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Dave Manville

Do you have an emergency fund to avoid going into debt?

Part of good financial planning is to have a good emergency fund in place to cover unexpected financial events.

Typically, it’s recommended to have a stash equivalent to 3 to 6 months of salary. The most obvious benefit is of course to prevent you going into debt and thereby debt collection.

The professionals here at iCollect have seen every scenario of people falling into debt collection, below is a common list of how easy it is to find yourself in a financial crisis.

Loss of job, a business or being made redundant?

If you find yourself in the traumatic position of losing your job or business, or if you are caught in the collateral damage of a business laying people off; you will not only have to deal with the practical implications, but also the emotional implications.

It’s important to act from a position of strength as getting a new job can be a slow process and slipping into debt is easily done. Many recruitment companies have seen the average time to hire increase from 28 days to 68 days. Employers’ processes can be lengthy between applications coming in, reviewing CVs, short-listing, interviewing and getting partners together if they are involved in the recruitment and decision making process.

Change of relationship status

The dissolving of a relationship that either entails separation or divorce, can be very costly. The re-organisation of finances from two incomes to one, has huge implications and this is an easy time to fall into debt. Take into consideration; the payment of the mortgage or rent if one partner moves out, responsibility of bill payments, change of bank accounts, legal fees and much, much more. An emergency fund in this situation, bridges the financial responsibilities, until the resolution.

Illness

If you don’t use all of your sick leave at your place of employment during a particular year (normally five days), you can carry over the unused sick leave to the following year. You can store up to 20 days of unused sick leave from previous years (more if your employment agreement allows it). After this, you may be able to use up your holiday entitlement and from there unpaid leave.

The problem can arise when an illness or injury is not covered under the ACC, or your private insurance does not cover the procedural and medicinal costs.

Unexpected home or car repair

Housing repairs can be unexpected. The roof starts leaking, the furnace dies or the washing machine will not work.

What if the car suddenly won’t start, you hit a curb on the way home from work and burst a tire or the transmission in the car goes kaput.
Most of us know, getting a professional to help with these sorts of problems are normally quite expensive. If you do not attend to these repairs, they will become more costly and impact your day-to-day life. Instead of pulling out the credit card, use the emergency fund. Credit card debt can mount quickly and soon turn into debt collection.

If you don’t have an emergency fund yet, maybe it is time to consider it. It’s never too late to start saving money.

How to Resolve Conflict with your Debtors

As any debt collector knows, being owed funds is a tricky situation to be in. Your priority is getting the money owed to you into your account, but customers are hard earned, and the last thing you want to do is lose a client to a competitor.

Made even more complicated is the issue of debt conflict, where there is disagreement between the debtor and creditor on the details of a payment or invoice. Handling such disputes well can be the difference between keeping and losing a client. With that in mind, here are some tips to resolve conflict with debtors.

Stay Professional

You have a professional relationship with your client, keep it professional as you bring up any disputes. Maintain the level of respect and friendliness that you would normally use; don’t be rude or let any frustrations over the debt show. Using debt recovery software helps maintain a professional relationship with your debtor before conflict arises.

A good tip is to refrain from sending emails on the topic until you have a calm head – emotionally charged emails can quickly damage a professional relationship. The goal is to resolve conflict, get paid and get back to your former healthy relationship – losing your cool or embarrassing customers is a good way to lose them.

Open-Mindedness and Understanding

Start out with an open mind to try to understand the client’s point of view. The conflict could be a simple miscommunication either between you and your client or between staff members within the client’s business. If you can understand the cause of the conflict, you can solve it more easily.

Also, be open to the fact that you could have made a mistake. You could have sent an invoice twice or forgotten to include that monthly special you advertised. Creditors can be in the wrong when it comes to invoice disputes – the sooner you discover your mistake, the less embarrassed you will be!

Use Debt Collection Software

Using debt recovery software allows a third party to take over the task of debt collection, which is proven to be more effective than trying to collect debts yourself. Conflict can still arise for genuine reasons, but debt collection software helps limit the number of conflicts that are actually just procrastination techniques.

If conflict does arise, iCollect’s debt recovery software will walk you through a procedure to resolve conflict as well as provide free advice on how to manage the situation.

Record Keeping

Good record keeping is the cornerstone to good accounting. Organisation will limit mistakes on your end and make effective debt collection easier as you can quickly identify and resend any invoice, bill, or other documents that will help you get to the bottom of a disagreement.

