and Briana Wills (Wesbeam).

The Australian Institute of Credit Management welcomes our Partners for 2019.

National Partners

Trusted Insights. Responsible Decisions.

Women in Credit The annual Women in Credit event was held on 14 June 2019 at International on the Water, a venue located on the banks of the Swan River. It’s an extremely popular event and is definitely one of the premier events on our calendar. The speaker was Nicolle Jenkins, Managing Director, The Hub Marketing Communications and Vice President, Chambers of Commerce and Industry WA. Nicolle told of her inspiring journey to where she is today and of the pitfalls and obstacles that she encountered and how she overcame them, as well as tips on how to succeed in your career today.

At the WINC we use the opportunity to partner with a charity to raise money for them. This year we partnered with Share the Dignity, a charity that is making a real difference to victims of domestic violence and homeless women. They also fund funerals for victims of domestic violence and campaign for justice for women in Australia. We raised $1,655 for their various campaigns on the day, a really great effort from everyone who contributed.

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.

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AROUND THE STATES

Daniella Tanasic (Southern Steel WA) Annabelle Rogers (Boyd Metal Industries) Grant Morris (Southern Steel), Barbara Busby (Structerre Consulting Engineers), Debre Bernado and Fiona Newman (both Westrac), Stephanie Hughes (Cloud Collections) Sharon Thiart (Westrac) and Jeff Hurst (Trade Bureaux Australia).

AROUND THE STATES

New Members The Institute welcomes the following credit professionals who were recently admitted to membership in May and June.

New South Wales

South Australia

Nathan Abellanoza Rentokil Initial Pty Ltd Andrew Allen HDI Gloabl SE Rebecca Anderson Optus Nirjala Baidya Kronos Danielle Basford Bluescope Steel Limited Vaidehi Bhatt Equifax Jessieca Cabalonga St John Ambulance (NSW) Christian Casulla Rentokil Pest Control Sydney Patrick Caunca Metcash Trading Pty Ltd Monica Cortez Optus Darren Davis Equifax Abdallah El-Haddad illion Claudia Guevara Rentokil Initial Pty Ltd Thomas Hunt Optus Tasnuva Islam Rentokil Initial Yvette Kinkade Single O Linda Lam Rentokil Initial Kimberly Lawson Snap on Lan Lin Bottomline Technologies (AUS) Pty Ltd Stacey Meers Shield Mercantile Pty Ltd Peter Moore Jirsch Sutherland Sean O’Connell Equifax Shamik Paul Optus Pty Ltd Sabina Piljek Southern Steel Group Roshak Raj BOC Limited Anthony Rizzuto Optus Administration Pty Ltd Katarina Sepping Shield Mercantile Isabella Sheman Jirsch Sutherland Ashwini Singh BOC Limited Katherinne Sutanto Ferrero Australia Pty Ltd Grace Touma Equifax Katherine Vasquez Arteaga Rentokil Initial Sharon West Invocare Alister Yee Vincents Carol Zhou BOC

Linda Bardwell Rachel Buckberry Rachael Bunting Stephen Done Angelina Gordo Briana Harris Raza Kamdar Jane Lohe Digby Luckhurst-Smith Amanda Rodgers Sandy Schokman Eddie Schwerdt

Queensland Jacob Anderson Payment Advantage Andrew Blackwell Property Compliance Australia Alleasha Blanzan Property Compliance Australia Pty Ltd Steve Brooker Quality Food Beverages Victoria Cole Vincents Damien Davis Vincents Jonathan Dooley Vincents Matthew Figgitt Payment Advantage Matthew Gooding Property Compliance Australia Pty Ltd Malinda Karunaratne Cooper Grace Ward Lawyers Ashley Leslie Vincents Sam Marsh Holman Webb Lawyers Zandalee May McKenzie Oakbridge Lawyers Pty Ltd Katelyn McLeod Payment Advantage Nicola Moore BlueCare Jemma-Lee Poynter Property Compliance Australia Pty Ltd Lisa Silver Results Legal Steven Staatz Vincents Chartered Accountants Liyan Tay Vincents 68

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

Rentokil Initial Pty Ltd Bluescope Steel Ltd Rentokil Initial Pty Ltd Bluescope Limited T/A Fielders Oakbridge Lawyers Pty Ltd Oakbridge Lawyers Pty Ltd Rentokil Initial Pty Ltd Lynch Meyer Lawyers Lynch Meyer Lawyers Accolade Wines Rentokil Initial Pty Ltd Bluescope Steel

