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Volume 21, No 3 March 2014

> CREDIT MANAGEMENT

> INSOLVENCY

CREDIT MANAGEMENT IN AUSTRALIA • March 2014

NSW Division: Presenters at the NSW Symposium: Rebecca Ross, assistant to Geoffrey McDonald, Barrister and Craig Tinkler from Worrells.

SA Division: Anne Wilkins presents Kerry Hammill with a ‘goodie bag’ of local produce from the National Conference.

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VIC/TAS Division: Great to see some of our retired ‘leaders’ attending the Vic/Tas Christmas party.

WA Divisioin: Credit Managers Byron Savage and Jason Louis.

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DIRECTORS

Australian President – G.L. Morris MICM CCE

Australian VP, Law & Regulation – J.A. Neate MICM

Professional Development – S.D. Mitchinson LICM

YCPA & CCE – G.C. Young MICM

Member Services – J.G. Hurst FICM CCE

Finance – N. Pilavidis MICM CCE

CHIEF EXECUTIVE OFFICER

T.J. CollinsLevel 1, 619 Pacific Highway, St Leonards NSW 2065Tel: (02) 9906 4563, Fax: (02) 9906 5686Email: [email protected]

EXECUTIVE SUPPORT

SA Division – Kerry HammillPO Box 2131, Felixstow SA 5070Tel: (08) 8365 9021, Fax: (08) 8365 9021, Email: [email protected]

EDITOR/PUBLISHER

Terry Collins | Email: [email protected]

CONTRIBUTING EDITORS

Gregg Odlum NSWMurray Ashford QLDKerry Hammill SAWarren Meyers WADonna Smith VIC/TAS

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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 1, 619 Pacific Highway, 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, 2014.

EDITORIAL CONTRIBUTIONS SHOULD BE SENT TO:

The Editor, Level 1, 619 Pacific Highway, St Leonards NSW 2065or Email: [email protected]

March 2014 • CREDIT MANAGEMENT IN AUSTRALIA

Greg Shaw

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Adrian Hunter

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Stephen Koukoulas

Moses Samaha

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Volume 21, Number 3 – March 2014

Message From the President 2

2014 Conference Promotion – Super Early Bird 3

Credit ManagementGuarantees – a brief refresher – part 3. By Greg Shaw 4

Voting Trap Following ROT Creditors Now PPSA Secured 6By Adrian Hunter

Data Points Positive for 2014. By Stephen Koukoulas 8

Big Stick for Companies Unprepared for New Privacy Laws 10By Aaron Greenman

Credit Managers’ Survey – part 3. By Moses Samaha 11

Virtual Worldwide Creditors Meeting is now a Reality 16By Blair Pleash and Warren Jeir

The Valuable Aspect of a Valuation. By Andrew Quinn 18

Cash is King – Benefits of Using Finance to Improve Cash Flow 20By Morgan Elliott

Corporate overdue payments in China at the highest level 22

AICM – Can We Help You? 25

InsolvencyInsolvency Update. By Giles Woodgate & Richard Rowley 26

Young Credit Professional Award 28

Around the States

New South Wales 29Queensland 32South Australia 34Western Australia/Northern Territory 36Victoria/Tasmania 38New Members 41

CONTENTS

Andrew Quinn

Morgan Elliott

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22

Blair Pleash

16

Warren Jiear

16

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2 CREDIT MANAGEMENT IN AUSTRALIA • March 2014

aicmf rom the p res iden t

Christmas seems like forever ago and the next one seems closer than the last.

However let’s start with a little personal reflection on 2013. The conference was well hosted by the SA crew and Adelaide came alive with quality speakers and sessions and some seriously good and worthwhile networking. So much so, in fact that James Neate, our SA Director has grabbed

the bull by the horns and has all but completed the programme for the 2014 conference. On that note we have already kicked off our earliest saver registration promotion for a conference with 2014 at 2013 prices for the first 3 months of this year. We have registrations already to hand and thank those members for their commitment.

We received a letter from a member seeking guidance on getting work approval for conference attendance and you can see the letter and response in the “AICM Can We Help” section where we talk about being pro-active, including it in upcoming budgets and being prepared now for training and development and/or reward and recognition schemes.

Whilst reflecting back on the conference I want to share with you an opportunity which presented itself to me. I met Rosanna Maugeri, the YCP winner from WA, and was understandably impressed. I have since had a recovery matter present itself in WA and approached Rosanna for assistance. We now have judgement for the debt, a matter which I must say was defended, and is continuing on the well-worn path of recovery. Just one example of the many benefits which come from attending an AICM conference.

Perhaps enough of 2013 as 2014 is already off and racing, particularly in the legislative arena. The PPSA transitional period ended January 30 and saw many businesses get on board at the 11th hour. The end of the transitional period does not mean you have missed the boat with PPSA, just the effective date of your registration changes. It is never too late to jump on board the wagon and reap the benefits which many of us have already seen.

From one piece of legislation to another with the Privacy amendments commencing March 12, and not without its own bumpy ride. There was a flurry of activity in February when businesses started to attempt to join External Dispute Resolution schemes. Both the Financial Ombudsman Service Limited (FOSL) and the Credit Ombudsman Service (COS) were approached by members such as Brian Kay, AICM Qld President and myself only to be told that they were not interested in taking on members from the trade credit arena at this stage. This prompted a flurry of activity and many letters from Brian, myself and many AICM members to the Attorney General seeking removal or deferment of the requirement to be a member of an EDR or guidance on the EDR membership process. We are pleased to report that there has been a deferral of this requirement for 12 months and I thank and acknowledge the efforts of many including Brian Kay, David Frances, Eric Milne and the crew at Veda in pushing hard and effecting this change.

The battle is not over and many matters need to be addressed to reach a workable solution. Rest assured the AICM is taking appropriate action.

On the subject of commercial credit it is interesting to note that businesses continue to fail although the rate seems to be steadying with 10,821 companies entering external administration in the 12 months ending December 31, 2013. New South Wales recorded the most external administrations with 38% of the national total, followed by Victoria at 28% and Qld at 20%. It seems like a lot but did you know there are 2.056 million companies in Australia (at 31/12/13) and last calendar year there were more than 200,000 new company registrations?

On an education and training basis AICM has been running mid-level collection training in WA for a number of years and this programme has recently been reviewed and refined into a series of training courses at a credit officer level. It will be rolled out nationally throughout this year.

This leads me to our younger members and the upcoming Young Credit Professional of the Year Awards. We have some great talent out there and I am sure you would know that, if you had a chance to get to know the 2013 winner, Balveen Saini, and the other Division finalists, including Rosanna whom I mentioned earlier. Last year’s winners are not alone and we have much talent around us, albeit sometimes a little shy to stick their hand up. I am sure you know someone who is outstanding in their own field and I urge you to encourage them to nominate this year. You will see the details on page 28 of this magazine.

By the time this is circulated we will have a few more members who have attained their CCE. I know from first-hand experience what some of them have gone through and must say it is encouraging to see the talent of our not so young members as they seek the recognition they have earnt through the skills and knowledge they have gained and professionalism they display in their workplaces. A special “good onya” to Max’s mates.

On the financial front I am pleased to say that we have passed the half way mark of the financial year and definitely turned the corner. We are in the black and will be at June 30 which is a massive turnaround from the last 2 years. 2014 started with a rush and doesn’t look like slowing down. Enjoy the journey and I look forward to seeing you at an AICM event this year and especially the Gold Coast conference (details of all events are available in each Division’s section in this magazine and on our website).

Grant Morris CCEAustralian President

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Credit Management

In Guarantees – a brief refresher – part 1, (October 2013 edition) we looked at the question of what guarantees are and how they differ from indemnities. In part 2 (December 2013 edition) we looked at the formal requirements of a guarantee. In this article we assume that the formal requirements of a guarantee have been satisfied and look at the some of the more common matters that a guarantor will often raise to “avoid” the guarantee (often referred to as being “discharged” from the guarantee) even though there is no argument that the document we are looking at is a signed guarantee that complies with the formal requirements.

Conditions precedent If there are conditions that need to be met before a guarantee comes into effect and those conditions have not been complied with, then the guarantor will not have any liability under the guarantee. These “conditions precedent” may be express or implied. An example of an implied condition that we mentioned in a previous article when discussing the signing of guarantees is where a guarantee provides for 2 or more guarantors but not all of guarantors actually sign the guarantee. In the absence of a an express term that each guarantor is liable under the guarantee regardless of whether or not all other guarantors sign, there is a strong argument that there is an implied condition precedent that all must sign before any one guarantor is liable

Express conditions precedent may include a requirement that certain steps are taken by the creditor before the guarantee is effective. Such steps may include an obligation on a creditor to take security over the assets of the principal debtor (or another guarantor) such as by company charge or mortgage as the guarantor will claim that they only entered

into the guarantor on the basis that the creditor would have such security. If the creditor has not obtained the security or “perfected” it (for example, by failing to register the security), then the guarantor will most likely be discharged from the guarantee.

Variation – of the principal contractAs the basis of the guarantee, and hence the liability of the guarantor, is the principal agreement between the creditor and the principal debtor, if the principal agreement is not effective, then the guarantee falls away.

If the principal agreement is varied or replaced by another agreement without the guarantor’s consent, this may result in a discharge of the guarantor. The rationale for this is that the obligations between the creditor and the principal debtor have changed from the obligations the guarantor agreed to guarantee.

The most common variations occur where the creditor allows the principal debtor further time to pay or the amount of credit is increased. Surprisingly, reducing the amount payable by the principal debtor can also discharge the guarantor in rare cases.

Appropriate wording in the guarantee to provide that a variation of the agreement between the creditor and the principal debtor will not affect or discharge the guarantee will usually suffice to avoid unintended discharge of the guarantor due to the variation. A word of caution: even though a guarantee may provide that it is not affected of discharged by a variation of the principal agreement, if the variations or variations are such that the principal debtor’s obligations under the varied agreement are completely different that under the original agreement, the guarantor may be discharged.

By Greg Shaw*

Guarantees– a brief refresher – part 3

Greg Shaw

March 2014 • CREDIT MANAGEMENT IN AUSTRALIA 5

Credit Management

To avoid such an argument by the guarantor, and regardless of whether or not a guarantee allows for variations in the principal agreement, a creditor should take steps to obtain the guarantor’s consent to any variation.

Release of the principal debtorIf the agreement between the creditor and principal debtor, for some reason, no longer exists, then the guarantor will be discharged as the basis for the guarantee no longer exists.

All too often this occurs inadvertently when the creditor releases the principal debtor because, for example, a settlement is reached between the creditor and the principal debtor on the mistaken basis that the creditor may pursue the guarantor for the balance. Yet again, creditors should protect themselves from this unintended consequence by including appropriate wording in the guarantee to provide that any compromise with the principal debtor will not affect the guarantee or, if the guarantee does not include such “protection”, ensuring that the guarantee consents to the release on the basis that the guarantor is not discharged

Non est factumNon est factum (which means “it is not my deed”) is a defence raised all too often by guarantors. In short, the guarantor claims that, whilst they signed the particular guarantee, they were not aware at the time of signing, that the document was a guarantee (at all) or that they were not aware of the terms of the guarantee. Whilst many of these claims defy belief, particularly in circumstances where creditors ensure guarantees are clearly marked as such, if the guarantor in successful in its argument, the guarantee will be void and, of course, therefore of no effect.

The onus of proof falls on the guarantor and this defence can be very difficult to establish where the guarantor is an adult of full capacity. The matters the guarantor must try and prove (as opposed to simply assert) are:

That they were under some “disability” such as that they were unable to read the document (for example, due to blindness or illiteracy) or for some other reason were not able to understand the document through no fault of their own;

That the effect of the document that they signed (here, the guarantee) is

fundamentally different from what they understood the document to be.

As a general proposition, a person is taken to have read and understood the content of a document that they sign. A simple failure to read a guarantee before signing it is not sufficient to avoid liability. Were it to be otherwise, no-one could be confident that any signed document was effective.

Whilst we have not covered all possible “outs” that guarantors may raise to avoid liability, appropriated worded guarantees, and some basic checks by creditors, can ensure that, whilst guarantors will continue to raise those arguments, the arguments are short lived. Now is the time for you to review not only your documentation but also your processes when dealing with guarantees. n

*Greg Shaw, Managing Lawyer, MSB Lawyers (QLD), Ph: (07) 3839 8011.Contact details: Melbourne and Perth – Danielle Humphreys or Rebecca Fahey. Ph: (03) 9600 2450.Sydney – Margaret Pavey. Ph: (02) 9264 4833.


Credit Management

With the introduction of the Personal Property Securities Act 2009 (PPSA) in January 2012, traditional Reservation of Title (ROT) suppliers to a business became, if they perfected their security interest (generally by registration) appropriately, secured parties and holders of Purchase Money Security Interests (PMSIs) in these supplied goods. Those suppliers who failed to register also became temporarily perfected as a result of the PPSA Transitional Provisions. As the PPS Registrar reports in this journal, this transitional protection will expire in January 2014.

For many, this priority of position for suppliers in respect of dealings with the goods that they supplied was largely similar to the suppliers’ standing prior to the introduction of the PPSA. However, such suppliers were rarely categorised as “secured creditors” in the general sense with this definition largely remaining within the domain of financial institutions. Primarily this was due to their claim being one of ownership rather than of security.