Also, if a conflict does arise, keep record of the conflict itself by keeping emails and notes. This will help you if things escalate as well as give you tips on changing procedure to avoid the same issues from happening in the future.

5 Common Reasons Debtors Don’t Pay on Time

As a small business, non-paying customers can be disappointing, frustrating, even infuriating. You’re thinking: I provided a good or service, I deserve to get paid! Why aren’t they paying?! Asking for money is an awkward enough part of the job before payments start going to arrears.

In order to get your debt recovered, it’s worth understanding the mindset of a debtor. Understanding 5 common debtor personas will help you make the most of your debt collection software.

The Accidental Debtor

The accidental debtor is our favourite type of indebted customer. They accidentally filed the bill away before payment, or the dog slyly ate the bill and they’re still waiting for it to show up in the mail. Whatever the reason, this debtor is not trying to pull the wool over your eyes – they simply forgot to pay. Debt recovery software works swiftly with these guys, as soon as they get that first scheduled reminder, the money will be in your account faster than you can say “show me the money”!

Debt collection agency

The Procrastinator

Often, the procrastinator simply likes to see money in their own account and has trouble parting with funds, so they put it off. They might be waiting until pay day, or may even be waiting on a late payment from one of their own clients. Again, these debtors don’t like being in overdraft and will usually resolve their debt with a single, friendly reminder from your debt collection system.

The Over Spender

These debtors are a little bit more unpredictable. The over spender usually pays their bills on time, but a holiday season or unexpected circumstance caused them to lack the funds for out-going bills. The over spender might only need a single prompt by iCollect’s debt collection software, as they didn’t intend to not pay you. On the other hand, if the over spend was serious, it might take some time for them to pay you back in full.

The Opportunist

Unfortunately, some debtors have less innocent motives and the opportunist is one of them. They are the business equivalent of that friend who always seems to forget his wallet. The opportunist might take advantage of a business that invoices customers after the good or service is delivered. They also might prey on smaller businesses which they deem less likely to have a strong debt collection practice – which is why making use of streamlined and professional debt recovery software system is so beneficial.

The Can’t Pay Debtor

Unfortunately, some people cannot pay their debts. It’s the rarest scenario, but these people are in over their heads, receiving notices left, right and centre. They are in trouble, fighting a mountain of fees. While some people or businesses will have to claim bankruptcy if the debt is bad enough, others need help in the form of payment plans and possibly even tax lawyers to get them back on their feet.

How to Maximise Debt Recovery this Tax Season

With the end of the NZ tax year just behind us, it’s timely to consider the relationship between taxes and debt collection. Around half of everyone expecting to get a tax refund will use the money to pay off debt, making tax season the most productive time of year for many debt collection agencies, and that includes debt recovery software.

At iCollect, our debt collection software is designed to help you collect debt quickly without hurting your relationship with your customers. One of the best ways to do this is to strike when the iron is hot and maximise profitable periods when people are most willing and able to repay their debts. Here are three effective ways to maximise this productive tax season and get money owed to you back.

Encourage One-off Payments

After getting a tax return, customers are more likely to repay a debt in a single, one-off payment than at any other time of the year. This makes sense of course: for most people, a tax refund is the only time in the year where an unaccounted for large sum of money will be injected into their bank account. Keep this in mind, and consider offering incentives to encourage one-off payments of debt.

Start Early

Get onto debt collection as early as possible in the new financial year, before people start committing their tax return to other sources. You want them to pay off your debt while they’re still using their logical brain. Wait too long and that flash new lounge suite might seem more appealing than paying down debt. With the financial year ending in April, people are only just starting to sort out their financial affairs, so now is the perfect time to act.

Keep that Customer Service Up

The beauty of iCollect’s debt recovery software is that it fosters healthy relationships between you and your customers, even those in debt. Remember this, and stick to your polite, friendly business persona while trying to collect debt during this season – you’ll keep your customer and are likely to see a healthy amount of incoming cash.

New Zealand has High Household Debt Levels – But Does It Matter?

When compared to the size of our economy, New Zealand’s household debt level is one of the highest in the developed world. But one economist argues that how much debt we have is not as important as whether we will be able to pay for it in the future.

In 2015, New Zealand’s household debt level was 91.3 per cent ranking us seventh highest out of 42 countries. Paul Bloxham, HSBC chief economist for Australia and New Zealand, says distribution and serviceability is more important than debt size.