Victoria Nejma Alashkar illion Australia Pty Ltd Kim Booth Coach Kim Bobby Bratanata Moula Linda Brown Oakbridge Lawyers Pty Ltd Tracey Dixon Bowens Robyn English Bluescope Steel Vladimir Flores Singtel Optus Pty Limited Lamyah Gill Bunzl Outsourcing Services Richard Horm Bluescope Steel T/A Lysaght Jacinta Hutchinson Bluescope Distribution Pty Ltd Dammika Jayasekara Bluescope Steel Ltd Joanne Karakurt Bunzl Outsourcing Services Ltd Timothy Kearney Optus Nathanael Kitingan Macpherson Kelley Nalinda Kumarapperuma Optus Navnith Lal illion Andrew Mahy Bluescope Distribution Pty Ltd Maureen Matthews Bluescope Distribution Pty Ltd Cindy McQuillen Bunzl Outsourcing Services Monique Milic Oakbridge Lawyers Ravish Modi Optus Thiep Pham Optus Ricka Slattery Viva Energy Australia Pty Ltd Nikolce Srbinovski QBE Insurance Brian Sterritt Optus Jacqueline Sutton Bluescope Distribution Pty Ltd Mathew Symmons Optus Pty Ltd Jessica Taylor illion Mark Thomas Equifax Julie Tobin Bluescope Steel Limited John Torounoglou illion Yinwen Wang Bluescope Distribution Pty Ltd Mary Whalan Kemps Petersens Receivables

Western Australia Damian Barr Jeremy Coote Colette Davies Anne Hooper Annabelle Rogers Paras Shah Robert Webster

AMPAC Debt Recovery BGC (Australia) P/L Roobix Bluescope Steel T/A Fielders Southern Steel Group Pty Ltd AMCAP Distribution Centre AMPAC

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 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

DISTRIBUTION & PRINTING AICM Divisional Partner

Lane Printing 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

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.

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.

CreditorWatch

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.

CONSULTANCY AICM Divisional Partner

Kemps Credit Solutions 50 Grenfell Street Adelaide 5000 Tel: 08 8418 1450 Email: gcrowder@kemps.com.au Web: www.creditsolutions.net.au/kemps Kemps Credit Solutions. 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 Kemps Credit Solutions has set the benchmark for providing quality collection and recovery services to South Australian businesses and government.

AICM MARKETPLACE

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.

AICM Marketplace – our new initiative 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

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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

INSOLVENCY

LEGAL

AICM Divisional Partner

AICM Divisional Partner

Trusted Insights. Responsible Decisions.

Vincents

illion 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.

AICM National Partner

Level 34 Santos Place, 32 Turbot Street Brisbane QLD 4000 Tel: 1300 VINCENTS

(07) 3228 4000 Web: www.vincents.com.au

Nova Legal

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.

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.

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

AICM Divisional Partner

AICM Divisional Partner

Results Legal Worrells

Equifax Tel: 13 83 32 Web: www.equifax.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.

Suite 1103, Level 11, 147 Pirie Street Adelaide SA 5000 Tel: 08 8214 0500 Email: adelaide@worrells.net.au Web: www.worrells.com.au Worrells is dedicated to solvency management, insolvency administration and forensic investigation. Worrells have been providing high quality corporate and personal insolvency services for over 40 years. We pride ourselves on offering reliable and practical solutions to those burdened with debt. With 24 partners and over 100 staff in 26 locations across Australia we are resourced nationally but focussed locally.

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 Divisional Partner

AICM Marketplace – our new initiative 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

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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.

CREDIT MANAGEMENT IN AUSTRALIA • July 2019

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.

AICM MARKETPLACE

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 TECHNOLOGY

RECRUITMENT

TRADE CREDIT INSURANCE

AICM Divisional Partner

National Supporting Sponsor

Sharp & Carter

CreditSoft Solutions

Web: www.sharpandcarter.com.au

Tel: 1300 720 164 Email: info@creditsoft.com.au Web: www.creditsoft.com.au

For any assistance with Credit recruitment, please call Melbourne – Chris Belegrinos on 03 9616 2622 Email: cbelegrinos@sharpandcarter.com.au Sydney – Taha Sayed on 02 8315 8800 Email: tsayed@sharpandcarter.com.au Sharp & Carter will tailor candidate sourcing strategies to suit your company’s needs, taking into account factors such as time frame, budget, level of role and availability of candidates in the market.

We are committed to achieving a successful outcome for every assignment on which we work.

National Credit Insurance Brokers Tel: 1800 882 820 (freecall) Email: info@nci.com.au Web: www.nci.com.au

CreditSoft specialises in providing credit managers with innovative products that will save your business significant operating costs and allow you to manage your time and resources more efficiently. We offer contact, tracing, payment, reporting and analytic solutions that redefine the way credit departments operate. Our goal is to ensure you achieve the best possible return on your investment.

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.

See you at AICM’s

2019 N A T I O N A L

CONFERENCE 16th – 18th October 2019 Marriott Gold Coast CLICK HERE FOR MORE DETAILS

AICM MARKETPLACE

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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