Of note is that section 51E of the Corporations Act states that:

Secured creditor of a corporation means a creditor of the corporation, if the debt owing to the creditor is secured by a security interest (wherein Section 51A states that a security interest means a PPSA security interest)

Now that ROT suppliers are defined as secured creditors, they become subject to an often overlooked regulation of the Corporations Regulations 2001, that being regulation 5.6.24 which concerns

the impact upon secured creditors when voting. This regulation states:(1) For the purposes of voting, a secured

creditor must state in the creditor’s proof of debt or claim: (a) the particulars of his or her

security; and (b) the date when it was given; and (c) the creditor’s estimate of the

value of the security; unless he or she surrenders the security.

(2) A creditor is entitled to vote only in respect of the balance, if any, due to him or her after deducting the value of his or her security as estimated by him or her in accordance with regulation 5.6.41.

(3) If a secured creditor votes in respect of his or her whole debt or claim, the creditor must be taken to have surrendered his or her security unless the Court on application is satisfied that the omission to value the security has arisen from inadvertence.

(4) This regulation does not apply to: (a) a meeting of creditors convened

under Part 5.3A of the Act; or (b) a meeting held under a deed of

company arrangement.

The peculiarity of this regulation is that it requires the creditor to estimate the value of its security and vote only for the balance at any meeting of creditors where the vote is called. A failure by a creditor to ascribe a value and then vote generally results in regulation 5.6.24 (3) being triggered whereby the creditor is

Voting trap following ROT creditors now PPSA securedBy Adrian Hunter*

Adrian Hunter


Credit Management

then taken to have forfeited their right over the security.

In my experience, many ROT suppliers who become creditors of an insolvent company fail to ascribe a value to their security. It is also my experience that at creditor meetings, generally all those present vote, whether that vote is for the creation of a committee of inspection or in favour (or against) a liquidator’s remuneration.

There are a number of cases involving security being lost depending on how the vote is cast. A vote by a creditor ‘on the voices’ is not enough to cause a loss of security but where a poll is held, a vote by a creditor will be a definite trigger. The relevant commentary from these cases is as follows:

z In Health & Life Care Ltd v SA Asset Management Corp [1995] SASC 5181; (1995) 18 ACSR 153 it was held that reg 5.6.24(3) did not apply because a vote was taken on the voices. In that instance it was said that each creditor voted simply as a creditor and not in respect of the value of the debt. The issue around the value of a debt only became relevant when a poll was demanded and held because of reg 5.6.21(2). That regulation requires a majority of the creditors voting and 50% of the value of the debts of voting creditors to pass a resolution by poll;

z Provident Capital Ltd v Kelso Supplies Pty Ltd [2008] FCA 868; (2008) 66 ACSR 643 held that a secured creditor’s conduct in voting, on the voices, without providing a valuation, did not amount to an unequivocal election to surrender the security; and

z The court in Young v ACN 081 162 512 [2005] NSWSC 139 noted that a secured creditor might become unsecured by voting on a poll that has nothing to do with the rights of creditors, has no apparent effect on the security and relates to such a mundane matter as the adjournment of a meeting. The judge went on to comment that the regulations do not make a distinction on the importance of the resolution upon which the vote is cast.

This is a cautionary tale for trade creditors with ROT type security interests and not one of which many would be aware. Somewhat interestingly for liquidators it is often these trade creditors who a liquidator will look to at the creditor meeting in search of votes for remuneration approval. I suspect that it would be quite an unfortunate discussion that a liquidator would be having with an ROT supplier who had approved their fees one day only to be told the next that they are no longer a secured party.

Whilst many in the past may have been ambivalent towards voting, the impact upon their position to recover goods supplied under ROT from the very liquidator for which they are approving remuneration is likely to have them sitting firmly on their hands.

Accordingly, it may be prudent for a liquidator when searching the PPS register not only to identify creditors who may have claims over the company’s assets which will assist them to make an assessment of those who either may not wish to vote at a meeting of creditors or those whose voting documentation needs close scrutiny. n

*Adrian Hunter is Director, Restructuring Services, Deloitte Touche Tohmatsu Limited, www.deloitte.com.au

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

© 2013 Deloitte Touche Tohmatsu

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Credit Management

After a 2013 of limited growth, business confidence about the year ahead has returned, with recent data on the economy supporting a mood of optimism.

The year kicked off on a positive note, with the continuation of record-low interest rates and an easing Australian dollar providing a strong upside impetus to housing, consumer demand and exports.

Meanwhile, the general business outlook, which began to show signs of improvement in Q4 2013, has consolidated its positive trend. According to Dun & Bradstreet’s Business Expectations Survey for June quarter activity, 70 per cent of businesses are more confident about growth this year compared to 2013.

More specifically, the survey has revealed that sales expectations have jumped to a 10-year high. The surging outlook follows impressive Christmas quarter trade, and has been accompanied by increasing expectations for profits and investment. Additionally, 20 per cent of businesses have indicated they intend to access credit or new finance to grow their operations, up from eight per cent a year earlier.

At the same time, however, some solid evidence has been emerging that inflation pressures are building, with business also raising their expectations

for selling prices. This fits with official data on inflation for the second half of 2013 which confirmed a lift in prices, with December quarter numbers showing a 0.8 per cent increase in the CPI.

While there remain headwinds to the economy from the inevitable decline in mining investment, the recent upswing in consumer spending and new housing construction is very positive. Recent data has also shown that that the value of exports hit a record high in December 2013, confirming a rebalancing of the growth momentum within the Australian economy.

After several years where the ‘cautious consumer’ reacted to the fall-out from weak share prices and the global financial crisis more generally, retail spending has recovered. The strong figures recorded in the December quarter indicate that consumer spending will continue to make a solid contribution to bottom-line GDP this year.

It should be noted, however, that consumer spending remains vulnerable to unforeseen shocks. Notwithstanding the very low level of interest rates, D&B’s latest Consumer Financial Stress Index has projected that financial stress will remain elevated through the first half of 2014.

Consumers have been impacted by soft labour market conditions and high levels of consumer debt, two factors likely to persist through the coming months. If the Reserve Bank of Australia starts to increase official interest rates this year, the position of consumer and their capacity to spend is likely to be further impacted.

While debt remains a potential risk to consumer spending, the upswing in the housing sector has been a clear and unarguable aspect of the economic performance this year, and consists of two aspects – house prices and new construction of dwellings. Both have been incredibly strong.

Data points positive for 2014By Stephen Koukoulas*

Stephen Koukoulas

After several years where the ‘cautious consumer’ reacted to the fall-out from weak share prices and the global financial crisis more generally, retail spending has recovered.


Credit Management

New construction, which is a direct contributor to GDP growth, ended 2013 on a powerful note. In the December quarter, the number of new dwelling approvals rose to the highest level since 1994 to register the third highest quarterly result ever. Indications are that new housing starts will reach record highs in 2014.

At the same time, house prices have surged, aided by low interest rates and strong underlying demand from the huge population growth in Australia. After a fall of around seven per cent in the 18 months before early 2012, house prices have increased at an annual rate of 10 per cent since, and are showing little sign of cooling.

Looking ahead, higher inflation pressures, an uncomfortable lift in house prices and generally improving economic conditions all point to the RBA moving to lift interest rates at some stage in the next 12 months.

Meanwhile, the new government

will deliver its first budget in May 2014 and there seems little doubt there will be some cuts in government spending. While it is still speculative exactly where those cuts will occur, balance will be important between the important task of moving the budget to surplus and not cutting spending to a point that impacts negatively on the real economy.

This is particularly the case given the sluggish pick up in employment expectations and some risks associated with global conditions. While both of these aspects of the economy are stronger now than a year ago, the fickle nature of markets and an increasingly uncertain outlook about the growth momentum for the Chinese economy remain obvious threats to what is otherwise a positive outlook. n

*Stephen Koukoulas, Economic Advisor, Dun & Bradstreet, www.dnb.com.au

...house prices have surged, aided by low interest rates and strong underlying demand from the huge population growth in Australia.


Credit Management

Australian companies that fail to strengthen their data collection, storage and management processes before sweeping new privacy rules take effect on 12 March 2014, risk copping tough new penalties from a regulator with wider powers, warns a technology expert at global risk consulting firm, Protiviti.

On 12 March 2014, the Australian Privacy Principles come into force, replacing existing Information Privacy Principles and National Privacy Principles. The 13 Australian Privacy Principles (APPs) significantly raise the bar on how businesses and federal government agencies collect, store, and handle individuals’ personal information.

The new rules also beef up the privacy regulator’s enforcement powers with the Office of the Australian Information Commissioner able to levy penalties of up to $1.7 million and impose enforceable undertakings against non-compliant organisations.

“For the first time under Australian information privacy law, organisations have an express obligation to take positive steps to adopt practices and systems to protect personal data in accordance with the APPs,” said Aaron Greenman, Director, IT Security & Privacy at Protiviti.

“Organisations will be saddled with a raft of new responsibilities including ensuring they have processes to deal with privacy complaints, making sure they are accountable for personal information disclosed to overseas parties, establishing security measures to prevent information breaches, and many more.

“These wide-ranging changes will have a big impact on organisations that collect a lot of personal information such as online businesses, retailers, utilities, healthcare providers, communications companies and most businesses in the finance and insurance sectors. Yet, while government departments are generally well-prepared, regrettably, our experience

has shown that the majority of corporates are not”, Mr Greenman added.

The Privacy Commissioner has made it clear that he will not shy away from using his new powers and come 12 March, companies should not expect a ‘softly, softly’ approach to enforcement. This is because the rules have been in the public domain for some time and organisations have effectively had 15 months to prepare*.

In view of the regulator’s tough stance, Mr Greenman warns that companies which have not already done so, need to take immediate steps to become APP-compliant.

“Corporate Australia’s appetite for yet another compliance measure may be underwhelming, but companies need to appreciate that privacy is much more than just a bureaucratic requirement”, he said.

“With the rise of online technologies and social media, community concerns about how organisations use or misuse private information are at an all-time high. Today, privacy is an issue that if done well, builds deep bonds of community trust and customer loyalty. But on the flipside, when things go horribly wrong such as when a major security breach occurs, the public backlash and negative publicity can inflict long-lasting damage to corporate reputations and see customers deserting a company for a very long time”.

The 2013 Community Attitudes to Privacy Survey indeed affirmed that 60 per cent of Australians had decided not to deal with an organisation because of concerns about privacy. n

Aaron Greenman is Director, IT Security & Privacy at Protiviti.

Protiviti (http://www.protiviti.com.au/) is a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit.

Big stick for companies unprepared for new privacy laws

By Aaron Greenman*STEPS BUSINESSES SHOULD TAKE TO BECOME APP-READY

1. Identify the classes of personal information collected and held. Examples include: contact details, employment history, educational qualifications, racial or ethnic origin, Tax File Numbers, health information

2. Identify how such information is collected, held, used and disclosed, and the purposes for which it is collected and used

3. Identify the scope of any cross-border disclosures including where possible, the countries where recipients are likely to be located

4. Review and update procedures and policies for managing the privacy risks at each stage of the lifecycle of this information, including at the time of collection, use, disclosure, storage and destruction

5. Implement security systems for protecting the information from misuse, interference, loss and unauthorised disclosure, such as IT systems, internal access controls and audit trails

6. Implement procedures for identifying and reporting privacy breaches and for receiving and addressing complaints

7. Implement access and correction procedures

8. Introduce procedures to give individuals the option of not identifying themselves or of using a pseudonym

9. Establish a process to conduct a privacy impact assessment for any new projects where personal information will be handled

10. Establish governance mechanisms to ensure ongoing compliance with the APPs such as appointing designated privacy officers and regular reporting to the board and management.

Source: *Privacy Reform – Act Three’: Speech by Timothy Pilgrim Privacy Commissioner to the ANZ Privacy Unbound Summer, Sydney 25 November 2013.


Credit Management

Key findings � Economic conditions have affected

business sentiment, with a majority of

credit managers reporting a negative

impact from general economic

conditions to their business

� Despite the poor business

sentiment, the number of credit

applications has risen for 40% of

credit managers and has fallen for

27% of credit managers over the

past year

� Credit managers have tightened

credit policies in response to

economic conditions and a

majority expect to further tighten

policies in the next 6 months

� 73% of credit managers offer 30

day payment terms, with 30 days

remaining the most common

payment term

� 47% of credit managers take

action when accounts reach 60

days. The most common course of

action is cancelling or suspending

the service, which has remained

unchanged since last year

� 64% of participants will accept a

credit application if an adverse is

present compared to 51% in 2012

and 31% in 2011

� There has been an overall

deterioration in Days Sales

Outstanding (DSO) performance

with the average DSO at 44.91,

compared with 43.22 in 2012

� 66% of participants feel the

introduction of Personal Property

Securities Register (PPSR) has

benefited their business and

a higher percentage of credit

managers are now using the PPSR

� Most credit managers have

further work to do to get ready

and compliant for changes to the

Privacy Act

� On balance, credit managers expect

an increase in the requirement for

credit if a monthly PAYG instalment

system is introduced

When customers don’t payAs a reflection of the broadly negative economic backdrop, in recent years there has been a trend in the credit management industry towards increased vigilance of customers who don’t pay their outstanding debts. This appears to have continued in 2013.

Actions takenWhen to act 47% of credit managers take action when accounts reach 60 daysThe most common time that credit managers cite to action delinquent accounts has remained the same since 2012, with this year’s survey showing that 47% of credit managers take action when an account has gone 60 days unpaid.

In addition, 38% of credit managers wait until an account has reached 90 days, and 23% take action at 30 days.