When consumer credit soars, such increases in the levels of borrowing can leave households over-indebted and vulnerable. However, when interest rates are low and there is solid jobs growth and a favourable distribution of debt together with tightened lending standards, risks to households with high debt can be manageable.

Bloxham cites the US sub-prime crisis, saying the problem was lending to people who could not afford to service the debt, rather than high debt levels in themselves. The question for NZ was then around whether banks and financial institutions had been lending to households that could continue to service the debt, especially in Auckland where house price growth has been rampant.

Bloxham says there are a number of reasons why New Zealand ranks so highly up the international ranks for household debt. Partly it was because housing made up a larger share of household wealth than other countries because house prices were higher.

Our high debt was also down to the high number of individuals who own investment properties. In other countries, like the US, investment properties tended to be owned by corporates, so the debt did not show up on household balance sheets. “Here households own it directly,” says Bloxham.

What Are the Different Types of Good and Bad Debt?

Not all debt is equal; there is good debt and bad debt. If you are a debtor, debt is good if it will help you accumulate wealth in the future. Good debt is something that you will make money from over time such as home loans, student debt, or borrowing to expand your business.

Just by regularly paying down your debt you can benefit. That’s because you build up a good track record in your credit file, making it easier to borrow when you need ‘good debt’ in the future. A good record may also mean you benefit from lower interest rates, or at least avoid higher ones.

Bad debt, on the other hand, is lost money. Debt is bad when you’re borrowing unnecessarily for goods or services that won’t help you financially in the future. It usually means you’re living beyond your means and falling behind financially.

From the perspective of the creditor, good debt will be paid within an agreed timeframe, potentially with interest, depending on the agreement. Bad debt is the debt that is not collectible and will need to be written off.

Bad business debt could result from lending money to an unreliable customer, a customer whose circumstances suddenly change, or from fraud. Sometimes the cost of pursuing a debt through a debt collection agency is not worth the value of recovering it.

Most businesses make sales on credit. This debt is treated as an asset however, it is typical to have some provision for bad debt in the accounting process to try to protect themselves from write-offs.

Debt collection software such as iCollect is a highly effective way for businesses to deal with late and unpaid bills – better to find a way for the debt to be collected than end up paying for it yourself!

The Pros and Cons of Debt Consolidation

It’s easy to collect credit cards and buy on hire purchase. But along the way, you could find you have collected a whole mountain of debt. If you are also struggling to make the minimum repayments on time, the additional fees can mean your level of borrowing quickly escalates.

A “debt consolidation loan” is one option to consider when you need to get your debt under control. However you need to go into it with your eyes open because these sort of loans have their disadvantages as well, and can even head you down the path to facing debt collection agencies NZ wide.

A debt consolidation loan combines multiple debts into one. If you’ve built up a debt on a number of high-interest loans, combining them onto one lower rate can give you the breathing space you need to really attack the debt and get it down.

The advantages of debt consolidation are that you have one single payment a month and can budget more easily. You may also get a lower interest rate, or the debt can be spread over a longer period, giving you lower monthly outgoings.

But be careful not to think of debt consolidation as a magic bullet that will solve your debt problems. By adding the debt to your 30-year mortgage, for example it’s easy to end up paying more in interest in the long run.

It can also be difficult not to keep falling back into bad borrowing habits. When you add a relatively small loan to your large mortgage, it can seem to reduce the loan’s significance, making it easy to forget and even to continue borrowing. Consolidating your debt can be a good option in some circumstances but it’s also a really good idea to get budgeting advice at the same time.

Credit Records – The Good and the Bad

Your credit record may be more important than you think. Information about your history regarding credit, debt, and repayment is being updated all the time and could have a big impact on you.

Bad credit ratings happen to people in all walks of life. Missing a few payments on the house, car, power or phone bills can stop you moving ahead financially. A bad credit record can not only affect your ability to borrow money again, it can even make it hard to sign up for phone or power services.

A credit reporting agency is allowed to disclose your credit report to debt collection agencies, people involved in court proceedings against you, and certain government agencies, without requiring your consent.

The good news is that there are ways to recover from a rough financial patch. Bad credit cannot be undone but with comprehensive credit reporting, borrowers can see if you’re on top of your commitments again even if you’ve been through some difficulties in the past.

If you have been through some financial hardship which is impacted on your credit record, there are some tips to help get your financial situation back in control:

  • Keep track of your payments.
  • Only apply for credit when you really need it.
  • Pay off any defaults, and
  • Work with your creditors.

