Client: Information Technology service provider (ASX Listed)
Project: To collect $713,000 owed by an ASX-listed leisure company
Service: Debt Collection
Kaizen Enterprises was engaged by a prominent national IT company to collect $713,000 owed by a large publicly listed leisure industry company. The debt had been outstanding for around a year, and despite many previous promises by the debtor to pay, no money had been received by our client.
There was no dispute over the services delivered. However, given the history of non-payment we decided to conduct some initial research to help us determine whether the debt was likely to be collectable. Our research revealed that the debtor company was about to enter into a merger, and that a condition of the merger was that each party come to it unencumbered. This meant that the debt had to be quickly collected before the company had its lines of credit withdrawn as a prelude to the merger.
We then calculated interest at the court rate and rang the CEO, who was located in another state. The CEO promised to pay the debt in full within one week, including interest. To help increase the likelihood of a successful collection, and remembering both the need for speed and the debtor company’s previous history of broken promises, we obtained the CEO’s agreement for a Kaizen Enterprises representative to personally collect the cheque in the event that it was not received by our client within the week. This was the first step of our locking-in process.
Despite the CEO’s promises, payment was not received, and the CEO declined to take our calls. Using information previously obtained from the CEO regarding the merger partner, our principal, Ian James, flew to Queensland to try and contact the partner’s Financial Controller in person. Although there was nobody present on-site at the industrial estate where a related company was listed as having an address, James persisted, calling the debtor company’s head office to arrange a meeting with the related company’s financial controller.
After waiting on-site for almost two hours, James was able to meet with merger partner’s financial controller, and explained the arrangement previously agreed with the debtor company’s CEO for the collection of the cheque. As the Queensland firm was a related entity, it had separate financials and the capacity to pay the debt. The financial controller reviewed the information brief and agreed to provide a cheque the following day. The next morning James met the financial controller, who reported that he had obtained the authority to pay the debt at a special board meeting the previous evening. The financial controller then provided a cheque for $736,000 , which included the full amount owing plus the $23,000 interest.
Kaizen Enterprises was able to recover the full debt for three main reasons: