Over the next few newsletters we will provide you with some answers to FAQ's we receive daily in the world of debt recovery. To kick this off here are the first four questions we constantly get asked.
- Why do I have to invoice the debtor for contract default fees, aren't they owed to ECCC?
Contract Default Fees are payable by the debtor to you the creditor as per the terms of your contract which you have disclosed and obtained formal acceptance of from your debtor prior to the debt being incurred. Your debtor owes ECCC absolutely nothing as there is no contractual relationship between ECCC and your debtor. We are acting on your behalf only (i.e we have not purchased the debt) as per our separate contract with you. Therefore only the creditor can raise an invoice to the debtor for the contract default fees. This should be done once you receive our debt load email advising if the amount of the contract default fees. It is important because debtors will often only pay for invoiced amounts and non-provision of same can delay payment further.
- Why is GST not added to contract default fees yet it is added to ECCC commission?
We charge our clients commission as per our signed contract and terms. As we are providing a service GST is added to same. Contract default fees (which you charge to your debtor as per your signed contract and terms) are neither a goods or service item, rather they are a fee charged for non/late payment therefore GST cannot legally be added to same. You can claim a portion of your GST back as per normal accounting procedures.
- Why am I being charged commission when I have waived the contract default fees?
Because you are waiving your contract default fees under your contract with your debtor. This is a decision only you can make and will leave you out of pocket after our commission is charged on actual monies received. You cannot waive our commission charges under our contract with you. If your debtor does not pay your contract default fees we still charge you commission on the amount they have paid as per our contract with you.
- Why am I being charged commission when the contract default fees seem to be for a different amount?
Because they are 2 separate calculations for 2 separate items. The calculations for contract default fees vary dependent on the amount of the debt submitted. Examples of these calculations can be found in your client manual and on our website. Our customer services team can assist you with any queries regarding these calculations and our Area Manager can take you through same when you meet with them. Ultimately these calculations are designed to allow you to cover your costs of collection from the outset. If the debtor pays your contract default fees, once we have invoiced our commission charges to you, you will not be out of pocket (apart from the GST component of our commission).