Recently I met with a client, Paul in South Perth WA to discuss the PPSA legislation. Paul was particularly interested in being able to have â€œsecured creditorâ€ status and not be liable for preferential clawback by the liquidators.
During our conversation Paul stated that we were responsible for saving him approximately $20,000 dollars. â€œHow?â€ I asked.
Paul explained that he had a potential customer that would not sign his credit application but who told him he had plenty of money and not to worry about getting paid. â€œNo signing, No work doneâ€ insisted Paul. Well he didn't get the job, but within two months that â€œCustomerâ€ had gone into liquidation and the losses to Paul would have been around $20,000.
Lessons to be learned
- If a potential customer won't sign your credit application then don't extend credit
- A â€œCustomerâ€ who doesn't pay is not a customer, but a liability
- Have EC Credit Control working for you after all its â€œBecause you work hard for your moneyâ€