Actions takenSuspending or cancelling the service is the most common course of actionThe type of action most frequently taken by credit managers for account delinquency remains the suspension or cancellation of the service, unchanged from 2012. In 2013, 76% of credit managers suspend or cancel the service in this scenario.

In addition, 58% of credit managers take legal action when an account continues to deteriorate, and 30% lodge defaults.

Although the majority of survey participants reported that they had increased or tightened collections activity in the last six months, significant changes in the use of collection companies was not reported. The proportion of respondents that use collection companies fell from 74% in 2012 to 68% in 2013. A slight fall was also recorded in the proportion of

Veda National Credit Managers Survey 2013This is the third and final installment of the Credit Manager’s survey.

Moses Samaha


Credit Management

Circumstances of account delinquency to take action (%)

Type of action taken for account delinquency (%)

Use of collection companies

respondents who reported increasing their use of collection companies over the last twelve months.

The impact of PPSR legislationOverviewThe Personal Property Securities Register (PPSR) was a major change in the way organisations register their securities interests. From early 2012, all national personal property registers (excluding land) were combined into one online register under the Personal Property Securities Act (PPSA).

Registering ROT security interests in PPSRWith the PPSR now in place for almost 18 months at the time the survey was taken, credit managers have reported increasing their use of the PPSR in registering for retention of title (ROT) for security interests. In 2013, 33% of participants always register, which represented an increase from 24% of participants in 2012. Similarly, an increased proportion of participants register depending on circumstances. The additional time that the PPSR has been in place has meant a corresponding reduction in respondents who were previously planning to operationalize at the time of the 2012 survey.

Interestingly enough, the most commonly gained insight into new customers from the PPSR is still the presence of competing suppliers. This was cited by 65% of participants in 2013, which was a small increase from 57% in 2012. A notable 12% increase in participants reporting that they gained insight from ‘PMSI priority risk due to control of ADI accounts’ was also recorded in 2013.

As in 2012, almost two thirds of participants believed that the overall business impact of the introduction of the PPSR has been positive, with the benefits outweighing the risks and costs. At the same time, a significant minority of around one third continue to hold the opposite view, with this also being reflected in the almost one third of respondents who had no intent to register ROT security interests in the PPSR in the future.


Credit Management

The impact of Privacy Act changesOverviewThe survey reveals that a large majority of respondents are aware of these upcoming changes to the Privacy Act.

The majority of respondents expect at least a moderate impact on how new credit risk is assessedCredit managers held differing opinions on the impact of the Privacy Act changes:

z 21% expected a large or very large impact;

z 30% expected a moderate impact; and

z 27% expected little impact.In total, 51% expected the changes

to the Privacy Act to have a moderate or greater impact on how new credit risk is assessed, and 78% expected at least some impact.

The survey reveals that this upcoming regulatory change is a source of uncertainty for the credit management industry. Not only are there varied opinions held about the impact of the change, but around one fifth of respondents were uncertain what impact the changes to the Privacy Act will have on how new credit risk is assessed.

Most credit managers have further work to do to get ready and compliant for the Privacy Act changesCredit managers are in varying stages of readiness for the upcoming Privacy Act changes. Only 8% of respondents reported that they were already ready and compliant now, while a majority of respondents are in the process of getting ready and expected to be ready in time. However, almost one third of respondents have not started, and 6% of respondents reported that they won’t be ready in time.

Impact of monthly PAYG instalment systemOverviewIn October 2012, the Federal Government announced that it would be changing the timing of pay as you go (PAYG) instalment payments to a monthly frequency for large corporate tax entities. In May

Increasing the use of collection services over the last 12 months

ROT Registering for new accounts (%)

Insights from PPSR when searching new customers (%)


Credit Management

2013, the Federal Government extended the PAYG changes to all large entities, including superannuation funds, trusts, sole traders and large investors.

The transition to a monthly PAYG system is expected to occur over a four year period from 1 January 2014 to 1 January 2017, commencing with the largest corporate tax entities and progressively including large entities with base assessment instalment income at or above a $20 million threshold.

Impact on credit requirementsA special question in this year’s survey related to the potential impact of the implementation of a monthly PAYG instalments system on the demand for credit.

On balance, credit managers expect an increase in the requirement for credit if a monthly PAYG instalment system is introducedSurvey participants’ views of the impact of a monthly PAYG instalments system were as follows:

z 33% expected an increase in their customers’ requirements for credit;

z 6% expected a decrease in their customers’ requirements for credit; and

z 41% expected the change would not have much impact.On balance, 27% expected

an increase in their customers’ requirements for credit as a result of the introduction of a monthly PAYG instalments system. This accords with much of the initial commentary surrounding this change, which was seen as likely to create cash flow problems for affected entities.

ConclusionEconomic conditions have had a negative impact on business over the past six to twelve months according to more than half of credit managers. Moreover, while there are glimmers of optimism, sentiment remains broadly pessimistic about the next twelve months.

There is evidence that low interest rates are helping to provide some support to business sentiment, but concerns about the relatively high level

Overall business impact of the introduction of PPSR

Awareness of upcoming Privacy Act changes

Impact of Privacy Act changes on how new credit risk is assessed


Credit Management

of the Australian dollar, the slowdown underway in Australia’s mining industry, Federal Government policy uncertainty, levels of consumer sentiment and unemployment, and weakness in housing construction are still taking their toll on sentiment in the credit management industry.

With economic conditions impacting negatively on many businesses, credit managers have adopted stricter and tighter lending criteria. This trend towards tighter credit policies is expected by credit managers to continue in the months ahead.

The caution in the area of credit handling which was exhibited by many credit managers in the 2012 survey also appears to be continuing. The use of collection agencies and the frequency of account reviews have remained broadly similar to last year. There appears to have been a slight deterioration in Days Sales Outstanding across the industry as a whole.

Although there was some initial resistance to PPSR in 2011, the response of participants in the 2013 survey has become more positive. Most credit managers have reported benefits to their business, which outweigh the costs and risk involved, and a higher proportion are now using the PPSR in registering for retention of title for security interests.

While PPSR has now been introduced for some time, changes to the Privacy Act are causing uncertainty in the credit management industry. Most credit managers have further work to do to get ready and compliant for these changes.

After another year of difficult economic conditions, Veda’s Credit Management Survey 2013 aimed to reveal changes in how credit managers feel about the economy, and changes in the credit management industry in Australia. Our participants have indicated that times are still difficult, and they are continuing to adopt the measures deemed to be appropriate to suit these conditions. Stricter lending criteria and continuing caution in the management of existing customers remain key themes in the industry. n

Expected impact of monthly PAYG instalments system on customer’s requirements for credit

Level of readiness for Privacy Act changes

With economic conditions impacting negatively on many businesses, credit managers have adopted stricter and tighter lending criteria. This trend towards tighter credit policies is expected by credit managers to continue in the months ahead.


Credit Management

investment was to be traded by professional FOREX traders at their discretion. The minimum investment for those Investors was US$10,000 or £10,000.

5. The platform was only accessible to Investors online through the Company’s website, and any communication in relation to the investment was communicated through the Company.

6. Ultimately on what was reported as one bad day’s trade, Investors lost approximately 60% of their investment. The Company’s assets were frozen after complaints were made to ASIC in Australia and the SEC/CFTC in the US. As a result of freezing orders obtained by ASIC, the Company’s website was shut down and it was prevented from continuing to trade.

7. Investigations are currently being undertaken in the United States (by the SEC/CFTC) and Australia (by ASIC) as to alleged fraudulent activity surrounding the platform. There are also criminal proceedings on foot in the Netherlands against third parties in relation to the platform.

8. To date, Investors have lodged proofs of debt for their losses, totaling approximately

9. $18 million. Members have lodged proofs of debt for refunds of their membership fees, totaling approximately $1 million. The liquidator, prior to the Court’s determination, had classified the Members and Investors as contingent creditors.

10. The Court concluded that the liquidator was justified in making this determination.

11. The Company also had general trade creditors in excess of $2.7 million.

12. Due to the Company’s online operating model, Members and Investors are located around the world in over 35 different countries across 5 continents.With creditors in such varied locations it was not obvious

Virtual worldwide creditors meeting is now a realityWith the continuing growth in companies trading in an online environment, it is increasingly common for liquidations to deal with creditors in numerous countries around the world. It is also becoming more and more common for liquidators to deal with creditors who only ever traded with a company in an online manner. Blair Pleash of Hall Chadwick as liquidator engaged Piper Alderman’s Brisbane insolvency team, to seek directions from the Supreme Court of Queensland regarding the convening and conducting of an online meeting of creditors in circumstances where creditors are located in at least 35 different countries.

Blair Pleash Warren Jeir

In the application heard on 2 December 2013, we were able to obtain orders from the court to enable a physical and virtual meeting to be held so that creditors could access the meeting anywhere in the world.

By way of brief background:1. The Corporations Act requires a liquidator to convene a

physical meeting of creditors.2. The Company operated entirely online in a format where the

director provided recommendations in relation to investing, and in particular investing in the foreign exchange market (FOREX).

3. Customers of the Company purchased memberships, which allowed them access to the Company’s website for life, business coaching and other tutorials – they are referred to as Member.

4. Once a membership was purchased, Members were introduced to persons who could facilitate them investing funds in a third party investment platform, whereby their


Credit Management

where the most convenient location was for the meeting. It was also logistically impossible to hold a meeting by teleconference and have all overseas creditors being able to dial in. Accordingly, the Liquidator sought directions from the Court in relation to how a meeting of creditors ought be conducted which allowed creditors the opportunity to participate in any meaningful way.

The directions sought in relation to the meeting were to enable an online webcast of the meeting and either online or email voting to ensure that the meeting was accessible to a majority of creditors. The Court was aware of an earlier decision in Accommodation Clearing House – where the Supreme Court in NSW was not prepared to make such an order. As with Accommodation Clearing House, as the Company is in liquidation, the Liquidator did not have available to him the “magic wand” of section 447A which in voluntary administrations would have been a more common means of conducting the meeting in that manner.

The liquidator recommended to the Court, and the Court so directed, briefly as follows:1. Notices for a meeting of creditors can be sent by email,

posted on various websites established by the liquidator and the receiver appointed to the Company in the United States, and mailed to the 20 largest creditors.

2. The meeting of creditors is to be held in the following way:-2.1 Holding the physical meeting at Brisbane (where the

Company is based);2.2 Broadcasting the meeting live via webcast;2.3 Permitting:-

(a) attendance by creditors;(b) votes by creditors;(c) requests for a poll;(d) questions for the Chair;(e) the putting of resolutions that may validly be put, to

be notified by way of either: (a) email address; or (b) other electronic means.

It was determined by the Court that this application was a kind in which assurance should be provided to the Liquidator pursuant to section 473(3) of the Act. Further, the Court was satisfied that it was appropriate to give the directions sought. Such an order permitted: 1. A much more cost-effective method of convening the

meeting (with over 3000 creditors, it permitted notice to be given by email and not postage – a more cost-effective method).

2. Creditors (be they Member or Investors) in any country to attend the meeting by online webinar.

3. Voting to be conducted efficiently in an online manner.The decision was a common sense one and perhaps

reflective of the need for reform of the Corporations Act and Regulations to be more reflective of the practical realities of modern commercial practices.

A meeting was held in accordance with these orders held on 19 December 2013, and broadcast live via webinar across the world. Hundreds of creditors from around the world logged on and participated, the webinar is also available to creditors to view for a set period of time in the future.

The meeting was held without issue and all resolutions tabled during the meeting were able to be voted on by attending creditors by using online polling and email. Ultimately, it appears that the meeting was successful, and allowed as many creditors as possible access to the meeting, while also being convenient and cost effective. n

Blair PleashPartner, Hall Chadwick [email protected]

Warren JeirPartner, Piper Alderman [email protected]


Credit Management

Business valuations are typically performed by business owners looking to sell a business or by potential buyers looking to purchase a business. However, business valuations can be an extremely useful tool for business owners in a variety of situations. A business valuation is a complicated conglomerate of statistical formulas and procedures that are configured to generate an estimate of the gross economic value of a business.

This knowledge is often useful in determining the most appropriate course to take in the financial decisions business owners must execute, not only the purchase price in the event of a sale or acquisition. It can be used to establish partnership agreements or dissolution, resolve disputes relating to estate and

gift taxation or even assist in something as left-field as divorce settlements and proceedings.

Most usefully however, by examining the information entered, business valuations can be used to identify those areas that are detracting from the overall economic value of a business. This clarity allows business owners to address these issues and subsequently increase the overall value.

Unfortunately, business valuations are under-rated and many business owners are failing to utilise this tool in business operations outside purchase and sale. This article will endeavour to outline how business valuation works as well the benefits it can provide so that business

owners will be able to determine whether a business valuation could assist their operations.

First and foremost, the circumstances surrounding a business must be considered during a business valuation. This stage is known as the ‘business value standard’. The business value standard refers to the putative conditions under which the business will be valued. This is the information input stage of a valuation. Most valuations begin by collecting and analysing the demographic information of the business.

Estimates of the current economic conditions surrounding the business at relevant levels (e.g. domestic, international, local or regional) are made. This is usually done by referring to the information provided by the Reserve Bank of Australia and/or the Australian Bureau of Statistics (or their international equivalents). Information pertaining to the industry that the business is related to is also collected in much the same way, although the statistics often come from a wider range of sources.

This information serves as a foundation from which to draw economic conclusions and discover trends relating to and influencing the business on a large scale. The valuation will then begin a more specific analysis of the business. This is called a financial statement analysis.

