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AICM “ Intro to Credit “

AICM “ Intro to Credit “. Part of a 3 Hour Workshop Prepared & Presented by Colin Prosser FICM CCE. Account Applications. “ Get it right from the Start “ Legally Binding Contract “ promise or a set of promises which the law will enforce “

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AICM “ Intro to Credit “

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  1. AICM “ Intro to Credit “ Part of a 3 Hour Workshop Prepared & Presented by Colin Prosser FICM CCE

  2. Account Applications • “ Get it right from the Start “ • Legally Binding Contract “ promise or a set of promises which the law will enforce “ • A written agreement showing the Terms of Trading agreed too; between the parties • Main Elements of a Contract ( Account Application ) are Offer, Acceptance, Consideration & Intent • Ensure Correct Name ( Correct Spelling / Individual / Partnership / Company ) , • Check ABN /ACN ( free govt service – www.abr.business.gov.au ) • Correctly signed ( do they have the authority to sign? eg: Receptionist or General Manager ) dated & witnessed • Proof of I/D - D.O.B, Driver’s Licence, Passport ( has Photo & Signature ) • Contact details – address physical & postal, phone, facsimile, mobile, pager, email address & website

  3. Credit Checks ( Trade & Bureau ) • 3 or 4 Trade Refs from Account Application ( initial checks & should do annual re – referencing checks ) • Trade Industry Bureau for New & Existing Accounts; Exchange of Information with Competitors within the same Industry ( eg: how long had their account, C/Limit $, Trading Terms & pays 45 days.) • Credit Bureau checks – in old days ( ABR ) Australian Business Research ( Detailed Reports ) & Veda Advantage ( Consumer ) – now merged & Dun & Bradstreet ( Commercial ) for New & Existing Accounts; use Default Listing ( for Bad Debts / Final / Default Notice), Credit Risk Scoring, E-Alert or Internet Alert ( e-mail advice on changes ) • AICM 5 “ C “ of Credit – Character ( Willingness ), Capacity Ability ), Conditions ( Economic ), Capital ( Financial position ) & Collateral ( Assets for Security ).

  4. Terms & Conditions of Trade • The Customer has to be aware & accepted the T&C’s; for them to be enforceable – Signed, Name Printed & Dated ( supply copy ) • Tools of your Trade – Types of Goods & Services ( eg: Identifiable / Perishable ) – Payment Terms, Account Suspension ( Stop Credit ) , Retention of Title ( Romalpha Clause ), Right of Entry ( Collect unpaid Goods ), All Debts / Monies clause, charge Interest, Offer Prompt Pay Discount, Default Clause - use of Mercantile Agency & Legal Action plus any costs incurred ( jurisdiction – eg: in Victorian Courts ) • T & C’s usually appear on the reverse of Account Applications, Invoices, Delivery Dockets, on the Website & Account Statements( A continual Reminder to Customers ) • Personal Properties Securities ( PPS ) Law & Regulations, registering for “ Perfection “ from May 2009 ( Attached Media Release )

  5. Monitoring Accounts • My 4 “ C “ s of Credit - Current, Complete, Correct, Concise information to make a Decision. • Updated Ledger ( Daily / Weekly ) – Invoices, Payments, Credits, read Discussion Notes on Accounts System. • Use Diary System to remind you to follow up - cheque / EFT due, arr to pay, chq run, reminder / final notice letter / statement • Work from Large $$ to Small ( 80 / 20 Rule )

  6. Making a Phone Call • ACCC / ASIC Debt Collection Guideline 2005 – How how often can you call & Penalties • Preparation – “ Think about what you want to say “ • Account History - payment cycle & contact details. • Copies of outstanding Invoice/s & Credit Notes handy. • Know your Credit Policy – Trading Terms, Follow Up Procedure, Arrangement to Pay, Credit Limit/s, Stop Credit, Payment options, Mercantile Agency or Law Firm  • Who to talk too - Has the person got the authority, gain a Commitment to pay, Timeframe & Amount $ ( is it acceptable ? ), Repeat their Responses & keep Notes of the Conversation ( Date, Time & Who.)  • Arrangement to Pay confirm in writing ( email, fax or letter ) • Remember to be polite, respectful & tactful ( you don’t want to loose the Customer ), Focus on the Important Issues, be precise & to the point ( assertive not aggressive ), listen to there response & restate the main points discussed

  7. Liasing with Customer Service & Sales • Work together, understand each other’s position, spend time in each other’s Departments to observe their activities. • If you put a Customer on Stop Credit or they have reached their Credit Limit who does it effect – Sales, Customer Service, Production, Warehouse & Despatch • Sales Reps & Delivery Driver/s are the eyes & ears of the business – your early warning signs for account problems • Sales, Customer Service & Credit should be working together to Maximise Profits by Minimising Credit Risk / Bad Debts. ( Handle & resolve Disputes & Queries )

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