In Focus Commercial Credit
Left-right: Myron Fedak; Paul Harbron; Phil Rice; Polly Greenwood; Andrew Mann >>
‘here are the outstanding invoices, here is the data, push it through – off
you go, and please make sure you do it as cheaply as possible’. Of course, the danger with the second type is that we are almost leaving it to osmosis to become suddenly armed with a full understanding of how the client’s business operates! Each client has its foibles and by far the most effective type of lawyer-client relationship is when you work in partnership together and invest the time to get decent, bespoke procedures in place.
JC: It can be that the client simply does not provide the relevant customer-interaction information to suppliers. I have been responsible for the flow of customer data to and from different third parties in the debt- supply chain. If a case was going out, say to a collections agency, we would have the flow of information going out to the company and coming back in, so any additional data could be forwarded to the next supplier. The use of that data and the provision of it to the next supplier down the chain is key. This is true of legal service providers and enforcement agencies, who are at the very end of that chain. The client might have a wealth of information that would be crucial if you need to follow up with enforcement, but that information needs to be managed throughout the client’s processes.
PG: There is also the silent client who gives you a couple of invoices, but you know there is a whole back-story to the case. There is certainly a difference between good-quality debt and bad-quality debt. It is amazing now, with the amount of information out there, how often a client does not even know who their customer is: for instance, they will not have a full company name and registration number.
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CW: Twenty years ago, it was almost impossible to get our clients to make changes to their terms; now it is much more common. There is more sympathy from Finance and the company secretary to buy in to what we want to do. The great benefit is to have the threat that litigation could follow, and late- payment fees, so it is a tool in the hands of the credit manager. There is now a greater desire to have that weapon in the armoury.
PG: I have had clients who do not even know if their firm has terms and conditions! It is vital to have a good set of them – a salesperson does not need to understand each word, as long as someone in the company has written a good set and they are passed on to the client. It gives the lawyer so much more power at the nitty-gritty end.
FJ: Non-authorisation of debt-management firms is likely to be an increasing factor over the coming period. When a firm is refused authorisation, what will happen to its clients and what will happen when paying customers stop doing so? Companies should have strategies in place to address these risks.
JP: Over the past five years, MI has become a huge factor in what we do. It is all about the data and how you use it. All our clients want lots of data, and we produce reports for them, but you do wonder sometimes just how much they are analysed in any great
detail. Really understanding how we use the data, and drilling down into precisely what clients want, has become important to us. That said, if you are looking to improve collections, then ultimately your priority still has to be the quality of your people.
JC: In my previous role, we would always work very closely with our suppliers about data. Housekeeping was absolutely key – we had massive amounts of data, but it was a question of how we could cleanse it and utilise it, and then, how do we supply it to other suppliers down that collections path? By the time it gets to legal and enforcement, there are probably four or five touch points where you have contacted the customer, and gathered some information that will probably be of use at that later stage. If you do not use that data, then you could paying for something you have not got any value from. However data management between suppliers is not an easy thing to do, the sheer volume of data means that you need systems and algorithms to make sense of it. You do not want to be in a situation where you are crushed by the volume of your own data and do not realise its full potential.
You do not want to be in a situation where you are crushed by the volume of your own data and do not realise its full potential
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BC: The Official Receiver had over 35 offices nationally – with some regions with more than two sub offices in 2010. It is now 20 regions, some covered in the same office as per budget issues. There are so many applications for insolvency but staff, in my opinion, restrict proper investigation, so nobody is going to investigate and action those that are not at a big enough amount of money. There has also been a rapid fall in the number of compulsory liquidations. The only creditors prepared to take action are in the construction industry, the utilities, and local authorities and HMRC. CCR
January 2017
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