NMS Collections

NMS Collections offer a comprehensive range of credit control and debt collection related services.

Credit control and Debt collection are two entirely different disciplines, with each having an intrinsic link to the other. However, due to the inherent nature and the commercial environment where these contracts ultimately arise, management needs to be fully aware of the legalities involved. It is no longer appropriate for commercial operations to be “pretty legal” as Stephen Joyce put it.

If you are not getting paid and you are not sure what to do, NMS Collections can review your debtor situation and provide an outline of options available to pursue recovery.

Credit Control / Debt Collection – Services

  • Commission collections, that are simply based on, “no collection – no fee”
  • Design and establish customised Terms of Trade or Terms of Engagements for any business operation,
  • Identifying the inherent risks of trading with an insolvent company,
  • 101 “in – house” advice to credit control or debt collection departments,
  • Site visits,
  • Credit history checks and/or default listings, including debtor risk analysis,
  • Repayment plan negotiation through to Deeds of Settlement and management,
  • Statutory demands,
  • Liquidation proceedings,
  • Bankruptcy proceedings,
  • Disputes Tribunal assistance,
  • PPSR Securities – advice, implementation or registration,
  • Defence of Liquidator or Receiver demands or actions, including insolvent transactions (formerly voidable transactions) or commonly now called “Liquidator  Claw – backs”
  • Expert insolvency advice evidence – High Court.

Commission Collections:

Chasing overdue debts is an unnecessary distraction from running your core business. When you use NMS Collections commission based debt collection services, you are not faced with significant upfront fees, and NMS Collections only earns commission when it successfully recovers an outstanding debt – hence the “no collection – no fee” collection arrangement. Depending on your Terms of Trade debt collection costs may in fact be fully recoverable from the debtor.

Terms of Trade – Terms of Engagement drafting through to implementation.

The commercial environment now demands and dictates that Terms of Trade or Terms of Engagement agreements operate between trading identities which clearly advise the terms of trade and agreed default provisions. In the majority of cases that come to our attention where a company or business operation wishes to enforce an outstanding debt, we ultimately find that there is no suitable or legally enforceable “Terms of Trade” existing between the contracting parties specifying or providing any security in the event of a payment default. This is a fundamental flaw for any business operation from start up. The consequences of this generally has devastating and serious financial effects on any business operation which is prepared to advance goods or services on credit without any agreement for payment, let alone any security in the event of a payment default. The fact that Dave may have known Bob for the last ten years is little comfort when Bob won’t (or can’t pay) his bill to Dave. The effect as we have seen on numerous occasions, is that the business of “Dave’s” may ultimately go to the wall. It is a sad fact of life but when money gets tight, past “friendly” relationships turn feral with people like “Bob” generally denying any liability. The end result it makes collecting money from people like Bob virtually impossible.

What should be in a basic Terms of Trade ?.

Each business is different in what it provides or supplies. However, a general Terms of Trade should be a written document between the two contracting parties, firstly specifying (and correctly spelling!!) the names and addresses of the contracting parties, contact phone numbers, the terms of payment for any goods and services supplied, and what security is offered in the event of a payment default. A next of kin or someone in a close relationship to the applicant (not in the same household) could be valuable in tracking a defaulting debtor. Many terms of trade now also require the applicants drivers licence number.

The introduction of the Personal Properties Security Register provides additional strength for security and provision should be made specifically for acceptance between the parties allowing security in this way to be registered. A PPSR or PMSI (Purchase Money Security Interest – the “super security” provides priority over unsecured creditors, and can provide priority in front of General Security Agreement holders in the event of a default, receivership or liquidation. This can be a valuable tool when added to other recovery procedures.

In addition, provision should be made not only for personal guarantees from the applicants, but also for the liability of the defaulting debtor for legal fees (on a solicitor client basis and taxes) or other costs associated to collection of the default arrears.

The terms of trade cannot be assumed or implied and under the Fair Trading Act the Commerce Commission is concerned about traders demanding collection fees and late payment fees, when there is no contractual entitlement to make such demands, amongst others.

Other issues such as to warranty for those goods and services supplied, plus an undertaking that ownership doesn’t pass until paid for (the standard Romalpa Clauses), and in the event of non payment for goods supplied, some agreement where those goods can be collected until paid for.

