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Archive for August, 2009
Friday, August 28th, 2009
Australian Police have been left with egg on their face after enforcing an illegally erected road traffic sign. It was later discovered that the sign was erected by a local resident and motorists have been advised to contact the local state debt collection office for a refund.
The resident in question, living in the Beecroft area of Sydney’s north-west region, is thought to have erected the sign displaying “no left turn between 7.30am and 9.30am.” It was thought to have been done to stop commuters taking a short cut through a local school area during rush hour traffic.
It was only when motorists ignored the sign, however, and the parents of students in the school began to complain, who thought that it was a genuine sign, to local police who then began to enforce the sign.
The police force have since admitted that around 200 motorists have been fined $175 (about £100) over a three month period. The sign has now been taken down and all motorists fined have been told to contact the state debt recovery office for a refund.
Tags: australian state debt recovery office, beecroft police
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Tuesday, August 25th, 2009
The quiet Nigerian real estate development sector has received an unexpected lifeline from an even more unexpected source.
With the sector on the back foot from the current global economic crisis, Nigerian banks had made the move into mortgage financing and property development and are now suffering as a result of the global meltdown, severely reducing the cash-flow into real estate.
However, after the Central Bank of Nigeria got tough recently and flexed its financial muscles on five other Nigerian banks, resulting in the dismissal of managing directors and chief executive officers, as well as other executive directors. It is thought this move could breath fresh life into the real estate development market.
The Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi Lamido, attributed the development to excessively high level of non-performing loans, which was attributable to poor corporate governance practices, lax credit administration processes and the banks’ credit risk management practices.
Last week, the Central Bank of Nigeria released the names of debtors – mostly shareholders/directors – who secured loans totaling N747 billion from the five banks, which are Intercontinental Bank Plc, Afribank Plc, Finbank Plc, Oceanic Bank International Plc and Union Bank Plc.
With the Central Bank of Nigeria seeking an immediate debt collection settlement for the outstanding debt, pressure now appears to be on debtor individual and corporate bodies to resolve the debt. Last Wednesday, the debtors were given a seven-day ultimatum to pay up or risk going to jail.
Mr S O Jagun, a Lagos based real estate valuer expressed confidence that the move could make the real estate sector once again.
He said, “If some of these debtors happen to be big-time real estate investors, they may want to offload these assets quickly to pay back. In this process, they may sell cheaply and not wait for the open market. They will reduce the asking price and considerably cut profit.”
“For example, a property worth about N80 million could go for as low as N60 million. Of course, speculators will quickly jump at this, in the hope that when things eventually normalised, the value will rise once again. Therefore, some liveliness in real estate trading is predicted.”
Mr. Jagun noted however that the influence of the crisis on real estate would end there because, according to him, banks’ investment in real estate was limited anyway.
“The impact on the real estate financing side will not be much because banks invest more in the oil and gas, as well as the manufacturing industries; which you can even make out from the list of debtors released by the CBN,” he said.
Tags: central bank of nigeria, nigerian real estate
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Tuesday, August 25th, 2009
In an ideal world everybody would pay their bills, invoices and accounts on time. Unfortunately, however, this is a less than ideal world and many businesses and individuals try to avoid paying their bills even when a debt collection agency gets involved. What they don’t take into account is that by not paying their bills, they could ultimately hurt their own business.
Consider that you place an order but do not pay for it. That company then goes bust because of mounting debts of their own. Now, a new customer comes to you wanting a certain product and you are now unable to get that product because the company who supplied you the materials has gone bust because they were not paid for their services. You lose the customer, the another customer and another and so on until you find that all your customers have gone elsewhere because the companies paying their bills on time are able to keep operating.
Chief executive for the East of England Development Agency (EEDA) Deborah Cadman said, “pay fair and we’ll help each other get through these tough times.” She is urging local businesses to register and sign up for the Government’s “Prompt Payment Code,” which is aimed to get businesses paying their suppliers on time. Cadman is also intending to write to local councils, health bodies, public sector organisations and business groups who have yet to sign up, to secure their commitment to the code.
“As business-focussed organisations, regional development agencies like EEDA recognise the importance of prompt payment. We were among the first agencies to sign up to the Government’s 10-day payment pledge last year, andwe’re right behind this new code. The costs to business of late payments is quite staggering, with one in four companies going insolvent as a result of their invoices not being paid on time. UK firms also paid over £180 million in unnecessary interest charges. It is clear, if we all commit to paying on time, we can help each other through these tougher times,” said Cadman.
