10 Hints On Avoiding Bad Debt
1. ESTABLISH THE IDENTITY OF YOUR CLIENT BEFORE YOU ACT
- Have you been appointed by the charterer to be the owner’s agent?
- Is your principal a well known ship manager, or the manager for a less well known shipowner?
- Who is your principal? Is it the owner, charterer or an intermediate broker?
Surveyors, consultants and architects:
- Be clear who has appointed you and who will be paying – owner, charterer, P&I Club, underwriter. Do not make assumptions and if in doubt clarify with the appointing party. Do not accept work without knowing who your client is and who will be paying.
2. GET FULL DETAILS OF YOUR CLIENT - NAME, ADDRESS, TELEPHONE, FAX, EMAIL, BANK ACCOUNT
- Double check via the internet if necessary.
3. CHECK OUT YOUR CLIENT WITH ITIC.
- ITIC is asked to collect debts from thousands of companies and often knows who is failing to pay.
4. IF YOU ACT FOR MORE THAN ONE CLIENT
- Make sure you get confirmation in writing who will pay for each service.
5. SHIP AGENTS - GET ADVANCE FUNDS
- If the principal fails to remit advance funds, or only remits part of the funds, check with ITIC as we may already be pursuing debts owed by the same company.
6. SHIP BROKERS - CHOOSE CAREFULLY WHO WILL PAY YOUR COMMISSION
- Unless the charterer is substantial (e.g. an oil major or large trading house) it is usually best to leave the responsibility for paying commission with the owner (who has the arrestable asset).
7. DO NOT CONTINUE TO ACT WHEN DEBTS ARE MOUNTING
- Especially if your client has already broken promises of payment.
8. ACTING FOR CHARTERERS? BE ESPECIALLY VIGILANT
- Only a few jurisdictions recognise charterers’ debts as a maritime lien against the ship and it is often difficult to trace charterers’ assets.
9. MAKE YOUR AGENCY STATUS CLEAR
- Sign off “as agent only” when ordering goods and services if you are a ship agent, broker or manager. Otherwise, you could be liable to pay the suppliers. For further information, see ITIC Circular 02/08.
10. DO NOT ACCEPT INVOICES FROM VENDORS IN YOUR NAME
- Invoices should be addressed to “Master/owners/charterers c/o agent” IF IN DOUBT, CHECK WITH ITIC. Our database is extensive.