A MAJOR debt collection agency has suggested more Warrnambool district retailers should consider offering credit to customers as a way of countering competition from online and big-chain discounters.
Roger Mendelson, chief executive of Prushka, said small retailers who tried to compete merely on price would not survive in today’s competitive trading climate.
“Service has to be a number-one priority — not every customer is after the cheapest price,” he said.
He said Liebig Street was a prime example of the rise in business closures across Victoria in the past two years.
“Pruska’s findings reveal three-quarters of Victorian businesses are having concerns about profitability, with more than half having more than $10,000 in well-overdue debts,” he said.
“Business operators in country areas, for example newsagents and pharmacists, are more likely to offer credit to customers than in big cities.
“It’s a way of keeping customers because local loyalties are not what they used to be.
“If you try to compete just on price you can’t win and will go broke.”
Mr Mendelson advised traders considering offering a line of credit to customers to firstly get them to complete an application which provides a profile of income, assets and references.
“If there’s a default this information helps debt collectors,” he said.
“A small percentage of customers will always fall behind in payment and there are certain low socio-economic areas that have bad consumer debt history.”
He offered the same advice for subcontractors in the construction industry where there has been a sad history in recent years of smaller operators going unpaid by larger companies.
“Lots of smaller tradies fail to get a credit application form completed with their major contractor and when they come to us for help in recovering the money we have to tell them there is not much chance,” Mr Mendelson said.
“We have found that Warrnambool building and construction business are struggling, particularly those working as contractors under a larger company where they are often second or third in line to get paid.
“There’s a trickle-down effect — when a contractor isn’t paid he isn’t paying his people.
“Always be wary of taking on a job with someone new — make sure you have the credit details and the name of a company director.”
Prushka, which claims to be Australia’s largest regional debt collection agency, has found a trend in western Victoria of more business operators holding debts higher than $2000 for longer to avoid collection costs.
“This is false economy because if a customer doesn’t pay in 60 days he won’t pay in 90 or 120 days either,” Mr Mendelson said.