All posts by admin

How GDPR will impact on call recording

One of the most important updates to data protection regulation is coming into force in the next few weeks.

On 25th May 2018, the EU General Data Protection Regulation (GDPR) replaces the Data Protection Directive 95/46/EC. It’s designed to harmonize data privacy laws across Europe, to protect and empower all EU citizens data privacy and to reshape the way organizations across the region approach data privacy.

The new regulations will especially impact on businesses that record phone calls. Many debt collection agencies in both UK and Ireland record all inbound calls as matter of practice. Most of these businesses currently don’t have strict processes in place to manage consent, nor do they have adequate processes for dealing with requests from callers to have recordings deleted.

Much has been written about exactly how GDPR will impact on businesses that record phone calls. The fact is, businesses throughout the EU that record phone calls need to quickly start addressing how they intend to comply with the new GDPR regulations. If they don’t, they’re leaving themselves exposed to potential fines of up to 4% of annual global turnover or €20 Million (whichever is greater).

Debt Collection Ireland Regulation

There have been renewed calls recently by the Free Legal Advice Centre (FLAC) and the Irish Institute of Credit Management (IICM) for debt collectors and debt collection agencies in Ireland to be licensed.

According to FLAC and IICM, there have been reports that some debt collectors in Ireland have used intimidatory and unscrupulous practices in the pursuit of debtors and, in their view, regulation would help get rid of the “cowboy” debt collectors and help establish an Irish debt collection code of conduct to deal with issues such as how often and what times in the day/evening collectors should call or visit debtors.

While we fully agree with the need to regulate and license the debt collection industry in Ireland, we would also argue that creditors and/or their agents should be allowed to exercise legitimate means to pursue unpaid monies from debtors. We therefore need to look closely at whether the Irish judicial system is currently up to the task. It seems obvious that if the legal system was less costly and more streamlined, particularly in the case of uncontested debt collection matters, creditors would be less likely to look to the so-called “cowboy” debt collectors to recover their debts.

Let’s not forget that, in many of the cases which are passed on to debt collectors, a creditor would have probably tried (and failed) many times to recover the debt using amicable means. Handing over the debt to a debt collection agency is very often a last resort. And, because a debtor possibly ignored peaceful efforts in the past to collect the debt, a creditor may be quite happy for a collection agency to employ more heavy-handed tactics. Any small business or individual that has been in the position where it has been owed money will fully understand the creditor’s position.

Yes we agree there ought to be regulation of debt collection services in Ireland, but let’s not forget that small and medium sized businesses are failing every day because of cashflow problems caused by debtors’ failure to pay legitimate bills. In Irish debt collection cases, as with most things in life, there are two sides to every story. It’s just a shame that, with organisations clamouring to uphold the rights of debtors, the rights and livelihoods of creditors are far too often being ignored.

Small Claims Court Ireland – Online Claim

We previously wrote about the failings of the Small Claims procedure when it comes to business to business debts. However, for individuals who have an eligible claim for under €2,000, there is a new online facility for making a Small Claims application online.

Small Claims Court Ireland Online

Before you rush off to sue every Tom, Dick and Harry, take note that only the following types of claim are eligible:

  • A claim in respect of goods or services bought for private use from someone selling them in the course of a business (consumer claim).
  • A claim in respect of minor damage to property (but excluding personal injuries).
  • A claim in respect of the non-return of a rent deposit in relation to a holiday premises (actions relating to rent deposits for places of residence must be brought to the Private Residential Tenancies Board.)

Get more information and advice about the Small Claims Court procedure in Ireland by downloading the following PDF guide:

A Guide to the Small Claims Court in Ireland

Using the Small Claims Court In Ireland to Collect Business Debts

With great fanfare, the Minister for Justice, Equality and Law Reform, Mr. Dermot Ahern, T.D., recently announced new Court Rules to extend the current remit of the Irish Small Claims procedure to include certain business claims.

Introducing the new Small Claims procedure Minister Ahern said

“The new rules will facilitate claims from a business against another business in respect of goods or services not exceeding €2,000. This Government is conscious that all businesses, but small businesses in particular, have been significantly affected by the very difficult economic situation that this country is facing. Businesses, as well as consumers, can find themselves in a position where they have a legitimate claim against another business or vendor in relation to a contract in respect of goods or services purchased.”