Typically, this analysis is used to compare the business to similar businesses and examine for influencing trends on a more localised level. This analysis will generally focus on ratio analysis (cash-flow, turnover and profit margins, etc.), something that is important to note as we will discuss this in a moment.

As business valuation is an extremely versatile tool, there are many ways in which a business valuation can be performed. It is therefore extremely important to identify the main reasons a valuation is

The valuable aspect of a valuationBy Andrew Quinn*

...business valuations can be used to identify those areas that are detracting from the overall economic value of a business.

Andrew Quinn


Credit Management

being performed. This idea is known as the ‘premise of value’, which refers to the assumptions relating to the value of the business. These assumptions will often determine the valuation method required.

There are two opposing premises of value in terms of the business itself. The first is the assumption that the main value of a business is in its ‘liquidation’ (termination, breakdown and sale). If this were the case, one would choose a valuation method that would focus on the asset value of the business and discount the ability of those assets to generate wealth into the future. The other premise of value in terms of the business is known as ‘going concern’. This refers to the assumption that the main value of the business is in its ongoing operation. In this case, one might choose a valuation method that focusses on the return of investment over time.

In addition to these, there are two premises of value relation to fair value calculation. These premises are used when the valuation is to be used to determine value for more than one party (i.e. in a purchase situation, or when partnerships are involved).

The first of these is the assumption that the business’ value is ‘in exchange’, meaning that the business is most valuable to all parties when considered alone because the individual assets of each party do not confer inequality in the value of the business.

The second of these is known as ‘in use’ and refers to the assumption that the business is most valuable when considered in combination with other related assets, for instance specific competitive advantages one party may have over others. However, for those business owners who are simply interested in gaining insight on the ‘problem areas’ within the business, the valuation method is almost moot, so long as it involves a ratio analysis as a part of the business value standard. The ratio analysis alongside the other features of the business value standard allows great insight into the inner workings of the business and clarity as to what areas need improvement to increase the outcome value of the valuation.

Once the business value standard and the premise of value have been

established, the method of valuation is chosen. As discussed earlier, there are several methods of valuation as a business valuation is an extremely versatile tool. These methods can be categorised under three main approaches; the income approach; the asset approach; and the market approach.

As each approach covers a number of methods, we will only define each approach in general terms. As the range of valuation methods are so vast, in this article we will only discuss one of the most common and most efficacious for each category.

Subsequently it is important to note that other methods within each approach may differ significantly in complexity and outcome. Income approaches focus on ratio analysis and generally measure the discounted cash-flow or net benefit stream of the business.

The most prurient example of this approach would be the capitalised future earnings method. In simplest terms, this method calculated the anticipated return on investment (ROI) by calculating the net profit over the last three years. A rate of return is decided on based on other, similar businesses or other investment opportunities. The net profit is divided by the rate of return and multiplied to determine the business value and the ROI is determined by multiplying this by 100. Asset approaches simply calculate the net asset value of a business (sum the parts of the business).

A prime example of the asset approach is the asset valuation method. Basically, the asset valuation method adds the value of the assets of the business and subtracts its liabilities. It is commonly used to determine what the business would be worth if it were sold at the time of the valuation (the premise would be liquidation).

However, as this method does not account for the going concern (future value) or any goodwill (reputation etc.) of the business, it may underestimate its true value. Market approaches focus on the economic and industry information and are typically comparison based, measuring the valued business against other businesses that share specific demographic and criterion-related commonalities. The comparable sales model is a great example of this, which is self-explanatory.

Briefly, the sales of similar businesses are compared with the business value presented to you. However, as this model (and many market approach methods) does not inherently include its own business valuation method, it is often rolled into another approaches model, as you may have noticed in the capitalised future earnings model (the rate of return).

Although there are a plethora of business valuation options available, unfortunately there is much grey area in terms of which technique is right for an individual business.

To decide on how best to value your business, you must first consider the reasons behind performing one. Whether it be purchase or sale, partner acquisition or perhaps simply to analyse the internal workings of your business for areas that need improvement, first one must consider the premise of value. It is then highly recommended to spend time researching the appropriate choices.

Finally, consult a completely independent third party, preferably a broker or better yet, a business valuer. In this way you will provide the clarity you need to make the right decision. n

*Andrew Quinn is the Director at Strategic Valuations which offers the focus on analysing risk points within a business with the intention of increasing value. For more information visit, www.strategicvaluations.com.au.

Business valuations are typically performed by business owners

looking to sell a business or by potential buyers looking to

purchase a business.


Credit Management

Figures this year provided by Dun and Bradstreet indicate that there is a continuing trend of businesses taking longer to pay their bills, with a high number of large businesses taking the longest to pay.

In 2013 we saw the average days taken to settle outstanding invoices drift from 52 to 55 days on average, and in the case of the largest businesses (over 500 employees) the drift has been from 55 days to 58 days.

At first sight it might not seem like such a big deal, but there are serious cash flow and cost implications, particularly for high turnover, low margin businesses. For every $10M of annual turnover a 3 day drift in days outstanding takes $82,000 out of working capital and if that hole has to be filled by increased borrowings, at 10%, there’s a cost of $8.2K in additional interest.

As most credit managers will attest, getting paid on time is a serious challenge in the current climate, and are always looking at solutions to solve the growing problem of longer debtor days.

Improving Debtor DaysIt is very important to emphasise the relevance of having a suitable credit management system to ensure all paperwork is in order. The correct details including the payment terms on invoices, quoting the correct purchase order numbers, ensuring that the detail such as number of units and price per unit is accurate etc.

It’s also important to issue invoices and statements in a timely manner and to have an effective collections programme and credit team in place.

Quite often an improvement in

paperwork, making sure invoices show all the relevant information required by the customer to make payment will speed up the collections cycle. Sending timely reminders and accurate statements will also speed up payment.

Improving Cash flow – Debtor FinanceDebtor finance is fast becoming the solution of choice for growing business and is recommended by many accountants and finance professionals around the country.

Historically, there has been a view often expressed by business owners and decision makers, that debtor finance would be a great solution if it were cheaper. Those who express this view are are often taken aback by the response “Are you sure your business can afford not to do it ?”

In headline terms, debtor finance may not be the cheapest form of commercial finance available, but it’s important to properly understand the enabling role it can play in the development and growth of a business and the alternatives available, before reaching any conclusions about whether it costs too much.

Growing businesses are cash hungry, and without the availability of working capital to meet increasing staff and material costs, the danger is that profits that look good on paper can in reality be tied up in stock and debtors. Couple this with longer debtor days, there is then insufficient cash available to meet wages and supplier payments as they fall due.

As a line of credit that grows in tandem with turnover, debtor finance is an ideal solution for businesses experiencing strong growth. A typical

Cash is king– benefits of using debtor finance to improve cash flowThe real cost of late payment

By Morgan Elliott*

The old adage “Turnover is vanity, profit is sanity, cash is reality” has never been more relevant these days, as a growing number of Australian businesses are discovering that “number of days outstanding” is more than just a statistic. It also has fairly significant cash and cost implications.

Morgan Elliott


Credit Management

facility will advance 80% of the value of the receivables, so $400,000 would be available against a ledger of $500,000; $800,000 would be available against a ledger of $1,000,000 and so on.

Many specialist debtor finance providers like Scottish Pacific offer the value add option of additional services such as risk assessments on potential new customers, collections, including follow up calls, reminder letters and statements. These facilities provide more than just a line of credit, they encompass an outsourced solution that compliment the task of the credit manager, and in particular, allow them to focus one more important tasks without having to perform these functions themselves and incur the extra cost of recruiting additional staff.

Used wisely, a debtor finance facility can add significant value. With more cash available, stock can be purchased in

larger quantities and paid for more quickly in exchange for discounts thus improving gross margin. Used in this way, debtor finance can actually pay for itself.

To summarise: z The funding available through a

debtor finance facility grows in line with sales

z Businesses are able to access the extra cash required to fulfil an increasing order book

z Real estate security is generally not required

z Additional complimentary ledger management services are available

z Used wisely, facilities may pay for themselves

z Facilities can provide a valuable alternate source of finance in growing businesses, and those operating in seasonal cycles. Other alternatives to debtor finance

such as unsecured overdraft facilities, raising private equity or offering early settlement discounts all typically work out more expensive than debtor finance, without the option of the additional services. Ultimately the key is to find the right fit for the business, so that the finance arrangements not only support the current needs of the business, but will also enable it to grow without undue constraint. Debtor finance is one of the few forms of finance with that level of flexibility and should always be considered as a viable alternative for businesses looking to optimise their working capital requirements. n

*Morgan Elliott is a Business Development Manager with Australian owned specialist Debtor Finance provider, Scottish Pacific Debtor [email protected] www.debtorfinance.com.au

Many specialist debtor finance providers ... offer the value add option of additional services such as risk assessments on potential new customers, collections, including follow up calls, reminder letters and statements.


Credit Management

Corporate overdue continues to rise in 2013 According to the survey, 82% of the interviewed enterprises reported overdue in 2013, a 5 % increase compared to 2012 and at the highest level in 3 years (Table 1). Among them, 45% also said the overdue amount had increased as well. Companies also experienced a longer overdue days: 18% reported an average overdue days longer than 90 days, a 5 % increase compared to 2012.

Payments that are over 6-months late are considered as highly risky. From Coface’s experience, there is an 80% chance for these overdues not to be repaid at all if they were not paid within 6-months. Moreover, if the amount of such overdue payment exceeds

Corporate overdue payments in China at the highest level in last 3 years: 80% of corporates affected in 2013More pressure on financing market/shadow banking in China in spite of stable growth in 2014

A survey of corporate credit risk management in China was conducted in the fourth quarter of 2013 by Coface, a leading global credit insurance group. The survey revealed that 8 out of 10 corporates in China experienced overdue payment in 2013. Sectors of chemicals, industrial machinery and household electric & electronic appliances are at higher risk. As credit facilities will remain tighten in 2014, deterioration in corporate payment could lead to significant ripple effect in the shadow banking market in China.

Sector (subsector) Payment experience (vs. 2012) Financial performance1 (vs. 2012)

Automobile Slightly improved Similar

Building and construction Slightly improved Improved

Chemicals Deteriorated Similar

Household electronics - computer machineDeteriorated

Slightly deteriorated

Household electronics - health and beauty Similar

Industrial electronics - electronics part

Slightly deteriorated

Slightly improved

Industrial electronics - heavy mining machinery Slightly improved

Industrial electronics - computer parts Deteriorated

Paper and printing Similar Similar

Steel Similar Similar

Textile Similar Similar

Source: Coface 1 Leverage and profitability


Credit Management

report their average overdue-period extended to more than 60 days in 2013, showing signs of deterioration compared to 2012. This is especially worrying for 3 sectors: industrial machinery and electronics (+16%), household electric/electronic appliances (+19%) and chemicals (+11%) (Table 3).

In addition to payment experience, the survey takes into account financial performances (debt-to-equity ratio and profitability) of industries to assess their healthiness in the Chinese economy. “Taking a look at the debt-to-equity ratio shows us how the leverage conditions of various industries have been changing over time, which sheds light on how changes in financing costs may impact the respective industries and how willing industry participants are to finance their own businesses. At the same time, profitability of industries is important for apparent reasons, but it also implies the ability of businesses to generate cash flow from their operations,” says Rocky Tung.

Industrial machinery & electronics, household electric/electronic appliances and chemicals experienced deterioration in both payment and financial indicators. It could be explained by the slow demand in domestic and export markets in 2013 and high competition of the sectors.

Companies worry about economic growth in China and credit tightening in 2014While hiking labor cost and RMB appreciation could be the headlined stories in the news, they are by far not the most concerning factors for businesses in China. These difficulties are considered as such by only 26% and 9% of corporates. It’s the potentials of economic slowdown in China that worries the majority (61%) of the respondents. Credit tightening, which would potentially reduce their accessibility to credits, is feared by 50% of companies (Table 4).

Table 1

Table 2

2% of the total sales, it is believed that these companies could have liquidity problems. This is the case of 33% of interviewed companies (Table 2), which is a sign of a severe liquidity problem and a high risk of non-payment to their suppliers or borrowing banks or institutions.

“Deteriorated payment experience in China is an alert to us. Traditionally speaking, smaller companies in China do not necessarily get enough credit facilities from the regular banking system and such issues are the main driver of the shadow banking system development. While we are expecting cost of fund to point higher in 2014, interest rate in the shadow-banking

system is already high. An increasing trend of overdue payment adds weights to liquidity management of different stakeholders in the supply chain, and the vicious cycle could lead to significant ripple effect,” says Rocky Tung, Economist of the Asia Pacific Region at Coface.

High risk sectors: industrial machinery & electronics, household electric/electronic appliances and chemicalsMost of the industries in the Chinese economy have seen a marked deterioration in their payment experience in 2013. An increasing number of industry participants


Credit Management

to 9.6% and 8.1% in 2013. Domestic consumption is expected to grow in a slower pace in 2014.

Increasing awareness of receivables management of Chinese companiesToday 90% of Chinese companies use credit sales in their domestic trade. It is encouraging to see more than 60% of companies expressed in the survey that they use different credit management tools in their operations.

“Receivables are as important as other assets and sometimes the largest one of a company. Offering credit sales certainly is an effective way to win business. However, without proper credit control, it will create significant impact to the financial condition of a company. It is also encouraging to see that the usage of credit insurance increased from 18% in 2012 to 24% in 2013,” said Richard Burton, Regional CEO of Coface for Asia Pacific.

