To run a business successfully, it is essential to have a consistent cash flow. However, if your clients aren’t making their payments on time, this can harm your cash flow, which can ultimately have severe consequences for your business. There are many ways to tackle customers who do not respond to your invoices. The two most common ways to settle this debt is to deal with the debt internally or by outsourcing it to a third-party debt collection agency that will take care of it for you.
No matter which option you decide, you should be aware of the corporate debt collection guidelines in Australia.
The Practical Debt Collection Process
Debt collection starts with contacting the debtor, and you can either call or send a letter. The idea here is to open a dialogue the debtor to pay the debt. Engaging with the debtor during this process is vital. You need to listen to why the debtor is unable to pay and then adjust your strategy accordingly.
If the debtor does not respond to you or does respond but won’t come to the party with payment – you can then move forward formally by sending out a debt collection letter, also known as ‘Letter of Demand’. This puts the debtor on notice that you are considering moving to legal proceedings.
The above steps can be done by you as the business owner provided you have the time, patience and understanding of the process.
But if you get to the point where legal proceedings are being considered, you may want to hire a professional debt collection agency such as eCollect to do the job.
To issue legal proceedings, a properly qualified practitioner must draft the document and file it with the court. The court then issues the claim, and your legal practitioner will send A hard copy document to the debtor.
Once the case moves its way into the court system, the debtor may defend the claim or may now come back and have a serious discussion as to how they would like to pay the debt. One of the advantages of legal proceedings is that raises the stakes for the debtor and often prompts a change in attitude about acknowledging and paying the debt.
What Are Australia’s Debt Collection Guidelines?
Australia’s debt collection guidelines are the rules that a debt collection agency and a creditor should abide by. These debt collection guidelines are based on relevant sections of the ASIC Act, Australian Consumer Law, the National credit code, and other Australian laws regarding debt collection.
This guideline is all about how a debt collection agency or a business should handle outstanding invoices. They cover the ways to communicate with a debtor so that the behaviour is not unfair.
Key Features of the Debt Collection Guidelines for Creditors
As a creditor, or debt collection agency, you have a few responsibilities to fulfil when dealing with debtors. You must ensure that all communication is professional, and you are not harassing the debtor; if you are found doing so, yourself or the agency may be held accountable.
Communication with the debtor should only be done during professional hours, and you must not contact them more than three times per week and ten times per month. If the debtor is not comfortable communicating a certain way, you must respect their request.
Debt collection is not as easy as business owners may think. If you mess up with even one guideline, you can get into trouble or, at least, have to spend a large amount of time responding to investigations by government departments. The best thing for you to do as a business, instead of chasing your own debts, is to hire a reliable debt collection agency, such as eCollect, to take care of your debts.
In Australia, eCollect is one of the most trusted debt collection agencies. The best part about working with eCollect is that they work on commission which means if they fail to collect your debt, you won’t have to pay them.
If you are having issues with your debt collection process, do not hesitate to contact them or fill out the debt terminator form available on their website.