Sounds like a great idea doesn’t it? On first reading, it appears the Minister has introduced something useful for once which will enable Irish businesses to issue legal proceedings themselves in the Small Claims Court (provided the debt is less than €2,000), thus doing away with the need for costly legal proceedings and solicitors. However, on further inspection, there are certain caveats which which suggest this won’t be a panacea to the problem of slow payers and bad debts.

The new Small Claims procedure amends District Court Rules (Order 53A of the District Court Rules 1997). The consumer or business must have purchased goods or services from someone selling them in the course of business. Claims cannot be made in respect of debts, personal injuries or breach of leasing or hire purchase agreements. The procedure provides an alternative and complimentary mechanism to the civil bill procedure.

So, it seems the Small Claims procedure in Ireland can’t be used for business to business debts. The most frustrating thing is that this was a perfect opportunity to introduce legislation which would have allowed businesses in Ireland (partricularly SMEs) a cheaper, fasttrack way of suing debtors. But if, as it seems, this isn’t the case, you kind of wonder what useful purpose it’s going to serve.

Credit Control Tips (Part 2)

Having an effective credit control mechanism is now more important than ever. A recent study by the Small Firms Association found that over 60% of small firms have had to resort to other forms of finance due to the adverse impact on cash flow caused by late payers. The study also found that invoices issued by small Irish firms are now taking, on average, 66 days to get paid.

Late payment problems aren’t confined to small businesses. Large firms have also seen cash flow problems skyrocket as customers take longer to pay for goods or services supplied, while banks have reduced overdrafts and other working capital support.

“A sale isn’t a sale until the money’s in the bank”. The fact is, while a company may experience an increase in the number of orders placed and invoices issued, unless adequate credit control policies are enforced from the outset, there may be delays in collecting payments or, worse still, much of the sales ledger may end up as bad debt.

Top 10 Credit Control Tips

1. Ensure you have a robust but flexible credit control policy. Agree specific parameters and stick to them.

2. Check credit references thoroughly. It’s not uncommon for a potential debtor to tender “friendly” referees when applying for credit. Take advantage of your network of contacts within the industry and check ALL known suppliers within your trade.

3. Know who you’re dealing with. Make sure you know the correct legal entity of the customer you’re trading with as this will dictate who you will need to pursue if a bad debt arises. If it is a Ltd company, consider asking one or more of the Company Directors to sign a Personal Guarantee, making them personally liable for the company’s debts.

4. Make sure your Terms & Conditions of trade are exhaustive. Include a watertight Retention of Title clause and outline exactly how you will handle queries and disputes. Explain what will happen in the event of a bad debt and whether late payment interest will be charged.

5. Regularly review your sales ledger. Ensure your credit controller has issued all the relevant credit notes and the balances on the ledger are correct. DO NOT put off issuing credit notes as this will only delay the process of cash collection. Conduct a credit control review at least once a month.

6. Regularly review credit limits. Credit limits are not static – they can be reduced as well as increased. If a customer is ordering significantly more than normal, it could suggest that they have been disallowed credit elsewhere because of payment problems.

7. Avoid wearing your sales hat when making credit control decisions. Take a commercial view based on the profitability of the account, the customer’s ability to pay, their reputation and their trading history with your company.

8. Don’t become a free overdraft. Habitual late payers and bad debtors can significantly impact on your cash flow. By not paying your invoices, the debtor may avoid using their own overdraft while placing you in an embarrassing position with your own suppliers.

9. Proactive credit control equals respect. The fact is, most companies only pay when they are asked to do so. If you take an active, professional approach to chasing invoices before the due date, this should ensure your payment is on the next cheque run. If it is not, then you have an opportunity to address any issues that may delay payment.

10. Credit control and debt collection outsourcing. Companies who don’t have the in-house systems, expertise or knowledge to manage their credit control have the option to outsource part or all of their function to specialist 3rd party agencies. Potentially this could free up valuable time and resources while allowing an experienced team to manage the debtors’ ledger on your behalf.

In theory, it’s possible to avoid bad debts altogether However such a zero risk strategy is likely to stifle overall profitability. The aim of any successful business should be to achieve maximum profits by balancing risk and profit. This is what an effective credit control policy should set out to achieve.

As the saying goes – “Turnover is vanity, profit is sanity, but cash flow is reality”.