In Focus Collections


The third-party effect can often tip firms over to pay. Is it still effective? VH: You must be aware of your reputation that, if you tell a customer you are going to take a certain action, then you are going to follow through. So, if someone does not pay, then you are going to take the goods or take whatever other appropriate action.


BL: We have to consider that, once we load that vehicle, then the product has a very short lifespan. It has to come out of the concrete mixer otherwise it sets and we lose a drum. Once the lorry is loaded, we have 20 or 30 minutes to use the products and, if something happens in that period, then we need to take a decision, maybe to let the deal go ahead and then we will sort the problem out; it is a risk. We have to make a decision and I would argue that we will not make a bad decision, but we might make a decision without all the information: based on the information that we have, we will decide if that is a risk we will go with.


KM: When we outsourced the day-to-day transactions, I had to reinvent my role, to be very customer focused and I am always out and about with clients. When I go into a firm, I always spend the first half an hour getting to know them, what family they have, their football team, so the next time I can start with asking ‘how is your son now he is a teenager?’ You break down barriers.


LC: When we have accounts passed to us, the client will have done their own credit- control processes and we will send an LBA out and, nine times out of 10, get a response from it. You ring them up, they are really nice people, and they pay it. When we ask why they did not pay before, they often say that the previous collector had not been


It is not just about wanting to get your payment in on the due date, it is about making sure that you have the right margin


good on the telephone with them. You can send letter after letter sometimes, but you need to make a high-quality telephone call.


CE: That can be a good way to use an LBA. The point of helping your customer is key, we see it sometimes where we need to put in what I call a ‘protective insolvency’ process. To get a good, reputable insolvency company in to put a protective insolvency in place can be invaluable.


KB: I am a great believer in the third-party effect. We go through all our collections systems, so only a small number of cases are passed out, but when we do and a letter is sent, then in the huge majority of cases, payment is received straight away.


LS: Even as a solicitor, we can take the tone of wanting to sort a problem out. Very often we will send a letter or put in a call with a tone of ‘can you call us to talk about it’. Then you can take a sensible approach.


LC: In a way, we can be seen as being in the middle and trying to sort things out. It can be presented that the client has passed us the account and want us to take action on it, so we are calling to see if there is a problem that can be solved. Quite often they will say ‘oh, I have told somebody about this so many times’ and whoever they


have told have just not got the information where it needed to be. Obviously you need a threat to sue, otherwise they will not do anything, but you can still take a practical approach. Sometimes it is difficult to make your mind up, as to whether to instruct lawyers to start proceedings, but once a decision is made, the third part effect works.


Do you think that there is sufficient awareness of the impact late payment has on the wider business landscape? BL: Another problem for the SMEs is that some of their larger customers simply moved to longer terms, so they continue to pay ‘on time’, but only within these extended terms. So the rules were good, but the government did not respond to the fact of the game changing.


PL:What we are talking about is not actually a legal problem, rather it is an ethical problem. Firstly you have the extension in the terms, but then you will have some of the bigger companies who will boast about complying with the Prompt Payment Code because they pay ‘on terms’ and then they issue huge debit notes; the cashflow is not guaranteed. They will introduce their customers to a finance house to provide supplier credit – again, it is an ethical issue that suppliers can get paid quicker, but they have to pay for it.


CE:We have one client who has taken the policy decision that we advised on, whereby all their clients that currently pay on 90 days will get a letter to say that they will be paid on 60 days, and if their customer does not agree, then any subsequent failure to pay within 60 days will be met with penalty interest under the Late Payment Directive. That is working quite well. CCR


Left-right: Nigel Fields; Patrick Langley; Chris Else; Paul Gordon; Atul Vadher June 2017 www.CCRMagazine.co.uk 37


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