Credit company on trail of bad debtors

By RICHARD WOOD

Credit management firm Creditworks is putting the screws on bad debtors, starting in the battered building industry.

It has launched, in conjunction with the Building Industry Federation, an inquiry database that charts the amount of debt owed by customers of participating firms.

It also gives a breakdown of past debt in 30-day cuts and can consolidate into one view the debts of firms with the same ownership or director.

The service, called Credit Reference Industry Solution (CrisWorks), is expected to catch businesses that move from one supplier to another when credit is denied, or use multiple companies to hide poor financial situations.

The figures are available only to participating firms, but any merchant or supplier who provides goods and services on credit terms can join the 150 already involved.

Merchants send in their customer debt data every day and it is processed overnight.

Company office data is brought into the system through a live link, identifying every New Zealand-registered company.

Creditworks managing director Ronnie Tan said there was no privacy issue because the system collected information on registered companies only, to whom the privacy laws did not apply.

Tan said the current total debt of a customer was information no one had been able to get hold of in the past, but the building industry had had $150 million of bad debt in Auckland in the past five years.

An email feature allows a warning to be sent when debt reaches a preset limit.

Merchants pay an annual licence fee for the service and a charge for each inquiry to the database, but any number of reports are freely available through a browser.

A matching process has been devised that uses not just the company name, but names, phone numbers, addresses and other variables to ensure accuracy in data matching.

Tan said some customers would not stack up and be turned away by suppliers. This would lift the standards of the industry.

A lot of people relied on suppliers to finance their businesses, he said. This system might not stop that, but would allow the supplier to assess risks based on the total known credit.

"That is far better than being told there is a bad debt when it happens."

Tan said CrisWorks cost several million dollars to develop. The hosting and network were provided by GDC.

The system was developed in Microsoft.Net and uses SQL Server database software.

CrisWorks was expandable to any industry that offered credit by just adding them to the database.

Tan said the difficulty was convincing the main players that this was the best way to resolve an industry issue. The building industry, with its problems in recent years, had that incentive.

Creditworks

Building Industry Federation