If you can show that you have arrangements with your previous creditors and are keeping to them, it will help other credit agencies look more favourably on your situation.

Everyone ought to check their credit files regularly, especially if you’re considering looking for credit. There are three credit reporting companies in New Zealand so if you want to check your record, you need to contact them all. And remember, you are entitled to free access to your own information.

Debtors – What Are Your Rights?

The highest percentage of credit card accounts that come past due occurs in the months after Christmas – 7.6 per cent of Kiwis pay their credit card bills late. By April, these debts could start being referred to debt collectors.

If you owe money to a creditor and stop making payments, they can take action against you to recover their money. Problems occur when disreputable companies play on people’s fears to get their money back – but if it’s harassment you don’t have to accept it. Debt collectors have no legal right to use scare tactics to demand payment.

Debt collection agencies are heavily regulated so if an agency is chasing you for money and you think they are behaving inappropriately – breaching your privacy or harassing you, question it.

By law a debt collector can’t use physical force, coercion, or unreasonably harass your family. They also can’t mislead or deceive you or take advantage of vulnerability such as a disability. A debt collector can’t visit your workplace and tell your boss about your debt without your permission.

Most importantly, if a debt collector breaks the rules, you have the right to complain. If they are claiming unreasonable debt collection fees or misleading you into believing that you are required to pay fees when you are not, you may be able to take them to court for breaching the Credit Contracts and Consumer Finance Act or the Fair Trading Act. Or, you might be able to complain to the Office of the Privacy Commissioner if they have broken the privacy laws.

The bigger professional debt collection agencies are unlikely to behave this way however some low level debt collectors may bank on the debtor’s lack of knowledge about their rights – so make sure you know yours.

Student Loan Debt Being Written Off

The average student loan balance is close to $21,000. Almost 731,800 people have a student loan. In the year to June 2016 40,695 borrowers repaid their loans in full.

Course fees are the main cost – more than 90 per cent of students borrow in order to pay their fees. The second largest driver of costs is the cost of living. Overall, students are leaving university with an average of between $16,600 and $17,220 of debt and the average time it takes a graduate to repay their loan is now a whopping 8.4 years.

Record amounts of student debt are being written off for bankruptcy, with $17.6m wiped from the books in the 2015-16 year alone. According to IRD, more than 100,000 student loans are in default, with about 80 per cent belonging to people living overseas.

$150,221 was repaid after eight arrest warrants were sought to prevent debtors leaving New Zealand. After three court cases, $79,610 was recovered – but only from two borrowers. The third person’s debt was wiped due to hardship. Twelve more cases covering $621,955 of debt collection were still under way, an Inland Revenue spokesman said.

Minister, Judith Collins described the threat of arrest as a “strong deterrent” but the New Zealand Union of Students’ Associations (NZUSA) president Jonathan Gee says a new repayment model for student loans is needed. Graduates in New Zealand feared taking on extra debt to own cars or houses and Kiwi expats were scared to come back home, he said.

When asked if other methods of debt recovery were being considered, Collins said reduced repayment holidays, information-sharing arrangements with the Australian Taxation Office and arrests of the worst overseas borrowers since 2010, had demonstrated success.

If you have a student loan that is in urgent need of paying off and struggling to find the right job to help support this, you could contact Ryan + Alexander Recruitment Agency. They boast a team of professionals whom can assist in finding the right occupation for your skill set.

Viagra alternatives works better

Last week, the United States equivalent to the Medical Products Agency, FDA, approved a new drug - Addyi (flibanserin 100 mg). The Sprout Pharmaceuticals supplier certainly cried up a bottle and journalists around the world wrote about this little pill. For Addyi is not any pill, it's the long-awaited pink Viagra.

Thus, a medicine that is expected to revolutionize women's most common sex problems (low lust) in the same way as Viagra revolutionized men's most common sex problems (erectile dysfunction) when it came in 1998. And clearly everyone wants to rewrite pink Viagra, everyone wants to rewrite sex, especially when It gets a nice scientific setting.

The subject of Pink Viagra comes up in the media on a regular basis and the conversation follows about the same pattern. In one corner, cheerful insistence that science can finally be close to finding the key to women's sex drive. In others, one and another feminist chronicle concludes that women may not want to lie because they take the main responsibility for the home and the children. The fascinating thing is that in the middle of the conversation about sex and science is the obvious few who actually talk about science.

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