iva automation will aid tix compliance

31st Aug 2007

A software developer says Insolvency Practitioners (IPs) need to automate processes now to remain profitable and to be sure of getting IVAs approved, while meeting the new requirements announced by The Insolvency Exchange (TIX).

Steve Hull, chief executive of Sawfish Software, says that automation of the admin-intensive procedures involved in Individual Voluntary Arrangements (IVAs) is the only option if companies are to remain profitable. The changes in the practices relating to IVAs will significantly reduce the fee income for IPs. And this follows a recent slump in share prices as the number of IVAs being issued levelled out.

Steve said: "IPs have increased their cost base, many employing more administrators and marketing substantially in anticipation of a continued rise in the number of IVAs - a rise which has not happened as yet, and may not. TIX, which represents the majority of creditors, has announced that they are now dictating the terms, and these terms are less favourable to IPs.

"The new guidelines mean fee levels will be substantially reduced and quarterly leading to monthly payments will add extensive amounts of administration. Profitability will rely on increased productivity and this can only occur if procedures are automated. IPs must act quickly to automate as many of the involved procedures as possible. It is the only option."

TIX, the insolvency management platform which represents 70 per cent of creditors in the IVA market, has recently announced changes in accepted fee structures and payment practices which come into force on September 1, 2007. The changes include movement towards quarterly and monthly payment of dividends to creditors, and payment through the BACS system. This is likely to increase substantially the workload involved in administering IVAs. Additionally, IP fees will be reduced to no more than 15 per cent of realisations, with all ‘hidden’ expenses removed. Compliance with the new TIX directives will be essential to ensure quick approval of IVAs by creditors and thereby avoid delays for both the IP and the debtor.