Coface has been conducting the corporate credit management survey in China since 2003 and the 2013 survey is the 11th edition. 956 companies from different sectors participated in the survey between October and December 2013. The survey provides a better understanding of China based companies’ payment experience and their credit management practice. n

Contact: Tania Muñiz, Marketing and Communication Manager, Ph: (02) 8235 8615, Email: [email protected]

Table 3

Table 4

For 2014, the overall macroeconomic environment in China remains healthy, albeit top-line economic growth is expected to slow during the ongoing normalization process. Reflected in the government’s slowing growth target in the last few years, top-line economic growth has also dropped slightly over the period. The 7.7% real GDP growth in 2013 was the lowest growth rate achieved by the world’s second largest economy in 14 years. This is in-line with the government’s address on focusing on the quality – instead of quantity – of growth

going forward. Nonetheless, Coface’s estimate of 7.2% YoY GDP growth in 2014 will continue to make China as one of the fastest growing economies in the world.

Despite the high hope of seeing consumption-led economic growth, investment will remain as the growth engine in the medium term as we expect income growth in Chinese family will carry on the slowing trend from the last few years. Growth rate of average income and consumption expenditure declined from 12.4% and 10% in 2012

aicm Can We Help?

December 2013 • CREDIT MANAGEMENT IN AUSTRALIA 25 March 2014 • CREDIT MANAGEMENT IN AUSTRALIA 25

AICM Response

We find it hard to believe that any manager worth their salt would

not send at least one representative from their company to our

national conference and make the following suggestions to you

z Raise this matter at the time you complete your annual

expense budgets and ensure it is included in each

subsequent year’s budget. A prudent business will ear mark a

training and development budget and a quick phone around

suggests that successful businesses/Credit Managers allow a

minimum of 2.5% of their salaries budget. What might it cost?

{ The cost of this year’s Gold Coast conference is

likely to be $1,000 registration, airfares Sydney/Gold

Coast/Sydney presently $232 return and 2-3 nights

accommodation say $5-700 ie all up less than $2,000.

The conference includes lunches and the President’s

Dinner.

z The benefits are numerous and should be discussed with

your Manager. They include

{ Approximately 14 sessions which comprise

� Updates on legislative changes which will include the

new Privacy provisions.

� Updates on court cases which are setting the rules in

such areas as PPSA.

� Key economic addresses providing the position and

forecasts for business conditions in many sectors

across the country. Dr Stephen Koukalis gave a most

informative address last year.

� People and development skills, such as preparing

for right sizing and public speaking as well as team

management.

� Credit management skills such as KPI’s, improving

collections and cashflow management.

� Recovery action and customers under external

control.

� Analytical data of credit management trends,

bankruptcies and external administrations together

with forecasts of the future risk climate.

{ The ability to discover the changes in credit management

support through the trade suppliers who attend. There is

a wealth of information available whether this be in debt

recovery, invoice despatch, customer communications,

recruitment or systems advances. Don’t be frightened to

compare their service offerings with those you already

receive.

{ The opportunity to network with your peers and make

potentially lifelong connections which will assist you back

at your desk. These opportunities allow you to draw on

their knowledge and experience and also impart some of

your own for your mutual benefit.

{ The ability to network with others who operate in the

same geographical or industry segment as you and to

understand their experiences and share your experiences.

z Use the opportunity of travel to your advantage. By this we

mean

{ Meet up with customers in or near the conference eg in

half an hour from the Gold Coast you are in suburban

Brisbane and within an hour you can be in the CBD.

{ Meet up with peers from your business and visit their local

offices to see people you may talk with but have never

met face to face. Have a look at their local operation and

see how it compares to your workplace.

{ Some businesses use the opportunity to hold their

own national Credit Conference on the Tuesday before.

Perhaps the best opportunity to get you all together.

{ Combine it with a holiday and come to arrangement

with your employer eg you make your own way to the

conference and he pays registration and accommodation.

z Consider entering either or both of the

{ Young Credit Professional of the Year competition, if you

are under 30, or

{ Credit Team of the Year, as the finalists prize includes

airfares, accommodation and conference registration for

the 2014 National Conference on the Gold Coast

In closing we would say two things. Firstly, have the initial

conversation with your Manager now and secondly make note of

and diarise this conversation together with the above notes and

ensure it forms part of your budgetary process in 2014. Do not

wait until the conference flyer hits your inbox.

AICM Conference

I have heard so many wonderful comments about the national conference in Adelaide however I have trouble in getting approval from

my Manager to attend, especially if it is not held locally. What do you suggest?

– MICM Sydney

AICM receives questions from Credit Managers that it puts to a panel of credit managers to answer. The brief is not only to answer the question but to look into the root cause of the problem and contribute strategic thought.


Insolvency

in Australia. Therefore, the number of companies entering into external administrations was less than 1% of all companies. The number of companies entering into external administration was also significantly less than the number of new company registrations during the year 1 January 2013 to 31 December 2013, which amounted to approximately 202,000.

ASIC recorded that court liquidations and creditors’ voluntary liquidations amounted to 31% and 44%, respectively, of all external administrations during the year 1 January 2013 to 31 December 2013. Voluntary administrations during the same period amounted to 13% of external administrations and, receiverships and controllerships each amounted to 6% of external administrations. Therefore, winding up, whether voluntary or by the Court, is the most frequently used corporate insolvency procedure.

By reference to table 1, it is clear that voluntary administrations and bank initiated receiverships are declining whilst liquidations are trending at a relatively high level. On the other hand there has been a clear decline in bankruptcies since the Global Financial Crisis (table 2).

The changing face of insolvencyDuring the year ended 30 June 2007 voluntary administrations amounted to 31% of all new external administrations and creditors’ voluntary liquidations amounted to 26% of all new external administrations. Since 2007 there has been a decline in voluntary administrations and an increased number of creditors’ voluntary liquidations. This was an intended consequence of the December 2007 amendments to the Corporations Act which recognised that many voluntary administrations were commenced with the intention of proceeding to liquidation, such as when the main reason for the appointment was to avoid personal liability for a director penalty notice. In December 2007 the procedures for winding up a company were modified so that many companies could be wound up quickly, assuming 95% of the members consented in writing, to short notice of a meeting of members.

ASIC’s insolvency statistics for the year 1 January 2013 to 31 December 2013 show that the various forms of controllership, such as Controller,

Insolvency updateBy Giles Woodgate and Richard Rowley

IntroductionThe Australian Securities and Investments Commission (“ASIC”) maintains extensive statistical records on external administrations. Further, since 1 July 2013 ASIC has retained records of the number of companies entering into external administration, by industry type.

A summary of ASIC’s insolvency statisticsDuring the year 1 January 2013 to 31 December 2013, 10,821 companies entered external administration for the first time. This excludes companies which were wound up pursuant to members’ voluntary liquidations, as those companies were solvent. New South Wales recorded the most external administrations, with 38%, followed by Victoria, with 28%, and then Queensland, with 20%. The other States and Territories comprised 14% of new external administrations.

As at 31 December 2013 there were 2.056M companies incorporated

Table 1: Companies entering into insolvency administrations

Liq

uid

ati

on

s

Re

ceiv

ers

hip

s &

VA

s

Mar 2010qtr

Jun2010qtr

Sep 2010qtr

Dec 2010qtr

Mar 2011qtr

Jun2011qtr

Sep 2011qtr

Dec 2011qtr

Mar 2012qtr

Jun2012qtr

Sep 2012qtr

Dec 2012qtr

Mar 2013qtr

Jun2013qtr

Sep 2013qtr

Dec 2013qtr

2,300

2,200

2,100

2,000

1,900

1,800

1,700

1,600

1,500

1,400

500

450

400

350

300

250

200

150

100

Court/cred vol winding up Receiverships Voluntary Administrations


Insolvency

Receiver and Manager, Managing Controller and Receiver comprised 12% of all external administrations. There has been an increase in the number of controllerships over the past six years. From a low of 6% of all external administrations during the year ended 30 June 2007, the number of controllerships as a percentage of new external administrations, peaked at 15%, during the year ended 30 June 2010, reflecting increased appointments by secured creditors post the global financial crisis.

Voluntary administration does not necessarily avoid liquidationASIC does not maintain publicly available records of companies which, having entered voluntary administration, are subsequently wound up or execute Deeds of Company Arrangement. However, ASIC does maintain records of the number of appointments of Deed Administrators. A comparison of the number of Deed Administrators appointed compared to the number of new voluntary administrations during the year 1 January 2013 to 31 December 2013, showed that the number of Deed Administrators appointed equated to 33% of companies entering into a voluntary administration. Therefore, despite the December 2007 amendments to the Corporations Act, the most likely outcome from a voluntary administration is liquidation.

(b) inadequate cash flow; and,(c) trading losses.

However, in only 10% of the cases identified by external administrators as involving possible misconduct, did ASIC request the external administrators to complete supplementary reports to ASIC.

The top three offences reported to ASIC by external administrators were:(a) contravention of the insolvent trading

provisions;(b) failing to keep adequate financial

records; and,(c) directors failing to perform their duties

with care and diligence.

ConclusionASIC’s insolvency statistics provide useful information concerning the number of companies entering external administration, the type of external administrations utilised and the types of companies entering external administration. The statistics show that, with some exceptions, corporate insolvency in Australia is principally a problem of the small and medium enterprise sector; but fortunately a declining problem. n

Giles Woodgate is a Liquidator and a Trustee in Bankruptcy. Richard Rowley and Giles Woodgate are partners of Woodgate & Co., Chartered Accountant and Insolvency Practitioners. They can be contacted on (02) 9233 6088

DISCLAIMER: The material contained in this article is merely general commentary and the comments and information do not represent a legal or professional service. Advice should be sought from Woodgate & Co. in relation to the circumstances of each matter before acting in this area.

What types of companies become insolvent?During the period from 1 July 2013 to 31 December 2013, the top five industries for the appointment of external administrators were:

%Other (business and personal services) 30

Construction 18Accommodation and food 8Retail 8Manufacturing 5

69%

External administrators are required to lodge reports with ASIC pursuant to various provisions of the Corporations Act. ASIC provided a summary of external administrators’ reports for the year ended 30 June 2013, which showed that:(a) 19% of corporate insolvencies had

21 employees or more;(b) 15% had assets of $100,000 or more;(c) 57% had liabilities of $250,000 or more;(d) 31% had secured creditors;(e) 11% had unpaid taxes and charges

amounting to $250,000 or more; and,(f) 3% of the dividends paid to

unsecured creditors were 11 cents in the dollar or more.ASIC noted that the top three

nominated causes of companies’ failure, listed by external administrators, were:(a) poor strategic management of

business;

Table 2: Total number of bankruptcies (Source AFSA)

MarchQtr

JuneQtr

SeptemberQtr

DecemberQtr

7,700

7,200

6,700

6,200

5,700

5,200

4,700

2009

2010

2011

2012

2013

2013 was a magnificent year for five young, intelligent, energetic, and highly motivated individuals. As the national finalists for the 2013 Young Credit Professional Award (YCPA), not only are they now regarded as the best in their roles, but they are amongst the best in Australia.

Now in its seventeenth year, the prestigious AICM and Dun and Bradstreet award seeks to identify and honour the accomplishments of young credit professionals from around the country and to recognise their exemplary contributions to the industry.

Four months have passed since having received the honour of being the 2013 National Young Credit Professional and my career as I knew it, will never be the same. The most significant of all changes has been recognising my very own role within credit.

As I reflect on the YCPA journey I don’t think I could have ever anticipated the exponential growth which has resulted in all aspects of my life. Not only have I been exposed to professionals who have introduced me to the evolving and dynamic nature of credit, but I am now employed with Makinson d’Apice Lawyers where I can uphold my appreciation for the profession.

Before the YCPA process I knew I wanted to practice in commercial litigation. But it wasn’t until I started

speaking with my mentors and likeminded colleagues that I was able to understand what this really meant. I have now recognised the necessity for specialisation in order to understand my clients’ needs and advise them on key legal developments where and when required.

When speaking with the 2013 national finalists, it is evident that our ambition to succeed has been spurred by the YCPA, and it wasn’t long until each and every one of us began to reap the benefits of our achievements. We all agree that the AICM has provided us with a competitive advantage over our peers, and will continue to do so for years to come.

The best part of the YCPA is the fact that there are no limitations. The high calibre of national finalists were from different occupations with various levels and years of experience. Yet similarly we all had one commonality- the comradery that is the AICM. The AICM has been responsible for promoting and recognising greatness, and 2014 is not going to be any different.

So many people ask; ‘What does this mean for you?’ The short answer is EVERYTHING- winning has been fundamental to my professional development. The skills and expertise which I have acquired cannot be taught in a classroom or even learnt by reading textbooks. I am now driven with a sense of pride and confidence in what I do, as I

Nominations for the 2014 Young Credit Professional Award, sponsored by D&B, are now open. If you are under 30 years of age as at 30 June 2014 and work in any of the many roles that embrace credit such as collections, customer service, factoring and invoice discounting, credit analysis, credit control, credit scoring, leasing and equipment hire, risk and/or loans, then you have what it takes to be this years Young Credit Professional.The National Winner receives $1000 cash prize and Educational Scholarship from AICM (valued at $2,000). The Division Winner wins their airfares, accommodation and registration costs to attend the AICM National Conference to be held at the Marriott Resort, Surfers Paradise on 15 - 17 October 2014.To register your interest and have an AICM representative contact you with further information and assistance go to www.aicm.com.au

You have what it takes to be the2014 Young Credit Professional.