Regional business minister, Rosie Winterton, said: “Prompt payment remains the biggest financial challenge faced by firms and was responsible for a staggering 4,000 UK companies going bust last year. It is critical that Government takes the lead and together with local businesses creates a better payment culture. That’s why in July, central Government departments paid £17 billion worth of invoices within 10 days. I want to see more companies paying fair and signing up to the Prompt Payment Code.”
If you are struggling with being paid for your services and require debt recovery services, contact Federal Management FREE on 0800 043 6922 now.
Tags: east of england development agency, prompt payment code, unpaid suppliers
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Friday, August 21st, 2009
A recent survey has suggested that students who are new to university courses this autumn could graduate with debts of up-to £23,000.
One of the main problems facing students with this level of debt could be if they don’t immediately find work and may find themselves being chased by a debt collection agency who have been utilised by companies eager to get back what they are owed. Debt recovery processes for students are often resolved quickly as there is a fair level of communication between the two parties.
After surveying 2,024 students, the Push Student Debt Survey suggested that at various stages of a degree course debt averaged at more than £5,000 a year, and was increasing! The National Union of Students, who had conducted research of their own, suggested hat this could be because some courses have higher “hidden costs” then others, with greater requirements for certain equipment or books. The survey also suggested that there was a wide gap in student debt between different regions and institutions.
The survey showed that students in England have the highest level of debt with an average of £5,271 for each year of study and that London students incurred the highest level of debt with some students owing over £30,000 by the time their degree ends! The level of debt has increased by 10% over the last 12 months, with a 30% increase in Northern Ireland, now at an average of £4,324 a year. Wales also an increase in debt with an average of £4,021.
Scotland, however, defied the trend and actually saw a decrease in the level of debt with an average of £2,194 owed. This could be because Students in Scotland who are Scottish or from another EU country outside the UK have their tuition fees paid by the government, and students no longer have to pay back a graduate endowment after finishing their course. It is expected a review is to take place for the rest of the UK and the government said it was spending over £5bn a year on student support.
Tags: student debt, uk student hidden costs, university costs
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Wednesday, August 19th, 2009
There are a magnitude of different agencies that regulate hospitals in the Bay Area of San Francisco and you can feel overwhlemed by the sheer number. However, if you look closer into this it becomes apparent that none of these agencies regulate debt collection and billing for patients who are privately insured. If you compare this to those patients who are insured by Government backed companies, such as Medicaid then you will discover that the opposite is true and there are an abundance to debt collection regulations.
The question that therefore needs to be asked is why are there no regulations for debt collection and debt recovery for the priavtely insured and uninsured? Well the uninsured have suffered for a long time with far greater issues than debt recovery and for the privately insured it would seem that it was left to hospitals to sort out for themselves.
“Hospitals also are required to establish a charity care policy and discount payment policy for patients whose families are at or below 350 percent of the federal poverty level, according to a California state law that went into effect on January 2007. Under state law every hospital is required to provide patients with a written notice about the availability of discount payment and charity care policies. Additionally, hospitals must post signage regarding the existence of its discount payment and charity care policies in locations that are visible to the public throughout the hospital,” was announced by the California Hospital Association.
It would seem that the level of insurance depends on the service that you get from a hospital before, during and after your visit with oen rule for some and one for the rest.
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Tuesday, August 18th, 2009
Debt collection efforts for overdue corporate bank loans have seen a sharp increase in activity rates. This is compared to March of this year when President Medvedev let rip into lenders who were refusing to accept payment arrangements for “corporate selfishness.”
With an increase of almost 250% on the amount of debt outstanding in March rising from 26 billion rubles ($792 million) to 91 billion rubles ($2.8 billion), it is no wonder that the leading banks in the country are increasing their debt collection output. The figures shown were reported by Kommersant on Monday who cited data provided by the Moscow Arbitration Court.
The bank with the largest amount of outstanding debt is Alfa Bank, who are using debt recovery methods to try and recoup some 26.4 billion rubles. Just shy of Alf Bank are VTB, with an amount owed of 26.1 billion rubles, although if it were included with its retail banking division, VTB-24, it could over an additional billion rubles to that figure.
Nomos Bank, MDM and Sberbank round out the top five. Bank of Moscow, seeking just over 100 million rubles, is at the bottom of the list.
When President Medvedev gave his speech back in March, he said “We can’t sacrifice the future of entire enterprises and the employment of many thousands of workers to satisfy the ambitions of individual lending institutions. It’s time to end corporate selfishness.”
At the time it was thought that the comment was aimed at Alfa Bank who are the countries largest private lender and were, at the time, involved in a legal struggle with companies that are part of Basic Eelement.
