A mentor or advisor is immensely important to your business’s growth, development and success. The right advice from professionals provides peace of mind that things are covered and the company is on the right track to achieve your goals. Two things I have noticed when talking to local business owners regarding advice are: 

  1. many people don’t consider the extent to which advisors or other professionals are acting on their behalf; and
  2. advisors or other professionals are not directly responsible for the outcome of any advice they provide (or lack of), including any financial loss due to a lack of advice. 

Something that has brought this to my attention is when companies have entered into liquidation in the last few years. Several local business owners have lost money as they were unsecured creditors when Tamarind Taranaki, Navigation Homes and several other businesses entered into liquidation. Losses have collectively totalled well over a million dollars for local operators and the Taranaki business community. How much better would our region be if local operators who work hard for their money got paid over a million dollars, then this flowed onto everyone else like local suppliers, contractors, small businesses and shops? And when you consider these businesses all had advisors and professional advice, it raises the question, who is responsible for getting good terms and conditions of trade and Personal Property Securities Registrations (PPSR) in place to protect local operators?

The answer to many has been Debt Free, with many happy clients and comments like ”where have you been?” and “we need more people like you”. We specialise in terms and conditions of trade, and to add additional value, we offer assistance with credit checking, account monitoring and PPSR services at no expense to help local operators avoid future losses. When you work with us, you will be safer in business with rock solid business documentation that is up to date, know about credit checking services and the PPSR and be utilising these excellent tools when appropriate. Getting the right advice is paramount in business, as is ensuring the extent of any services are clearly understood.

Without exception, a lack of passion is the number one thing I have seen that leads to a lack of success in business, which is a snowball effect. A demanding client, job or financial stress can test your resolve and your passion, making your job even less enjoyable, again decreasing your passion. In contrast, a passionate person’s effort and willingness creates success, reinforcing and igniting their motivation.

Being part of the passionate Debt Free team is unique because we all genuinely care about our clients and understand the enormous value we can provide. The business documentation, credit checking, security interest and debt recovery services we provide make a massive difference. We help business owners focus on the activity they got into business to do and are passionate about. No one thought, “I love building or electrical work, I can’t wait until I can do lots of paperwork and chase debtors”.  

To be passionate about something, you need to believe in it. Whatever it is that you do, you need to see the benefit. If you provide insurance, read articles on families left homeless and penniless after an accident with no insurance. If you help people with tyres, read about stopping distances and the difference that good tyres make in saving lives. Once you see yourself as the holder of the solution to a very serious issue, the passion will ignite, and you will see the results.

People say, “passion isn’t everything, you need skill and knowledge” – yes, that’s true, but how much easier is it to learn a skill or gain knowledge in an area when you are passionate about it. And if my passion ever wavers, all I have to do is call up one of my existing clients and ask, “how has your interaction with Debt Free and myself improved your business?” and I’m back on fire again.

At the start of February, I spoke to a client I had visited in December of the previous year due to a debt issue. The client had weak terms of trade at the time that were rehashed from an old set the previous owners had left behind. They were inadequate and failed to protect the business in critical areas that it had exposure due to dealing with new customers. I quickly ended the policy of extending $5,000-$10,000 credit on a verbal agreement over the phone and helped to implement terms of trade, Personal Property Security Registrations (PPSR) and credit checking processes for the business.

The client decided in December to make his business more professional, make his company a lot more secure and make his job in business a whole lot easier. He took his initiative and saw a chance to add value to his business, and comprehensive terms of trade and being a secured creditor through the PPSR did just that.

I emphasise the decision made in December because that decision made a month prior saved him $25,000. In January, a company had attempted to not pay $10,000, which our implemented terms of trade and effective collection process solved at no expense to our client due to the legal ability to on-charge the debt costs. In the same month, a company had entered into liquidation owing $15,000 to our client, which was paid in full from the liquidator due to being a secured creditor.

Speaking together, we agreed that he needed to put things in place when he did and that being $25,000 better off was much better than losing the money. I am thrilled with this outcome and can’t stress the importance of getting comprehensive, industry-specific terms and conditions of trade in place while things are going well in business.

Two important things happen when you say to your client I need you to sign or agree to our terms and conditions of trade:

  1. you are viewed as professional: your clients now see you as a business owner who has gone to the effort of setting up business documentation with correct legislation to protect clients and yourself. Your clients respect you, and they are clear on what you expect;
  2. a commitment is formed: when someone signs Your terms of trade, they are committing to the project, payment and agreeing upon your terms, including any outcomes that may arise.

Beyond these two benefits, commitment on paper to your business documentation has a ‘superman and kryptonite’ effect on problematic clients. Bringing out your terms of trade is a great way to avoid issues in the first place, as most people who are going to cause you problems, dispute or be slow on payment will know what business documentation is and why all major companies use this – because you can’t escape paying the bill. 

Due to the psychology involved with signing a Terms of Trade (knowing there will be consequences), problematic clients will look elsewhere to greener pastures or the unsuspecting local competitor who will do the job on a handshake and deal with the problems at the other end when payment is due.

If you are a business owner who wants to take control and have a smart, secure and smoothly run business, contact Debt Free to talk about getting the correct documentation in place for your business, as when someone signs your terms of trade, they are then fully committed, just like you are.

The Personal Property Securities Register (PPSR) of 2002 brought a whole new opportunity for business owners or creditors. A chance to be paid in full before other creditors, which is an amazing benefit, however, there is a downside if you do not utilise this opportunity and sit as a default unsecured creditor.

Something that is not widely known is a liquidator’s right to challenge money back off businesses who sit as default unsecured creditors (voidable transactions) when they are paid from a client up to 6 months before they enter into liquidation (sometimes two years). That’s right, a client can pay you and then months later, you can receive a letter from a liquidator asking you to pay the money back. This is because of the chance that the unsecured creditor would receive more money than they would in the normal liquidation process, therefore making it unfair for other creditors who are secured and have utilised the PPSR. There is a valid and just cause; to stop businesses from paying out associates, friends or companies that have a personal guarantee before insolvency and to allow funds to be distributed among creditors more fairly when liquidations happen.

Like all things, there are positives and negatives to this situation. Liquidations are now handled far more ethically as there is no way for creditors to get lucky and get payment due to the timing of the invoice. However, if you are an unsecured creditor, you will most likely not get paid much, if at all, and are exposed to having the money you have already been paid challenged.

It is about having up-to-date business documentation and PPS Registrations in place with your commercial clients to ensure you get paid for your work but also aren’t open to having recently paid invoices challenged by a liquidator. Never before the introduction of the PPSR have business owners had this opportunity. Beforehand there was no way to secure your invoice value in the event of insolvency, so this should be approached as a positive, and it comes down to a simple saying with the PPSR, “use it or lose it”.