10 bad habits keeping you in credit card debt
By Steve Gan (GCS Partner)
Steve: Tell me, what was the impetus or motivation for establishing a global credit and collection organization? And why a partnership and not just membership?
Neil: It was 1977 and I believed that globalization meant we needed to offer at the very least a regional service, because Australia was already an exporter to the Asia Pacific region and as it turned out was destined to become on the major economies of the region. What we now know as NAFTA, Europe Union, AFTA and MERCOSUR (the various free trade associations) were only starting to be formed but it seemed to me that if I could offer credit and risk management services regional then globally, we would be in strong position to expand our client base and revenue.
Whilst venture capital companies were looking for entrepreneurs to invest in, I wanted to retain my independence, whilst at the same time not creating just another industry association. Members belong to industry associations and may or may not participate in a pro active way. By seeking to develop a unique group where the partners are required to undergo both a stringent due diligence and contract to meet service criteria, we created an organisation where all partners share a common vision and therefore strive to achieve our goals and objectives far more than an industry member would do.
Steve: With partners in over 80 countries, which areas have the most prevalent partners and where are you looking to increase the number of partners.
Neil: The majority of partners are located in Europe, Asia Pacific, Middle East & Gulf and North America, although Africa in the past year has become an exciting continent for GC with partners now located in South Africa, Botswana, Zimbabwe, Tanzania, Uganda, Malawi, Kenya, Nigeria and Ghana, and we have a presence in Mali enabling us to service the former French colonies of the Ivory Cost etc. We are also focusing on the development now in Central and South America and have partners in Guatemala, Panama, Venezuela and Brazil and are in negotiations with potential partners in other parts of Latin America.
Steve: China, as economically powerful as it has become, seems to be a no-man’s land for credit & collection support. How would you describer GCS’s presence in China?
Neil: I would have agreed two years ago, however we look on China as the world’s manufacturing base and as such many Chinese exporters face delinquent debtors, and have learned to adopt modern credit management practices that help them to indentify and mitigate risk. The very high use of credit reports and due diligence investigations by Chinese companies, supported by export and credit insurance has helped to reduce the risk, but no country could have the huge balance of trade that China has without having the resultant increase in bad debt and even fraud that has impacted on sections of their export manufacturers.
GCS first established a presence in Hong Kong in 1982, and in mainland China, by entering into a joint venture in Qingdao Shandong province in 1991. It has been a slow process of learning and understanding the way business is done in China but we now have partner offices in Beijing, Shanghai, Guangzhou and of course our first offices in Hong Kong and Qingdao. I would subscribe the success of GCS in China now to the skills, knowledge and enthusiasm of our partners. They are not only our artners but over the years have become close friends like family.
Steve: In what ways has technology or social media given the GCS Group an edge in your world wide credit and collection services?
Neil: That’s a good question Steve – GCS is not a multi national in the way that IBM, Microsoft, Citibank are and we do not have the deep pockets or long history of these companies and so I needed to see how we could hope to manage a group efficiently and realised very quickly we needed ou own technology platform. There was nothing that we could buy “off the shelf” because there was no software that offered a management system capable of handling collections, credit reports, credit and risk management consulting, investigations in the areas of fraud, due diligence, KYC, KYE, Brand Protection / Intellectual Property Rights.
In 2006 we launched the Global Case Management System (GCMS) which is a browser based system enabling all GCS partners anywhere in the world to log onto the internet and receive, manage cases from a time perspective, maintain updates and have records of all files on our exclusive secure databases for all time. Clients can have access to their own files enabling them to monitor developments and generate reports as and when required. The system is truly unique and even today there is nothing like it available in the market, and every month we add valuable modifications that ensure the GCS partners are a long way ahead of our competitors in regards to the use of modern state of the art technology.
Steve: How did the 2008 ~ 2009 global economic meltdown impact the GCS Group?
Neil: Like most companies we were affected however whilst certain partners suffered adversely in their collection portfolios ( if the debtor is unemployed or in bankruptcy it’s bad for the collection industry as well because the old adage applies “ if they haven’t got it they can’t pay “), however what we have continued to see emerge in markets and economies that have really had substantial downturns due to the GFC, is that companies become more focused on managing and mitigating their risks, and so the demand for credit reports, due diligence and background investigations has grown far faster than what had been forecast. I would estimate our growth has slowed from our forecasted 20% + to around 15%, however we can see signs of improvement particularly in the demand for our risk management services.
Steve: How does a creditor or exporter go about taking advantage of the GCS worldwide collection system?
Neil: Steve we like to work with our clients with a view to eliminating or certainly reducing bad debts and the correct use of credit reports, investigations and the monitoring of customers on behalf of our clients helps to achieve this goal, however there will always be bad debts. Where we already work with exporters and multi nationals we have provcesses that have been worked out with the client for our management and staff to adopt.