The Banks, however, insist that they are acting within the law and have no alternative means to recover back their debt. In an e-mail statement, a spokesperson or Alfa Bank said “We are a 100 percent private bank, and we receive all our loans from the Central Bank and VEB on certain conditions and at a certain rate of interest. Therefore, the cash we loan to our clients is mostly borrowed and can be demanded back by our creditors at any time.”
Alfa Bank’s shareholders recently gave it $320 million in capital, which makes the lender highly accountable to them, the lender said. “If some of our clients are in trouble, we are ready for an open dialogue,” the bank said.
Other banks said they rush to recover loans in order to avoid being taken advantage of by debtors.
Some debtors prefer to have their companies liquidated, which allows them to be in control of the bankruptcy process, said Irina Gordeyeva, vice president at Nomos Bank.
“Banks are aware of such behavior and try to get a court ruling as soon as possible in order to control the bankruptcy process and prevent the debtor from divesting assets,” she said.
Nevertheless, stringent loan repayment policies during difficult economic times might not be in lenders’ best interests. “The banks that apply tough policies have chosen an irrational approach,” said Metropol’s Mark Rubinstein. “During a recession, the real sector expects banks to be more cooperative.”
Tags: alfa bank, bank of moscow, russian debt collection, vtb
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Monday, August 17th, 2009
With the economic downturn in full swing, small businesses are finding it hard to cope with unpaid invoices and overdue accounts. As a direct result, debt recovery is becoming a more and more frequent requirement and small businesses are feeling the pinch as they having to spend time chasing debt.
Overdue accounts can be a nightmare to manage for small businesses. If a business is dependent on a regular flow of cash then the problem is greater than those who have an extended period of payment in their terms and conditions. Ensuring the cash flow continues to come in means that these businesses are able to pay their own suppliers and avoid bad debts of their own, not to mention their staff who also need to be paid which is why outstanding debts can be such a problem. The recovery of the debt, however, needs to be done as quickly and as smoothly as possible so that the business feels as little of the pinch as possible. Ensuring that the company takes the right steps from the outset can have a better chance of you recovering the monies that are owed, as well as maintaining a healthy business relationship with customers.
When setting about to recover an outstanding debt, the first port of call is to ensure that the terms and conditions are clear, so the customer knows exactly what is expected regarding payment. It is a good idea to ensure that these terms are on all invoices and if you are going to use an external debt collection agency to recovery the debt, then it is advisable to mention as such in the terms also. That way there can be no doubt as to payment terms.
Once the monies become outstanding then the need to collect them back as quickly as possible becomes paramount. A cost effective and expedient debt collection company, such as Federal Management, are an ideal solution for this. For some businesses, however, there is always the worry that chasing the debt could cause a business relationship to turn sour, and to lose future business. As the payment terms near their end or shortly after, a “friendly” phone call can often result in payment. And if not, you have the option to follow this up in writing to instigate a gentle reminder of the outstanding payment due and, to re-emphasise your payment terms.
What is not recommended for a small business is to continually chase the debt via telephone or through the post. This means that the business is directing resources elsewhere and not focusing on making money. There are companies who perform these tasks as part of their service and are more likely to have a greater success rate anyway in recovering the money in this format. It also elminates the stresses that can occur with having to chase a debt.
A lot of companies will choose to utilise a debt collection agency to recover owed monies as they simply do not have the time or the know how to do it themselves. Whichever way a business chooses to operate it’s debt recovery methods, making sure that the money owed is recovered is the key to a continual cash flow and to getting paid in tough times.
Tags: cash flow, debt collection, debt recovery, economic downturn
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Friday, August 14th, 2009
In the last 12 months over £2.5million pounds of unpaid debt has been written off by Swindon Council.
Papers provided by the Council show that there was more than £2.5m of outstanding debts waiting to be collected, including council tax, business rates and parking tickets. The outstanding amount which was written off was outstanding from the period April 2008 to March 2009.
Broken down, the figures reveal that out of the £2,501,366 that is outstanding £868,066 was for non-domestic rates, £614,601 was for council tax, £266,038 of car parking penalty charge notices, £160,000 of benefit overpayments and £73,000 of housing rents with £519,661 outstanding from other sources.
The figures equate to just over one per cent of the charges that were collected over the year and the net revenue budget for the council in 2008/09 was £126m. The papers also show that £240,000 of charges for 2008/09 were still being chased as of last month.
However, the move has come under fire with Labour leader Coun Derique Montaut saying “I think when people see that kind of money being written-off at the same time that services are being cut they are going to be understandably angry. There are issues with the way the council collects council tax. There are questions that can be asked over how effective that service is.”
Political director of the Taxpayers’ Alliance, Susie Squires, said “The issue is council tax is incredibly high. People in Swindon have seen their council tax rocket in recent years and the council needs to look at every option to ease the financial burden on people. While we don’t want to see the council chasing pensioners down the street demanding money it is important measures are taken to discourage wastage. Overpayment of benefits is one area of unnecessary waste which could easily be eliminated.”