Young Credit Professional Award

Balveen Saini – 2013 National YCPA winner

know I am contributing to the industry in my own way.

My ambitions as the National Young Credit Professional are first and foremost to be available to my colleagues. I hope to ignite the same excitement and awareness as I share amongst my peers, as the future of the profession is in our hands.

As the AICM roll out the 2014 event calendar, I hope that I can encourage prospective YCPA candidates to take part in this journey. It is a once in a lifetime opportunity, so why not take the initiative to be responsible for your own success? – Balveen Saini, Makinson d’Apice Lawyers


YCPA

aicma r o u n d t h e s t a t e s


new south wales

President’s ReportA quick reflection on 2013; We saw a number of new members join us, successfully ran 13 events for our members, had over 20 current members undertaking the Certified Credit Executive (CCE) exam, the National Young Credit Professional for 2013 was awarded to Balveen Saini of NSW and to top it all off, we successfully launched the NSW Pinnacle awards recognising a number of individual contributions to our industry.

I hear you all whispering – what exciting events will happen in 2014? With the help of the NSW Council (Nick Pilavidis (Director), Grant Morris (National President), Arthur Tchetchenian (Vice President and CCE), Ben Sewell (Secretary), Malcolm Poslinsky (Treasurer), Susan Day, Sam Pearlman, Treacy Sheehan and Colin Magee (Events), Peter Morgan (Membership), Ian Hadwen and Baleen Saini (YCP/Credit Team)) we have put together a full calendar of relevant and exciting events. In 2014 we are trialling the re-launch of a Golf day as well as bringing on board some great sponsors for the 2nd annual Pinnacle awards to be held in November.

For those members out there that don’t regularly come along to our events, can I encourage you to come along to one event this year, and give us some feedback as to what we can do better.

Thanks for your support and I hope to see you at an Event in 2014.– Gregg Odlum MICM, NSW President

NSW SymposiumThe 2014 NSW Division Symposium is an annual event that provides a full and complete summary of all the recent and proposed changes in the laws relating to Credit, Debt Collection and Insolvency and includes practical solutions to the problems that are faced by Credit Managers.

We were pleased to again team up with Geoffrey McDonald, Barrister, who has 30 years of experience in the credit industry. Geoffrey has been presenting at seminars such as this for nearly 20 years. He has been a member of the AICM since 1993. Geoffrey and Rebecca Ross, from his chambers were joined by Mark Franklin and Craig Tinkler from Worrells.

This half-day symposium was attended by over 50 delegates who finished the afternoon by networking with their fellow professionals at the Symposium Cocktail hour to discuss the year ahead.

Meet Your Councillor

PeteR MoRgANPeter Morgan whose mother is an internationally acclaimed ventriloquist, graduated from Middlesex University in London England in 2003.

Peter started his career in Credit with Kone PLC and then IBM. After moving to the “lucky country” Australia in 2004, he started his career in recruitment at Michael Page International where he was recognised as one of the top consultants in the country, qualifying for the platinum club and winning a trip to New Zealand.

Peter’s success motivated him to establish Byron Thomas Recruitment in early 2009. In 2010 Byron Thomas Recruitment won the best business services firm in the business achiever awards sponsored by Dell, Channel 9 and American Express. Peter was recognised with the NSW Recruiter of the Year – Pinnacle Award by the Australian Institute of Credit Management in 2013 and is now a councillor for the AICM in NSW.

IAN HAdWeNIan Hadwen works as a Sales Specialist within Veda’s Commercial and Property Solutions division, providing pre-sales product support for third party data services. This senior position plays a crucial role in supporting Veda’s sales team, addressing the banking and finance, trade credit, collections and government markets. A key function of the Sales Specialist role is to form a detailed understanding of customer requirements and link through to product development within Veda.

Ian has twenty years of business development, account management and commercial experience within the financial services and telecommunications industries. Ian’s prior roles within financial services include; the Commonwealth Bank, Equigroup and Deloitte. It is this broad market understanding and account experience that has enabled him to achieve significant successes at Veda and in earlier roles. Ian has recently been appointed as a Councillor for the NSW Division of the Australian Institute of Credit Management.

ColIN MAgeeColin started working in Collections in 1989 for a company named Custom Credit (yes the old tennis mob with John Newcombe at the forefront). Since then he has worked for the likes of GE, National Credit Management and currently the National Accounts Receivable & Collection Manager for GrainCorp Operations.

He is a passionate “collector” who likes the thrill of the chase and has a real strength of process improvement and change Management. He travelled Europe in the late 90s and had the chance to run a couple of pubs in the UK. He also worked part time as a security guard & PI.

He is now an active Council Member of the NSW Division of the AICM in the events team and really enjoys meeting new people in our field and listening to their ideas and vision for our industry. One in particular is a fellow Council Member, Balveen Saini (Current YCP of the year) - if you get a chance sit with her for 5 mins – fantastic.

On a personal note he loves spending time with his family and enjoying watching his little 4 year old daughter grow. He is also a Dragons (NRL) tragic, and love seeing the mighty Red V in action.

Presenters at the NSW Symposium: Rebecca Ross, assistant to Geoffrey McDonald, Barrister and Craig Tinkler from Worrells.



new south wales

Membership MilestonesIn this issue we celebrate the following membership milestones:40 Years – Ken Lawless LICM CCE, joined in 197435 Years – David Cains MICM, joined in 197935 Years – Peter Trayhurn MICM CCE, joined in 197930 Years – Ron Lidman LICM, joined in 198425 Years – Fayez Hanania MICM, joined in 198925 Years – Warwick Bennett MICM, joined in 198925 Years – Lionel Stratford MICM, joined in 198925 Years – John Cole MICM, joined in 198925 Years – Frank Merritt MICM, joined in 198925 Years – Andrew Power MICM, joined in 198925 Years – John Kavallaris MICM, joined in 198925 Years – David Paterson MICM, joined in 198920 Years –Jeff Butterworth MICM, joined in 199420 Years – Vernon Miller MICM CCE, joined in 199420 Years – Tom Frair MICM, joined in 199420 Years – Ian Purchas MICM, joined in 199420 Years – Stephen Vaughan MICM CCE, joined in 1994Congratulations to each of you.

We asked Ron Lidman, a member for 30 years, for a few words on his time since joining the AICM

Ron lidmanWhat were you doing when you first joined the AICM? I had completed the Credit Manager’s course at Wetherill Park TAFE and was National Credit Manager of CMA Foam Group which was a division of Metal Manufacturers.

Where has your career taken you and what roles have you had? My career has taken me to many National and State AICM conferences (some of which I presented at). It has also given me the opportunity to serve on council, present at numerous monthly meetings and sit the inaugural CCE exam in Hobart in 1998. Since 1984 I have only worked in 3 companies. CMA Foam Group which in 1988 became Joyce Australia, Frito-Lay Australia which later became Snack Food Limited, and finally Manildra Group.The positions I have held were National and Group Credit Manager roles. My career has taken me all over Australia and to overseas countries such as Fiji, Bali, Bangkok and Phuket. The overseas trips were a “junket” holiday with some of our top customers. I was invited to attend by our Sales Director as a result of me forging strong customer relationships with these customers.

What are you doing know? Currently I am in semi-retirement and for the last 2 years or so have been spending my days doing volunteer work with Holroyd Community Food Services in the Meals on Wheels and social support programs. In saying that I do miss working in credit and who knows if the right role came around I may come out of retirement.

We asked David Paterson, a member for 25 years, for a few words on his time since joining the AICM

david PatersonRecently I got an email from Terry Collins congratulating me on 25 years membership with AICM. At first I thought really, that’s nice and then I thought no way! 25 years! it can’t be. But sure enough it is 25 years and its one part of a 37 year career so far.

I started my career with Custom Credit Finance back in 1976 and had various roles over a 5 year period including consumer loan acceptance and collection as well as bank referrals. Interesting times back then doing your own process serving, court appearances and the like. My last

position was as Dealer Floor Plan Controller for several Car Dealerships in the Parramatta area that was an interesting and fun job for a young lad at the time. I left Custom Credit trying to find my feet in the commercial world of credit.

After 3 jobs in 5 years I joined Arnott’s Snackfoods as NSW Credit Manager, 9 months later I was promoted to National Credit Manager and it was shortly after that I joined AICM. During my 5 years at Arnott’s I was involved in 3 acquisitions, assisted with IT rollouts for the AR functions and developed a multi company Credit Policy.

I left Arnott’s Snackfoods and joined Cottee’s Foods until they moved back office functions to Melbourne, I then joined Smiths Snackfoods until they moved offices. A bit of a pattern was emerging. All good companies and challenging roles, made lots of professional friends, some of which are still in contact with me as well as past managers.

At this stage of my career I decided it was time to get out of Food and Beverage.

So I had a go at consulting and special project work, no regrets it was an exciting time of my career and it provided me with additional experiences in other businesses.

Anyway after not being able to have a meaningful holiday for over 3 years I decided to take on a permanent role at Yates as Group Credit Manager for Australia and New Zealand. I was there also funnily enough also for 5 years, during which time ownership changed twice. Orica was the final owner and Yates back office functions were merged into Orica shared services in Melbourne. Melbourne again! I left Yates and had my first overseas holiday.

Where did I go, Disneyland naturally. After a tough 5 years at Yates I needed some fun.

When I returned to the land of OZ, I joined Adelaide Brighton as Group Credit Manager. What a dynamic company it has been and still is. We have grown so much in recent years. Every day I catch the train into Circular Quay and see the Harbour Bridge, Opera House and so on, it’s tough, well the train trip is but it beats driving and parking.

In a few months I will start my 10th year at Adelaide Brighton, another milestone event.

When I left school I was told I was best suited to being an Accountant, so off I went and did cost accounting for 3 years, Credit Management is way more interesting and it can be fun.

We asked John Kavallaris, a member for 25 years, for a few words on his time since joining the AICM

John KavallarisIn 1987 I accepted a role as Credit Officer at Rothmans of Pall Mall. I enjoyed Credit and proceeded to complete a 2 year course at TAFE for my Credit Management Certificate. I then joined the AICM and participated in conferences and attended various seminars to better myself in the Credit profession. The networking and friends made proved to be invaluable for my education and career. Within a year of completing my certificate the opportunity arose for the National Credit Managers position at Rothmans which was offered to me.

Roles as National Credit Manager:Rothmans of Pall Mall Pacific Waste Management Kimberley Clarke MSA(Aus) Pty LtdI am still working at MSA (Aust) Pty Ltd where I manage the Accounts

Receivable, Accounts Payable and the general Administration area. What I’ve learnt over the years is that it is very important to work

well with your Sales team, have a great working relationship and mutual respect with the National Sales Manager. Get this right and your job is a lot easier and from there you build up the profile of the Credit Department where you demand the same respect as the other key departments in the Company.



new south wales

The Australian Institute of Credit Management New South Wales

welcomes the following organisations as our sponsors for 2014

The Australian Institute of Credit Management and our Sponsors benefit from a cooperative and supportive relationship that provides high profile branding opportunities to sponsoring organisations and gives the credit industry greater recognition and the opportunity to work together to promote best practice in the credit industry and in so doing provide professional development opportunities for credit

practitioners in Australia.

Tuesday 18 March 2014

Network NightSubject: Can I please have my money first? The inside word on preferencesSpeaker: Sam Pearlman – Partner Curwoods LawyersVenue: KPMG OffICe – 10 SheLLey STreeT, Sydney

21st - 24th March 2014

CCE Exam Online

Tuesday 15 April

Parramatta BreakfastSubject: The energy Project – employee engagement in the Credit Industry. Speaker: Gina d’Almeida – Client Service Manager Mondo directVenue: rydGeS hOTeL, PArrAMATTA

Tuesday 22 April 2014

City Youth Network Night – TriviaVenue: CITy LOCATIOn TBA

Tuesday 20 May 2014

Network NightSubject: PPS and Legal Procedural reviewVenue: CITy LOCATIOn TBA

Tuesday 17 June 2014

Network NightSubject: Can I please have my money first? The inside word on preferencesSpeaker: Sam Pearlman – Partner Curwoods LawyersVenue: rydGeS hOTeL, PArrAMATTA

Tuesday 15 July 2014

Annual Golf DayVenue: PArrAMATTA – wATCh ThIS SPACe


YCPA – Awards Dinner – AGMVenue: rydGeS hOTeL, PArrAMATTA

Tuesday 19 August 2014

Network NightSubject: where is the corporate watch dog at?Venue: rydGeS hOTeL, PArrAMATTA

Tuesday 16 September 2014

Network NightSubject: fraud – Protecting your companyVenue: CITy LOCATIOn TBA

Tuesday 9 October 2014

Youth Network Night – TriviaVenue: LOCATIOn TBA

15 – 17 October 2014

AICM 2014 National ConferenceVenue: MArrIOTT hOTeL GOLd COAST

Tuesday 18 November 2014

2014 Credit Symposium Part 2Subject: Collections Master Class & Credit Manager PanelVenue: rydGeS hOTeL, PArrAMATTA


Pinnacle Awards DinnerVenue: CITy LOCATIOn TBA

Events CalendarWe asked Stephen Vaughan, a member for 20 years, for a few words on his time since joining the AICM

Stephen VaughanWhat were you doing when you first joined the AICM?I had spent 5 years working at the old Coopers & Lybrand (PwC) on insolvencies since the Black Monday 1987 share market crash. It was boom time for liquidators and receivers and we struggled to keep up with the constant flow of new matters.