GCS has Regional Directors on all continents and new clients can contact GCS Head Office in Melbourne Australia on [email protected] or via our web site www.gc-group.com an we will respond and discuss the details of their cases with our clients and offer advice on how to best deal with them. It is important for us (clients and GCS) to understand that we work in the global marketplace with varying languages, cultures, customs and laws and what works well in one country may have the opposite effect in another, and so the fact that GCS partners are experts in their knowledge of these factors in their respective countries means the clients are receiving the very best advice on how to deal with their problem accounts.
Once a case has been placed with GCS the client can have access to their cases, enabling them to monitor developments, and I believe this is an important factor in why we continue to see the growth we are experiencing.
Steve: How do you identify a potential GCS partner? What qualities or standards are required?
Neil: It’s a lot easier now fr us to determine if a company wil make a suitable partner for GCS, because of referrals from within the group, however as we are seeking to build on our presence as I mentioned in Latin America, we identify market leaders in the target countries, and build profiles of the companies, establishing how long they have been in business, financial strengths, reputation in the marketplace, any existing liaisons with or commitment to industry groups. Contact will be made if they pass the first stage and communications commenced so they understand who GCS is, what our goals and objectives are and we can determine if they share our vision.
If satisfied they meet our standards, the potential partner will be invited to make application and then undergoes a due diligence investigation, into the company and its directors and shareholders so as to ensure they meet the probity requirements that we and our clients look for. If approved, they are then required to sign a Service Agreement that sets out the expectations and commitments the partner agrees to; these are then monitored.
GCS has a detailed Code of Ethics monitored by our Ethics Committee, and any issues that may arise are managed by the Ethics Committee. In addition we also seek compliance by all partners with Quality Assurance work place processes and many partners have ISO or PPMC certifciation.
Steve: What kinds of claims are submitted to the GCS Group partners?
Neil: This can and does vary dependent on the partner’s business model, however almost all partners work across both consumer and commercial accounts GCS Head Office as well as zseveral Regional Directors have negotiated high volume case placements with Debt Buyers seeking to have an arrangement with GCS to handle their local and in particular their global collection cases
Steve: What has been the Group’s experience with international fraud issues?
Neil: A really good question Steve – in the past year alone we have seen fraud cases placed with GCS head office and partners increase from around twenty (I’m talking very large amounts) in 2008 to more than 150 this year to the end of September. We are currently working with authorities in regards to two fraudulent cashiers checks drawn on a reputable bank in the United States delivered to our office as part of a scam. The checks were for US$375,000 and US$450,000 and were allegedly payment by a debtor company in the United States to a creditor company in China.
Surprisingly this scam has had some very good results for the criminal behind it and several law firms and collection agencies have banked the funds into their trust accounts, paid the “creditor” because of repeated requests by the creditor claiming the funds are needed urgently and because they have banked a cahsiers check assumed the funds will clrear and have paid the money to the “creditor”. You can imagine the feelings when the cashiers check is returned as fraudulent.
Steve: What are the general commission rates charged?
Neil: The commission scales vary from 10% through to 50% dependent on a number of factors, These include age of debt, availability of supporting documentation, first or second placement, whether fraud was involved, amount of the debt, whether consumer or commercial. If necessary, we can and do offer investigation services which may target assets of the debtor/s and provide quotes to the clients as required.
Steve: Where do you see the GCS group over the next few years?
Neil: GCS has grown from its early origins as a family owned and operated company into a group with operational capabilities in almost ninety (90) countries, and as regional and more multi national companies join us as clients, this growth will continue. As such we need to become more focused on an infrastructure that enables us to capitalise on the expertise and knowledge of all our partners.
Whilst our global conferences and regional meetings each year allow for the exchange and adoption of new and exciting ideas these will not be enough and so GCS will continue to expand it’s management structure and Board so as to ensure that we remain leaders in the shared vision of our partners as experts in the provision of credit and risk management services within the global marketplace
I believe we shall achieve these goals and also see the group expand into more than 110 countries over the next three years.
Steve: Any last comments you would like to share?
Neil: We live in exciting times and whilst the global financial crisis has caused many companies around the world to suffer and even close, at the same time it offers opportunities to those of us who recognize them and who are prepared to be pro active in achieving their vision. I believe that world markets will continue to change dramatically and India and China will continue to become even more important in world affairs and as such our presence will have a strong impetus in both of these countries.
I would also like to thank you for the opportunity to share some of my thoughts with your readers Steve, congratulate you on what has become an excellent and important publication and wish you continued success.
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