These are basic terms and are provided simply as an overview, and should be further tailored to suit the specific security arrangements for any business serious in limiting its risk exposure from defaulting debtors. If your business doesn’t have adequate Terms of Trade you need to contact NMS Collections today.

Identifying the Risk of Trading with an insolvent company:

If your company is trading with a company which appears to be having financial difficulties (generally because it doesn’t pay its accounts on time) that company could very well be insolvent. The risk to your business is not only you risk not getting paid, but also in the event the company goes into liquidation, you could be required to repay the monies paid to you by that company back to the Liquidator as insolvent transactions. The Liquidators stance would be that you have received more than you would normally or should have received through the liquidation process, and the effect is that you have received a valuable preference above other unsecured creditors. The “ordinary course of business” defence has changed to a “running account” exception with the introduction of the Companies Amendment Act 2006. While this legislation has been around now for a number of years, many businesses are still unaware of its significance. A helpful section on voidable charges and transactions is available on this web site for you information. This scenario does happen, and its frequency is increasing so be warned !.

101 “In – house” Advice to Credit Control or Debt Collection departments:

NMS Collections regularly works independently with either regional or national credit control or debt collection departments, and can provide invaluable advice or instruction on the latest insolvency developments either established through the Courts, or can audit your credit control and debt collection systems and processes limiting your exposure to outstanding debt and therefore maximising profitability.

Site Visits:

Our field agents can visit the debtors last known address to request payment if the debt cannot be collected by other means, or to gather information which will assist in tracing the debtor if they are no longer at the address and cannot be found by other means. NMS Collections can also check an assets location and or condition prior to recovery actions.

Credit history checks and/or default listings, including debtor risk analysis:

If you are extending credit you may wish to obtain a snapshot of your customers credit history. NMS Collections can provide Veda Advantage credit reports on individuals or companies. Provision of consumer credit reports is subject to the Credit Reporting Privacy Code 2004. Disclosure of credit information must be authorised by the individual concerned. Veda Advantage’s commercial credit reporting services allow you to obtain credit information about companies that are not governed by privacy legislation. However, the Veda Advantage Company Plus service provides information about company directors and access to this information must be authorised by the individual concerned.

Consumer and company default reporting allows you to list overdue debts on the Veda Advantage credit reporting database, impacting the debtors credit rating. If at some stage in the future the debtor applies for credit and finds they are denied credit due to a default listing, the situation experienced may prompt payment of the debt.

If you or your company are extending credit or concerned about an existing customer’s ability to pay, NMS Collections can undertake a discrete background checks using a wide range of sources which will be presented to you in a written report. This information can be invaluable in deciding how much credit to extend or what steps should be taken to recover overdue debts.

Repayment plan negotiation to Deeds of Settlement and ongoing management:

If the debtor is having cash flow problems they may be more receptive and comfortable negotiating a repayment plan with a third party. NMS Collections will work with the debtor to negotiate a repayment plan that meets with your approval. Once the repayment plan is in place NMS Collections maintains regular contact with the debtor to ensure that honouring the repayment plan remains a priority for the debtor.

Often the issue of a statutory demand or the likely hood that a creditor will commence legal proceedings brings the debtor to the negotiating table. In this situation, a Deed of Settlement that commits the debtor to an agreed payment plan and which extracts either a personal guarantee or security to the value of the debt (or above) as consideration for taking legal proceedings off the table, extending payment terms, or both, provides the creditor with the security of recourse to both the company and the individual if the payment plan is not honoured.

Statutory demands:

A statutory demand can be an effective way to recover an undisputed overdue debt over $1,000.00 that is owed by a company. A statutory demand is a legal demand that a company pay its debt due within 15 working days. In the event a statutory demand is not paid this may provide evidence of the debtor company’s insolvency (the solvency test) pursuant to section 4, and also section 287 of the Companies Act 1993. The served party has 10 working days (the 10 day rule) from the date of service to make an application to set aside the statutory demand. If the debtor company does not pay or make application to set aside the demand, the creditor company is then able to apply to the Court for a liquidator to be appointed, and the liquidation process will then take the prescribed course. If the debt is clearly overdue and undisputed or you have an admission of cash flow problems from the debtor you have strong grounds to serve a statutory demand. A statutory demand must be served on the defaulting party under the terms set and prescribed by the Companies Act 1993.  NMS Collections can draft and serve a statutory demand on your behalf.

