Baines & Ernst Financial Management has become the latest UK company to settle out-of-court with the Business Software Alliance (BSA) for the use of unlicensed Microsoft software.

The settlement has prompted calls for greater clarity in software licensing rules, because some organisations claim they have been breaching agreements despite sustained efforts to comply with licence terms. It has also highlighted the need for efficient asset management policies.

Under the settlement, the debt management firm will pay the BSA "a substantial five figure sum" in compensation for software used illegally. Charles Howson, chief executive of Baines & Ernst, said his company was reviewing its management systems following the settlement.

"The BSA's legal action has focused the company and its new management to put in place better controls and auditing processes to ensure this does not happen again," said Howson. The company has now set up a corporate software policy, with the BSA's help, and plans to conduct regular software audits.

Court action is the last resort, said Mike Newton, programme manager for the BSA in the UK. "But we hope that if companies hear about these cases and it prompts them to start looking seriously at their own software asset management, then some good will have come of it."

One IT director in local government said asset management was hindered by complex licensing terms. He said his organisation is diligent about licensing, but a recent audit of its software indicated a shortfall of #50,000. "The licensing terms are just too confusing," he said.