If your business does not have clear payment “Terms and Conditions”, your customers have no reason to pay your bills promptly. They often face cash flow problems of their own that cause them to delay paying bills when they can do so.
Cash flow problems are often compounded by poorly drafted or non-existent credit terms and “Terms and Conditions of Trade”. Earlier this month in the Nelson, Marlborough, West Coast areas EC Credit Control assisted two Milk distributors, one MTA mechanical workshop and one Master Electrician with new, robust “Terms and Conditions”.
The decision by these businesses to have well drafted “Terms and Conditions” helped encourage their customers to pay their bills quickly. They do this by making sure the true cost of delayed payments is recognised and passed on to their customers. If their customers are required to pay the real interest and administrative cost incurred in chasing unpaid bills, the incentive for them to pay the outstanding bill quickly increases.
Well drafted “Terms and Conditions” don’t have to be complex and intimidating. They should clearly explain in simple English where possible so that your payment requirements are clearly explained. They do however, need to adhere to technical legal rules that increase the effectiveness of the Terms.
EC Credit Control assisted two Nelson businesses this month with PPS registrations. Both Mainline Commercial & Industrial Limited and Prowood Limited had solid, updated “Terms and Conditions of Trade “and appreciated working alongside EC Credit Control as a strategic partner for their PPSR requirements.
Their “peace of mind” was knowing that EC Credit Control would ensure their “registration was correct and most importantly valid”.
In 2002 New Zealand became the first country to launch a full electronic online securities register.
“Since its inception the Personal Properties Securities Register has proved to be a vital tool for businesses, allowing them to register leased goods or collateral and protect these goods in case their customers go bankrupt. There are now over six million personal property statements on the register”. (Former Commerce Minister, New Zealand Small Business Minister Craig Foss).
Suppliers/lessors of goods must ensure that their “Terms and Conditions” are properly worded to reflect the current law. They must ensure that they have a valid PPSR registration to protect those legal rights.
We recommend that all businesses selling goods on credit (or leasing goods) carefully review both their Terms of Trade and their PPSR registration procedures. Ensure that as a responsible business owner you have the Personal Properties Securities Act 1999 as a clause in your Terms of Trade. This will give you the ability to register your collateral on the Government website.
EC Credit Control can save you time and money by taking over this administrative function. We can help reduce the possibility of registering an invalid interest by not having the correct documentation in place, the correct collateral noted, or incorrect guarantor details loaded.
As a responsible business owner give this due consideration as often Directors of New Zealand Companies only realise the importance of this legislation when it is too late and they lose out financially.
Contact me today at firstname.lastname@example.org and I will arrange an interview between your company and one of our trained PPSR professionals to protect your goods and become a Secured creditor.
Ray Marshall Area Manager EC Credit Control Nelson, Marlborough, West Coast