Debt Collection. It’s a term business owners sometimes dread thinking about. It can seem complex, difficult and time consuming. But it doesn’t have to be. We’ve put together a list of tips to ensure you have good debt recovery strategies in place to recover the money you’ve worked hard for.
Who is your customer?
It’s important to check your credit applications to make sure they have been accurately completed. It’s also a good idea to verify the customer by completing a simple search, such as a free search of ASIC’s records. It’s important to understand if you’re dealing with an individual, company, usiness
etc so you know who your actual customer is. People often try to recover debts by suing a business name, when they should in fact be suing the individual running the business, who is only trading as that business name.
Confirm contracts in writing Many orders for work are completed over the phone. While this is still a legally enforceable contract, having the contract in writing means both parties are aware of the contract terms from the start. By sending a confirmation e-mail to the other party, you also have the ability to attach your standard terms and conditions and draw their attention to any specific exclusion clauses in relation to your liability etc. It’s best to avoid the contract becoming a war of words later on, with each party recalling different versions of what they thought was agreed.
Keep your evidence
It is so important to keep copies of all relevant documents and communications, such as signed contracts, job confirmation e-mails and customer authorities as well as order forms, signed and completed delivery dockets. Any e-mails or correspondence where the debtor admits the outstanding debt will be very valuable in the event you need to sue them for recovery of the debt. It’s up to you to present the best possible case, and you need evidence to support your case.
Debt collection processes
Every business should have some sort of debt recovery process in place. This should start with a follow up system for unpaid invoices. It’s a good idea to have reminder letters sent, with demand letters following if these are ignored. If you have sturdy debt recovery systems in place, it makes it much easier to address and resolve disputes quickly. Engage a solicitor You may eventually get to a point where your invoices, reminder letters and demand letters have been ignored. At this point, by engaging a solicitor, you will show your debtor that you’re serious.
This may assist to get them talking to you to resolve the dispute and make arrangements to pay. Where recovery of the debt needs to be taken through the courts or tribunals, engaging a solicitor to handle this will usually be more effective and efficient for your business.
Macrossan & Amiet would be happy to assist in your debt recovery process, and can ensure you have more time to concentrate on growing your business.
