Monday, September 8, 2014

Recovering Collections Fees in Canada

To be able to recover your collection costs from a commercial debtor in Canada, you must have a valid signed agreement whereby the debtor has agreed specifically that the costs of collection are recoverable. 

  A version of this clause may look something like this:
“The customer shall pay all solicitor's fees and expenses, and all legal costs as between solicitor and his own client on a full indemnity basis, as well as an allowance for the time, work and expenses of the Credit Grantor, or of any agent, solicitor or employee of the Credit Grantor, for any purpose herein provided for and whether such sums are advanced or incurred with the knowledge, consent, concurrence or acquiescence of the Customer or otherwise, together with interest thereon at the rate provided for herein, shall be repayable to the Credit Grantor on demand, or if not demanded then with the next ensuing installment payable to the Credit Grantor.”

Where these costs are recoverable, often the courts decline to add the total amount of the collection costs and/or contingent fees in the event you decide to sue your customer.

Funds paid for court filing fees, service of documents, etc.  are legally recoverable in all provinces in Canada and are added to the final judgment amount.

The Reality of Recovering Collection Costs

Notwithstanding the legalities, what are the chances of recovering collection costs from your slow-paying customer?

As with any business transaction, if you have a signed agreement where the customer has agreed to your terms and conditions, the chances are more favourable than if you do not.  Sometimes it may take court action to facilitate the recovery of collection fees.  It is only possible to enforce a legal contract through the courts.  

Priority Credit’s approach is to recover all principal and interest charges on an amicable basis.  If the creditors agreement with its customer contains the required clauses to hold the debtor company liable for collection fees, then we will work to obtain those expenses as well.
Should your customer balk at paying these fees, they may be used as a negotiating tool to encourage prompt remittance of the principal amount of the debt.

When pressed, some debtors will agree to pay the interest expense, especially if they want to work with the creditor again in the future; however if there is no signed agreement to pay interest or collection expenses, the debtor will not pay them.

Thursday, September 4, 2014

How to Hire Top Shelf Credit Staff

In most small and medium sized companies the accounts receivable clerk was recruited from the accounting department and got the job by accident. If you were to ask these credit clerks if they actually enjoy their work – most will answer with a resounding NO! Employee turnover in this position is extremely high.

Low Job Engagement = Big Problems

If you check out the help wanted ads they are chock-full of employers looking for credit and collection personnel. We regularly see advertisements for the same companies every month. Turnover in any employee position is expensive; however the turnover of credit and collection staff can be exponentially more expensive if not caught and corrected right away.

Untrained Staff Managing Your Largest Asset?

So how do you attract and retain quality credit & collection staff? It all starts with your advertisement. Workopolis, Monster and Career-Builder are popular help wanted sites. Firms like Robert Half and Mercer Bradley can help you with recruiting as well. Increasingly sites like Craigslist and Kijiji have become excellent sites to post your advertisements.
Your advertisement is critical. Be specific about the job expectations. Post the salary or the hourly wage. Let people know exactly what they can expect. Pre-qualify candidates to make sure they possess the qualities of top credit and collection professionals.  There are several pre-employment tests that can be administered to help you short-list candidates for this specific position.

Ounce of Prevention vs. Pound of Cure

Once you have posted your advertisement, pre-qualified your candidates, and given thoughtful consideration to the job requirements – you are ready to make an employment offer. Attracting and retaining the right credit and collection personnel is critical to your firm’s financial success. Don’t leave it to chance otherwise you can expect the same results with your accounts receivables.

Need Help? No Time?

If you know you need help with your accounts receivable, we can help you draft an advertisement, test candidates and provide you with a short-list of people that actually want to work in credit and collections.

Call us today at 1-866-266-0117 for a free consultation and don’t leave your financial results to chance.