Debt Recovery

Common questions asked & answered regarding our debt collection processes.

What are the warning signals that a debtor isn’t going to pay and when do you know it’s time to send a debt across for collection?

There are many phrases and excuses debtors use – among the most common are:

  • “I will pay you next Thursday” (or provide a date in the near future). They will tell you this every time you contact them
  • “My industry has been badly effected by Corona Virus lockdowns” or “I am still waiting on government subsidies to arrive and will make a payment as soon as I get it.”
  • The old favourite still goes around – “the cheque is in the mail”
  • “Can I get your banking details again”
  • “I entered an incorrect account number and waiting for the funds to bounce back to me.”
  • “My online banking (or credit card) has been hacked and I’m waiting for the bank to fix it”
  • Their credit card payments are declined when processed.
  • The debt suddenly becomes disputed after hearing other previous excuses and refuses to pay any or all of the debt.
  • The debtor ignores all communication whether it be by phone, email or mail. You may receive return to sender mail.

You are hearing rumours from others in your industry that the debtor owes other people money. If you are a member of Creditor Watch you may be receiving Mercantile agency alerts, insolvency alerts or notices of court judgments with regards to this debtor.

At the commencement of engaging with the debtor, they may be reluctant to sign your Terms & Conditions or a Personal Guarantee. They may ask for payment on “their” terms which should be a red flag.

If you are receiving multiple excuses or delays in payment, you should advise your customer that you will be sending the account to Repaid! Collections. This may elicit a response and/or payment. It is important that you follow through with engaging us following advising your customer. If you don’t, this becomes an empty threat that they will continually ignore.

What information do I need to provide if I am sending a debt across for collection?

We provide a free phone consultation regarding the matter. Sometimes there may be a meeting. (according to size and complexity of debt). We discuss the history as to why the debt remains unpaid and discuss a strategy to collect the debt.

If you are a new client, we request all information be sent across to us electronically including any outstanding invoices, terms and conditions and any communication between the parties.

We require your bank account details as we prefer the debtor pays into our trust account. That way we can monitor expected payments. As we do banking every Tuesday and Friday we can then deduct our agreed commission and remit the balance of the funds to you.

Will my information be safe?

Our systems are backed up and information is stored in the cloud and also off site. A copy of the Certificate of Compliance with ISO/IEC 27001:2013 for the Provision of Secure Data Centre Facilities is available on request.

What is the usual debt collection process?

Our usual debt collection process consists of 3 letters that escalate in intensity and the final letter is a complimentary legal letter of demand. These are teamed with phone calls to resolve the matter. If the debt remains unpaid, we discuss a sensible strategy to escalate the matter. It may mean taking legal action with our associated law firms.

Can I continue with ongoing work for that debtor or will sending a debt to a collection agency ruin my ongoing relationship?

Yes, you can continue doing ongoing work. We are a third party to resolve an issue if required. Sometimes there has been a misunderstanding and we can assist in identifying this.

Your staff may not be educated in negotiation skills or may not like debt collection. They may be time poor or don’t fully understand the importance of cash flow for business.

Matters are handled professionally and assertively (not aggressively). Testimony to that is sometimes our debtors are so impressed with how the matter is handled they become clients.

Our trained staff are familiar with ACCC guidelines and our company is a member of the professional organisations Institute of Mercantile Agencies and Australian Institute of Credit Management.

Credit Solutions

Common questions asked & answered regarding our business credit solutions.

Why should we have Terms & Conditions?

Terms & Conditions of Trade or Sale specific to your business are very important. Among items you can include are:

  • A Default Clause – This is for when your customer does not pay you according to your agreed Terms. You should include being able to add all collection costs, interest (at a reasonable rate – generally your State penalty interest rate) and legal costs all on an indemnity basis.
  • Payment Terms – Depending on the type of business you have, you may require payment be made within 7, 14, 21 days or 30 days after end of month. There are many variations you can choose.
  • Ability to obtain information from, or to lodge details with a Credit Reporting Bureau (CRB). There are different laws and wording for commercial and consumer debts which your lawyer will be able to include.

It should be noted that your Terms & Conditions should be prepared by a lawyer that specialises in this aspect of Law. They should be aimed specifically at your business and not just copied off another business. For further information or an introduction to a specialist lawyer and quote, please contact us.

How can I minimise the risk of bad debts in the future?

Spending time and developing good processes to minimise risk as your business grows is a must for any business.

These processes begin at engagement with your new client. Have you checked their credit worthiness…Credit Reporting Bureaus or Agencies (CRBs) are a good start rather than checking with their supplied referees.

Ensuring you have up to date terms and conditions which are specific to your business practises are crucial. They must also include a default clause so that costs of debt collection can be added to the debt. This will give you an edge over other suppliers for payment. E.g., your business has consequences for not paying on time.

Do you have a dedicated Accounts Receivable Manager or team skilled in debt collection who understands the importance of this task? Is there a time frame that they follow? Are they familiar with the process to escalate a debt?

Do you use a credit reporting bureau to monitor “at risk” clients? We can provide credit reports and offer this service to you for a small fee (starting at $30 plus GST)

Will my information be safe?

Our systems are backed up and information is stored in the cloud and also off site. A copy of the Certificate of Compliance with ISO/IEC 27001:2013 for the Provision of Secure Data Centre Facilities is available on request.