Liquidation proceedings:

After the 15 working days in which a debtor company has to pay or reach a settlement agreement a statutory demand expires, a creditor has a right to apply to the Court to liquidate the company. If the debtor has not responded to the statutory demand, the creditor can file and serve liquidation proceedings which may result in payment of the debt or at the very least settlement negotiations.

Bankruptcy Proceedings:

Bankruptcy proceedings can be an effective way to recover a judgment debt against an individual. The filing and service of bankruptcy proceedings may result in payment of the debt, or again at the very least, settlement negotiations.

Dispute Tribunal assistance:

On the 1st August 2009 the Disputes Tribunal claim limit increased from $7,500.00 to $15,000.00. If both parties agree, the Tribunal can hear claims up to $20,000.00 (up from the previous maximum of $12,000.00). With a filing fee of $100.00, the Disputes Tribunal is an inexpensive way to resolve a dispute. The Tribunal is not a formal court – parties must represent themselves and disputes are heard by a referee – there are no lawyers allowed. However any ruling the referee makes is binding and can be enforced by the Courts. Having an enforceable ruling for greater than $1,000.00 opens the way for the issue of a statutory demand as the first step for the commencement of bankruptcy proceedings against an individual or liquidation proceedings against a company. NMS Collections can provide assistance with the preparation and advice for any disputes type hearing or settlement meeting.

PPSR Securities – advice, implementation or registration:

The Personal Properties Securities Act (PPSA) provides for the registration of securities on the Personal Properties Securities Register (PPSR). The ability to register securities against client debtors starts with consent from the Terms of Trade. It is becoming more common for trading organisations to register securities on the PPSR of their debtor clients as an effective credit control measure. However, the PPSA and PPSR is not for the faint hearted and NMS Collections can assist or even manage PPSR securities on behalf of clients or client companies.

Defence of Liquidator or Receiver demands or actions:

NMS consultant Pat Norris has in the past 15 years acted in the statutory capacity as either Liquidator or Receiver and is well experienced with liquidation or receivership matters as prescribed by the Companies Act 1993 or the Companies Act Liquidation Regulation 1994. Having that knowledge and experience Pat is well versed and qualified to assist clients defend Liquidator or Receivers demands, particularly including insolvent transactions (formerly voidable transactions) or commonly now called “Liquidator cash claw – backs”.

Expert Witness – Expert insolvency advice evidence – High Court.

NMS Collections (Pat Norris) has experience in giving evidence before the High Court and Court of Appeal in respect of insolvency matters concerning the Companies Act 1993 or the Companies Act Liquidation Regulations 1994 including specifically procedures and practises of Insolvency Practitioners while undertaking appointments. Importantly, voidable or insolvent transactions is a highly specialised field and NMS Collections is well qualified to provide expert assistance in these areas.

Sell your problem debtors ledger to NMS Collections

NMSNZ Ltd specialise in New Zealand for purchasing debtors ledgers. Selling your debtors ledger can have immediate financial advantages in respect of IRD/GST implications, and the value achieved from the sale also crystallises the debt value for end of year tax purposes, as well as providing immediate cash flow. NMS Collections will purchase one off ledgers or have an on-going arrangement based on a forward flow purchase agreement. NMS Collections will buy your bad debt on an agreed price, based on our assessment of the debt recovery level that is considered attainable, and based on a wide range of variables such as the age of the debt, the documentation available including any terms of trade, whether personal guarantees exist, the market in which the debt was incurred, and the activity that has already taken place in attempting to collect the debt. Payments made by NMS Collections for debtor purchasing are banked the very next business day, and that or those files then become the property of NMSNZ Ltd. NMS Collections are skilled debt collection professionals who will protect your brand even though the debtors file has been assigned to NMS Collections. Generally for smaller debts, the cost of collection can outweigh the value of the debt due. Defaulting company debtors, or those “gone – no address” are always of interest to NMSNZ Ltd. For financially distressed company’s, the option to unload their problem debtors for an upfront cash payment will in most cases be very appealing. Alternatively, prior to writing the debts off your company’s “books”, contact NMSNZ Ltd as those bad debts may still have some value.