Where has your career taken you and what roles have you had?I was looking for a change and entered the banking world, joining one of the big 4 as a business banking manager. I quickly realised it’s a lot harder making lending decisions than it is recovering money. I developed a new respect for bankers and credit managers! Although I built some good credit skills I realised my true calling was dealing with distress and problem solving. I moved to the dark side of the bank and worked in recovery of problem loans. One thing led to another and I rejoined the insolvency profession, this time with a more worldly outlook and a strong passion in finding innovative ways of making the best of bad situations for all stakeholders. Ideally this involved preserving and restoring enterprise value and, in the process, jobs as well as debt and equity.

What are you doing now?I’m an Official Liquidator and a Director in the KPMG Restructuring practice. I’m running a number of administrations and liquidations. However the majority of my work is still ‘distressed advisory’, working with all stakeholders of underperforming businesses to stabilise and diagnose underlying issues and implement restructuring plans to help turn businesses around. It’s very challenging but also satisfying work. Interestingly we do a lot of cash and working capital improvement work as well as cost reduction. Improved receivables management is always a key component and we regularly consult around credit issues. I’m very appreciative of the opportunities and support I have had through the AICM over the last 20 years. It’s a great organisation.



We asked Peter Ham, a member for 25 years, for a few words on his

time since joining the AICM

Peter Ham

I joined the AICM in Sydney in

March 1989 while attending a

credit course at Sydney’s Ultimo

TAFE. At that time I was employed

as the Sydney branch manager

for a finance company. I had

spent many years working in both

consumer and commercial finance

companies in various roles.

After re-locating with my

family to Brisbane, I used my credit management experience to work

as a credit consultant for various commercial enterprises including law

firms, a pathology business, a private hospital, an X-ray business and

even a chicken processor.

During my membership with the AICM I held various roles including

Qld Executive Officer, Qld Councilor, Qld President, Qld Director and

Australian Vice President. I very much enjoyed the time in these roles

and the many friends I made. I obtained CCE status at the inaugural

CCE exam, was made a fellow and was subsequently recognized for my

contribution to the Institute by being made a life member.

I have seen many changes in the Credit Industry in the last 25years

and in particular changes involving Privacy, Security registration, and

Credit Reporting. I try to keep informed with changes by following

articles in Credit Management in Australia magazine.

Having retired as a credit controller for a medium sized Brisbane

law firm in 2012, I spend my retirement with my wife of forty years and

our six grandchildren and as an avid surfer, spend much of my time

between the Gold and Sunshine coasts. In retirement, I believe every

day is like being on holiday.

Inaugural Marion Hintz Award goes to the Vice-President

Marion Hintz acted as Executive Officer and Professional Development

representative for the Queensland Branch of the Australian Institute of

Credit Management and has been a member of the institute for well

over 25 years.

She is a well-respected credit personality that gave her all, to

advancing issues with regards to credit management. She trained with

a passion in both private and public sectors and was heavily involved in

advancing the AICM becoming a Registered Training Organisation.

In order to honour Marion’s contribution, the Queensland Branch

wishes to have an annual award:

Marion Hintz Meritous Service Award

President’s Report

After South Australia’s excellent

Conference in 2013, Queensland

has begun training in earnest for

the National Conference on the

Gold Coast on 15th October to

the 17th October.

With the Golf Day at the

renown Hope Island Course on

the 14th October it is set to be an

outstanding few days for body,

mind and soul.

The Queensland Council

is pleased to announce that we are holding our inaugural Master

Class in the first half of the year and we have secured Eric Milne FICM

CCE as one of the presenters. Eric will present A Credit Hypothetical

that promises to be educational, informative and engaging. Other

top quality presenters will complement the program, stay tuned.

Our Credit Network Nights will again attract professionals with our

short sharp presentations on relevant topics. Our year commences

with Wednesday the 12th March 2014 at The Tattersalls Club in the

Brisbane Mall.

With a still difficult economic climate, credit control is still at the

forefront of businesses as they strive for ever better Operating Working

Capital, our sponsors Veda, Dun & Bradstreet, Randstad, Results Legal,

and Vincents will again be providing excellent support financially and

professionally by way of speakers and presenters on relevant topics.

I look forward to seeing you at our next function

– Brian Kay FICM, CCE,

Queensland President

Membership Milestones

In this issue we celebrate the following membership milestones:

50 Years – Roland Rodda LICM, joined in 1964

30 Years – Jean Peel MICM, joined in 1984

30 Years – Stephen Vardy MICM, joined in 1984

25 Years – Elizabeth Inglis MICM, joined in 1989

25 Years – Peter Ham LICM, joined in 1989

20 Years – Terry Van Der Velde MICM, joined in 1994

20 Years – Lorraine Cole MICM CCE, joined in 1994

Congratulations to each of you.

queensland




CCE Exam Online

Wednesday 9 April 2014

Credit Network NightSubject: what is new in the Country/ Liquidations, PPSevening event

Venue: TATTerSALLS CLuB

Wednesday 14 May 2014

Credit Network NightSubject: Pros and Cons of Outsourcing Key functions/Positive reportingevening event


Wednesday 11 June 2014

WorkshopSubject: A Credit hypothetical – engaging workshopPresenter: eric Milne CCeAfternoon event

Venue: rAndSTAd

Wednesday 9 July 2014

Credit Network NightSubject: Skills report – Manage Peopleevening event


Friday 25 July 2014

YCPA - Awards Dinner – AGMVenue: TATTerSALLS CLuB

Wednesday 20 August 2014

Half Day SeminarsBack to Basics: risk & Account ManagementSubject: ½ day Telephone TechniquesSubject: ½ day Manage Account Over duesPresenter: Toni Sawyer

Venue: rAndSTAd

Wednesday 10 September 2014

Credit Network NightSubject: Impact of unseen effects of Business failure


Wincollect/AICM National Golf DayVenue: The LInKS hOPe ISLAnd

15th – 17th October

2014 AICM National ConferenceVenue: MArrIOTT hOTeL – GOLd COAST

November

2014 in Review – End of Year Celebrations

Events Calendar

The Australian Institute of Credit Management Queensland welcomes the following organisations as our sponsors

for 2014



z For outstanding or meritorious

service, outstanding achievement

and outstanding contribution in the

attainment of the objectives of Qld

Branch of AICM and

z For a high level of committed service

for a significant period of time or

z For outstanding leadership in the

encouragement and development

of others within AICM (Queensland Branch) and for fostering and

furthering the aims of the AICM to the long term benefit of the credit

community.

The Inaugural recipient of the Marion Hintz Meritous Service

Award has given of his time to benefit Queensland members of the

AICM as well as the wider Australian AICM community. His enthusiasm

is infectious, his commitment to training and the dissemination of

information has been Meritous given the multitude of permutations

of events that can occur. I speak of course in regards to the myriad of

impacts of the Personal Property Securities Act and it will come as no

surprise that the 2013 recipient of the Marion Hintz Meritous Service

Award is our own Peter Mills.

Peter has undoubtedly devoted these last two years to assisting credit

professionals understanding of the PPSA and has certainly fostered and

furthered the AICM’s aim of credit education.

– Brian Kay FICM CCE,

Queensland President



south australia

Certified Credit executive (CCe) Recognition and Information Night

Division President, Gail Crowder, and CCE Chairperson, Trevor Goodwin,

recently hosted an evening for current and potential CCEs. Those in

attendance appreciated the opportunity to meet with other CCEs and to

encourage those poised to take the March exam.

Trevor Goodwin opened the evening with an overview of the CCE

program and its benefits to qualification holders. Among other things

he spoke of how the qualification is an ongoing recognition of current

competency. It promotes personal growth, personal development and

self-belief and CCEs stand out amongst peers. Attaining CCE is, Trevor

said, clearly for Credit Professionals at the top of their game and who see

themselves in credit for the long-term.

Trevor then invited those present to give a short talk on their own

industry group, and this was something in which they all enthusiastically

took part. The discussion that followed, focusing on the debt and market

situations of such a diverse group of industries, in both commercial and

consumer fields, was the highlight of the evening. In particular, the Privacy

Act came in for a lot of attention and it is clear that this topic will be a

talking point for quite some time to come.

Gail, Trevor and Division Director, James Neate, offered congratulations

to all who have achieved CCE status and who continue to re-certify, and

best wishes to those taking the exam.

Anne Wilkins presents Kerry Hammill with a ‘goodie bag’ of local produce from the National Conference.

‘When it comes to CCE, South Australia has its ‘dux’ in a row!

The Australian Institute of Credit Management South Australia welcomes

the following organisations as our sponsors for 2014





Enthusiastic discussion at the CCE Recognition and Information evening.

south australia21st - 24th March 2014

CCE Exam Online

Thursday 10 April 2014

Credit FocusSubject: Liquidation – Is it the end of the road for your debt?Venue: eduCATIOn deVeLOPMenT CenTre – hIndMArSh

Friday 11 April 2014

Quiz NightVenue: TBA

Thursday 8 May 2014

Credit Focus Subject: Accounting Basics for Credit PersonnelVenue: eduCATIOn deVeLOPMenT CenTre – hIndMArSh

Thursday 22 May 2014

YCPA Networking Night Venue: TBA

Thursday 12 June 2014

Credit Focus Subject: Collecting debt – A Credit manager’s PerspectiveVenue: eduCATIOn deVeLOPMenT CenTre – hIndMArSh

Thursday 10 July 2014

Credit Focus Subject: Privacy – Are all your i’s dotted and t’s crossed?Venue: eduCATIOn deVeLOPMenT CenTre – hIndMArSh

Wednesday 23 July 2014

Women in Credit – Subject: Social NetworkingVenue: TBA

Thursday 14 August 2014

Credit FocusVenue - eduCATIOn deVeLOPMenT CenTre – hIndMArSh

Wednesday 20 August 2014

YCPA – Awards DinnerVenue: TBA

Thursday 11 September 2014

Credit FocusVenue: eduCATIOn deVeLOPMenT CenTre – hIndMArSh

September 2014

Men in CreditVenue: TBA

Thursday 9 October 2014


15 – 17 October 2014

AICM 2014 National ConferenceVenue: MArrIOTT hOTeL GOLd COAST

Thursday 13 November 2014



Christmas FunctionVenue: TBA

Events Calendar

Membership Milestones

In this issue we celebrate the following membership milestones:

35 Years – Eddie Piasentier MICM, joined in 1979

35 Years – Richard Jacobs MICM CCE, joined in 1979

35 Years – Richard Przesniak MICM CCE, joined in 1979

30 Years – Kerry Hammill FICM CCE, joined in 1984

30 Years – Neil Ricketts LICM, joined in 1984

20 Years – Robert Comazzetto MICM, joined in 1994

Congratulations to each of you.

We asked Richard Przesniak, a member for 35 years, for a few

words on his time since joining the AICM

Richard Przesniak

When I joined the AICM I was a

credit analyst/reporter with CPA

Credit Services Pty Ltd. I enjoyed

the challenges of this industry

so much, I bought 50% of the

company in 1981.

I bought the balance of 50% in

2003 and am still enjoying and, fully

active in “My Business” now. Its still

CPA Credit Services.

Concurrently with my credit industry career, I also pursued a

part-time career as a musician/singer. Both careers still capture my

interest and keep me more than just busy.

Since my 1979 commencement in AICM I look back at the

increasing complexities of the credit industry and how AICM has

also developed and expanded its tuition to keep me and all other

members well informed and up to date with the many changes over

the years. Well done AICM. Lets both continue evolving.



victoria/tasmania

VIC/tAS Christmas Party

Approximately 100 members and guests attended the 2013 annual Christmas Party for the Vic/Tas Division, held at the palatial L’Unica Reception Centre on Brunswick Road in Parkville. The evening commenced with drinks in the foyer followed by a three-course dinner and entertainment. Those who attended were treated to a great meal and good company. In between entrée and dessert party goers were amazed, bemused and thoroughly entertained by award winning comedian Nick Nickolas with his oddball but hilarious magic tricks, which included a brilliant trick with guessing the right sausage, involving an audience member and a bag full of sausages. Yes I said sausages, and it was a great trick/gag, but you really had to be there. After dinner guests danced the remainder of the night away with classic rock band VCR, who won over the crowd with a number of AC/DC tunes, and ended the night with further great dance tunes from the seventies. An unexpected surprise for many members to see their very own Vic/Tas committee member Donna Smith up front with VCR on lead vocals. The committee wishes to thank everyone who attended the night for their patronage throughout 2013 and are looking forward to more great events in 2014.

Great to see some of our retired ‘leaders’ attending the Vic/Tas Christmas party.

VICtoRIAThursday 20th March 2014

Youth Networking Evening – Barefoot Bowls 6.00pm


CCE Exam Online


Network Night – The art of NegotiationSpeaker: Jason McCutcheon – Biscom Training

Thursday 10 April 2014

Seminars & Workshop half day Seminar – (12.30pm to 5.00pm)Subject: Basic 101 of Credit

Thursday 15 May 2014

Network – Presentation skillsSpeaker: Glenda Linscott – Perform with Confidence

Wednesday 21 May 2014

CCE Breakfast (7.15am - 9.00am)The first CCe event for 2014. Topic TBA, however rest assured it will be current and relevant.