Swindon Council said “Unfortunately local authorities, like all organisations and businesses, do end up having to write off money they are owed because the debts can’t be recovered. This can be because of bankruptcies, fraud, or people making themselves difficult or impossible to trace. We do pursue all debts vigorously, and our record on debt recovery is as good as the best performing authorities in the UK, but there comes a point when it simply isn’t cost-effective to continue to do this, and the money has to be written off.”
Clearly, if the debt collection record was as good as the leading agencies, there would not be such an oustanding amount of debt being written off.
Tags: business rates, parking tickets, swindon council debt, unpaid council tax
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Thursday, August 13th, 2009
The Electricity Supply Board (ESB), an Irish electricity company, has been forced to defend its decision to use a UK debt collection agency. This move came about after the ESB decided it was time to use a debt recovery agency to recover small debts that were outstanding for customers who had left ESB and moved to alternate providers of electricity and one of these ex-customers, who had switched to Bord Gáis advised that he was being pursued by a debt collection agency for an outstanding amount of €73 which remains owing to the ESB.
Liam Carey, Hanover Quay, Dublin, last March availed of the Bord Gáis “Big Switch” offer which gives discounts of 10 to 14 per cent on ESB rates to householders who move to Bord Gáis.
At the end of June he received a final bill of €97.93 from the ESB. He queried the bill because it was an estimated reading, but later in July agreed to pay the sum.
Having lost his job, Mr Carey came to an arrangement with the ESB to pay the sum in increments of €5 per week. He admits to missing one or two payments later in the month, but said he had resumed payments.
Last Monday he received a text message which asked him to call the debt recovery company and quote a reference number sent in the text. Mr Carey said there was no other information and when he rang the number the person who answered would not say who they were unless he quoted the reference number and gave his name.
Concerned that the text might be a scam, Mr Carey rang the Data Protection Commissioner who said he could give his name and the reference number, but should give no other information such as his address.
He rang the number again and after giving his name was told who the recovery agency were and that they were working on behalf of the ESB. Mr Carey was told he has until Friday to pay the bill in full or legal proceedings would be initiated.
“I was surprised, so I rang the ESB and they confirmed they were using this firm. Admittedly I had missed a week or two, and I had had an agreement with the ESB, but I was paying regularly,” Mr Carey said.
He said he was surprised to learn that the ESB would use a UK debt collector to pursue such a small debt. He would not be in a position to pay the €73 by this Friday and would have to face whatever legal consequences arose he said.
The ESB said it could not comment on individual cases.
“When a customer closes an account with ESB, reminder letters and telephone calls are made reminding the customer of the amount still owing. If this amount remains unpaid, we use the services of a collection agency to collect this debt on our behalf,” he said.
Dermott Jewell, chief executive of the Consumers’ Association of Ireland said he understood the ESB were entitled to collect the debt, but there was a need for some customer care.
“This method of sending a fairly anonymous text message seems rather strange and for such a small debt putting it in the hands of a UK debt collection agency is a rather heavy-handed approach.”
A spokesman for Mabs, the Money Advice and Budgeting Service, said he had not heard of the UK firm in question, but was aware of other debt collection agencies making similar calls.
Tags: Bord Gáis, ESB, unpaid electricity bill
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Wednesday, August 12th, 2009
Citizens Advice Scotland reported a 14% increase in the number of debt related issues over the past 12 months. The figures are an ongoing concern for CAS with almost 30% of the 976,989 issues advisers handled over the last year being debt related.
With the ongoing recession it is likely that these figures will increase again over the next year, and will also lead to increase in redundancy related issues due to loss of jobs. Of course as people fail to pay their bills they may be contact by debt collection agencies which can often lead to calls to CAS.
Kaliani Lyle, Citizens Advice Scotland’s Chief Executive said that “the fall in income, the threat of redundancy, the spiralling debt, the disappearance of reasonable credit, the lack of affordable housing and the spectre of homelessness – many are suffering combinations of all of these things, and the result is often depression, illness, family or relationship breakdown. This is the reality. And it’s hard to talk the language of recovery when you are dealing face-to-face every day with people who are living with such dreadful circumstances.”
As with any debt related issue, ignoring the problem does not make it go away and if you are contacted by a debt recovery agency you should deal with them in a professional manner, as they should with you. Discuss the debt and try to arrange an affordable payment plan where possible. In these tough times most debt collection companies are more than helpful in arranging payment agreements to clear off outstanding debts.
Tags: citizens advice scotland, debt collection
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