Social Network Night

Thursday 19 June 2014

Breakfast Session – understanding financials and the Cost of Credit Speaker: Glenn Spooner – Cor Cordis

Events Calendar Wednesday 9 July 2014

YCPA – Awards Dinner – AGM


Network – Debt Collectors - Keep them honestSpeaker: dale hannan – national Collection Services


Half Day Seminar - (12.30pm to 5.00pm)Subject: See you in Court! Speaker: Tracey rothwell – rothwell Lawyers


Network - Bad Debts and ways to avoid themSpeaker: Mark wenn – Mills Oakley Lawyers


Breakfast Session – Leadership And Career Development For WomenSpeaker: (delivered by a man) Jason McCutcheon – Biscom Training


Half Day Seminar - (12.30pm to 5.00pm)Subject: Liquidation Case Study


Network – What defines a good Leader?Speaker: Murali neelamegam – dynamic wisdom

Wednesday 26 November 2014

Social Network Night

Wednesday 3 December 2014

CCE Breakfast (7.15am - 9.00am)

Wednesday 3 December 2014

Christmas Cocktail Party



victoria/tasmania

CCe Breakfast – 4 december 2013Frank Gambera of McMahon Fearnley presented an overview of the upcoming changes to the Privacy Act to an intimate gathering of approximately ten CCE Members, at the Westin on Collins. A delicious buffet breakfast, and an excellent presentation by Frank, was enjoyed by all: a fitting climax to the year for all the participants in the CCE Program. If you are interested in the Certified Credit Executive Program for 2014 and wish to register your interest, or if you simply wish to find out more information, please contact Committee Member Suzanne Lucas via email at [email protected] and she will get back to you.

Half day Seminar – inside Word from a liquidator and the traps to avoidBy popular demand, a re-run of our September Half Day Seminar, was delivered by Tony Cant and Simon Nelson from Romanis Cant Chartered Accountants. Tony and Simon presented an informative half-day seminar on Liquidations and the traps to avoid. The presentation examined the inside world of corporate insolvency, topics included how an insolvency practitioner analyses the options available to a company before an appointment, the process and conduct of a creditors’ meeting, including what your comments mean to a Liquidator, what and how the information you provide to an insolvency practitioner could be used against you, such as preference payments, the critical information to analyse in determining whether to accept a Deed of Company Arrangement, the information you should expect prior to voting on remuneration, and what is a conflict of interest and what to do about it. A very special thank you to Tony and Simon for sharing their time and knowledge - our members and guests really valued the information you conveyed.

Membership MilestonesIn this issue we celebrate the following membership milestones:20 Years – Isobel McCutcheon MICM, joined in 199420 Years –Gerald Pacholec MICM, joined in 1994Congratulations to each of you.

The Australian Institute of Credit Management Victoria/Tasmania welcomes

the following organisations as our sponsors for 2014



tASMANIATuesday 18 March 2014

Hobart Network – Understanding the Legal Process

April 2014

Half Day Seminar (12.00pm to 5.00pm)Subject: Credit 101 – (understanding Credit Apps, Collections & Legal Actions)


Launceston Network EventSubject: understanding the Legal Process


Social/Youth Network Night


Hobart Network Event – The Art of Negotiation

Tuesday 19 August 2014

Launceston Network Event – The Art of Negotiation


Half Day Seminar (12.00pm to 5.00pm)Subject: Liquidation Case Study


Hobart Network Event – Presentation skills

Friday 12 December 2014

Christmas Cocktail Party

Events Calendar

AICM LEGAL CORNERPrivacy Review – What Credit Managers

should be doing right now

The Privacy Amendment (Enhancing Privacy Protection) Act 2012 comes into operation on 12 March 2014. The Australian Information Commissioner has released the final Australian Privacy Principles Guidelines. Credit Managers should:a. Review the Privacy Statement contained in their

Company’s Application for Credit Account to ensure that the statement complies with the Australian Privacy Principles;

b. Review their company’s Privacy Policy;c. Consider whether to prepare a Credit Policy which

complies with the Credit Reporting Code; andd. Prepare a Privacy Manual.

Credit Managers should become aware as soon as possible how the Privacy amendments will affect their day to day management and what impact, if any, the amendments will have on their Company.

Proudly Supplied by Frank Gambera, McMahon Fearnley Lawyers



western australia/nt

Presidents Report“Does size really matter?”

Definitely so when it comes to understanding the financial mechanics of small businesses and the traps that await unsuspecting financial managers but more of that later.

Firstly welcome to my first report for 2014. I trust you all ruled the line under 2013 in the most appropriate manner and for some of you it marked the end of the 12 month calendar year of trading and for others it meant starting up the engines again for the second half of their financial year. 6 months of further productivity and 6 months of managing the credit terms and conditions you offer your customers.

6 months in the ‘credit’ world is a ‘long’ time as you know! A lot can go wrong in a month let alone 6 of them (slow payments,

in small firms should not be viewed as posing the same principles and problems as large firms. This is mainly due to the problem of resource scarcity, a major constraint for small businesses which is not present in larger firms.

This scarcity of resources is widespread and can include a lack of: money, cash flow, time, employees, equipment and managerial talent to name a few. SMEs cannot easily survive strategic mistakes which many of the larger firms might simply write off somewhere in their balance sheets at the end of the financial year.

As you know SMEs are heavily dependent on continuous cash flow to remain solvent. The amount of cash at bank is their primary focus and this is usually determined by the SME’s ‘break-even’ point, or the sales required to break-even. In a growth phase SMEs are rarely

Credit Managers Denise Riley and Frank Vredenbregt.Credit Managers Byron Savage and Jason Louis.

Girls having fun.

defaults, genuine hardship, lack of cash flow, changing legislation, administrations, liquidations, wind ups and the list goes on and these are real issues that face your own organisations before you even get to understanding the business circumstances of your customers!

But hey, that is why you are what you are and you do what you do. Your organisations look to you and your ‘crystal ball’ to mitigate the risk of these things occurring or so they think!

Let me now return to my opening line ‘Does size really matter’ and I would like to explore this statement in context with the SME market and you as credit managers within that context.

First of all we need to understand that a small business is NOT a little big business and the principles employed in managing credit



WA YCP’s Kristy Shrigley (2011 & 2012) and Rosanna Maugeri (2013).


in a state of equilibrium unlike the larger firms. Their working capital requirements fluctuate as does the cash flow, as the business grows and takes on more costs either fixed or variable.

Ultimately what all this means is that for SMEs, cash flow is much more important than profit or return on investment. Maintaining this liquidity is where you can play the most important role for your organisation and it is a subject close to my heart as I have been assisting businesses with their liquidity for many years by virtue of the services my company offers in debt recovery and receivables management.

Get the basics right and the strategic goals of your respective organisations will take care of themselves.

I look forward to working with my WA Councillors and in turn all of the WA Members as we embark on the opportunities and challenges that 2014 will bring our way.

Colin Phillis – MICM, President AICM WA

Rosanna Maugeri – Young Credit Professional WA “Teddy Bear’s Picnic”If you go down to South Perth Thursday, you’re sure of a big surprise. If you go down to South Perth Thursday, you’d better go in disguise.

For every credit manager that ever there was will gather there because, because, Thursday was the day Perth AICM had their welcome picnic.

Every member who’s been good was sure of a treat that day, there were lots of marvellous things to eat and wonderful games to play. Beneath the trees where nobody sees they’ll hide and seek as long as they please – including a change of location – because that’s the way Perth AICM have their picnic!

Although it was windy it did not deter the group who had gathered, who all concurred, it was a wonderful way to welcome the year, with a


CCE Exam Online

Friday 2 May 2014

Breakfast – Economic OutlookSpeaker – Allan Langford of Bankwest

Venue – MATILdA BAy

Thursday 8 May 2014

Young Professionals Meet-upSubject – Career Coach and Awards Information

Venue – PeTer TALIAnGIS BAr PerTh

Tuesday 20 May 2014

Credit Toolbox TrainingVenue – CASM OffICe PerTh

Friday 13 June 2014

Breakfast – WA Police (WAPOL) Overview on FraudVenue – MATILdA BAy


YCPA – Awards Dinner and AGMVenue – IBIS hOTeL PerTh

Friday 8 August 2014

Breakfast – How to Work Better with the BailiffVenue – MATILdA BAy

Tuesday 9 September 2014



Social Networking – Games NightVenue – PeTer TALIAnGIS BAr PerTh

Friday 3 October 2014

Breakfast – Mock Creditors MeetingVenue – MATILdA BAy

15 – 17 October 2014

AICM 2014 National ConferenceVenue – MArrIOTT hOTeL GOLd COAST

Wednesday 12 November 2014


Thursday 4 December 2014

XMAS Sundowner – Relax and NetworkVenue – TBA

Events Calendar




The Australian Institute of Credit Management Western Australia/NT

welcomes the following organisations as our sponsors for 2014



guest appearance by Fema the bear – because that’s the way Perth AICM have their picnic!

Our cheerful president made sure we were welcomed and told of coming events and more. For every credit manager that ever there was had gathered there because, because, Thursday was the day Perth AICM had their welcome picnic!

Rosanna Maugeri, YCP 2013

Upcoming eventsWith current amendments to the Privacy Act, our breakfast on the 21st February addressed key challenges and changes that will impact us and how we conduct business. With Olga Ganopolsky and Moses Samaha of Veda flying in to Perth to take us through the

Sponsors: Warren Myers – CMP, Natalie and Matthew Walker – Blitz and David Sinton – Veda.

changes and give us some hot tips, it was a great start to the year.This year we have implemented our Credit Toolbox Training

– half day sessions that help you to work smarter rather than harder. Learn to ensure you have the right types and levels of information, undertake appropriate analysis and implement effective decision making to drive your business’s growth. With the first session of the year on the 11th March, this is a course that received great feedback in the past and one that our members want re-visited.

Something new to our calendar this year is our Social meet-up on the 8th May. The aim is to engage our members that are interested in self-improvement, personal development and even career progression. With the Young Credit Professional Awards coming out late May, this would be a good chance to get some of our younger colleagues and staff to come along and meet similar minded people, and hear what the award is all about. With a marketing expert coming along who will give us an informal session on how to sell ourselves, it looks to be a great night.

In May we have Allan Langford of Bankwest providing us with a current economic outlook, something we all need to have a clear view of in our roles, and in June we will have our popular Fraud brekky with our friendly Fraud Squad Detectives.

As always we welcome any feedback or suggestions, and we ask that you share these upcoming events with your colleagues and spread the word!

– Kristy Shrigley MICM, Seminars and Events

Membership MilestonesIn this issue we celebrate the following membership milestones:30 Years – Evan Verge MICM CCE, joined in 198420 Years – Jennifer Low MICM, joined in 1994Congratulations to each of you.

aicma r o u n d t h e s t a t e s new members


Queensland

Sneha Brahmbhatt Cement Australia Pty Ltd

Simon Bright BSR Group

Lynda Taylor Herbert Geer

New South Wales

Kathy Bernal-Silva …….

Ann Brennan Rushmore Distributors

Jeffrey Butterworth Actrol Parts

Caroline Chung Hilti (Aust) Pty Ltd

Joyette Cuenca Hilti (Aust) Pty Ltd

Maree Etherton Hilti (Aust) Pty Ltd

Todd Field Endeavour Energy

Graham Ford Toyota Finance Australia Ltd

Maria Ghidella Grant Thornton

Anna Golubeva Hilti (Aust) Pty Ltd

Mridula Gundlapalli Hilti (Aust) Pty Ltd

Jamie Kerry Commercial Credit Services

Katie Lai ISP Australasia Pty Ltd

Katherine Lin Laminex Group Pty Ltd

Sara Obeid Coates Hire

Leonard O’Grady Australian Receivables Limited

Shirjana Rai Hilti (Aust) Pty Ltd

Wojtek Randla Access Law Group

Jacqueline Smith Benedict Industries Pty Ltd

Peter Spence Hilti (Aust) Pty Ltd

Justin Watson National Credit Management Limited

Bradley Williams Remondis Australia Pty Ltd

CoRPoRAte MeMBeR

Australian Payment Register Pty Ltd

Victoria/tasmania

Jahid Ahmed Fuji Xerox Australia Pty Ltd

Daniel Barlow Aurora Energy Pty Ltd

Melissa Belbin Aurora Energy Pty Ltd

Sarah Cavallo BP Australia Pty Ltd

Renae Conforti BP Australia Pty Ltd

Meecah Cooper Aurora Energy Pty Ltd

Timothy Davies Aurora Energy Pty Ltd

Laila El-Khoury Amerind Pty Ltd

Robyn English Fonterra Australia Pty Ltd

Jamie Henderson Aurora Energy Pty Ltd

Steven Jamieson Austral Mercantile Collections Pty Ltd

Kim MacFarlane Aurora Energy Pty Ltd

Adam Mulligan Aurora Energy Pty Ltd

Shelby Pennicott Aurora Energy Pty Ltd

Oshadh Premaratne BP Australia Pty Ltd

Allena Ruddle Warrnambool Cheese & Butter Factory Co Ltd

Shanil Singh Fuji Xerox Australia Pty Ltd

Tony Truong BP Australia Pty Ltd

Jasmine Vella Murray Goulburn Co-Operative Co Ltd

Kim-Ngan Vu Fonterra Australia Pty Ltd

South Australia

Tamira Bannister NCI (Brokers) Pty Ltd

Peter Bosco Lynch Meyer Lawyers

Craig Jones NCI (Brokers) Pty Ltd

Katherine Lagos NCI (Brokers) Pty Ltd

Damian Romano Australian Credit Management Pty Ltd

Jordana Schenk NCI (Brokers) Pty Ltd

Jonathon Wabnitz Australian Credit Management Pty Ltd

NeW MeMBeRS

The Institute welcomes the following credit professionals who were recently admitted to membership in November, December 2013 and January 2014

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