How to Approach Debt Collection If A Company Becomes Insolvent

Insolvency is the circumstance of being unable to pay the debts, by a company or person, on time. Insolvency becomes an issue when a creditor seeks to collect, and the debtor can’t pay what’s due.

Just because a company has or is about to enter insolvency, it does not mean the company has lost everything and they cannot pay you back.

eCollect is one of the best debt collection companies in Australia, and they have successfully recovered debts owed by insolvent companies.

The best technique for dealing with insolvent debtors is to have some other collection options available to you like personal guarantees and charges over assets.

eCollect can assist you in setting up trading arrangements that will improve your position when your customers are able to pay you.

If you haven’t done these things and have supplied goods or services to a customer who is unable to pay, here are some tips from the experts themselves:

Don’t Always Believe Customer’s Advice About Not Having Any Money

Most of the time, customers give this excuse, and it’s often not entirely correct. It is always a good idea to find out more about the customers’ financial position.

Speak with your customers’ staff members other than those you usually deal with and see if you can get some more information about the company’s financial position. If you have a good relationship with other suppliers to that customer, you can call them to see if they are getting the same treatment as you.

Get Help From The Experts

eCollect can access credit reports which sometimes helps to shed light on the company’s financial position. These reports aren’t provided within our usual no recovery at no charge arrangements. So, one of their account managers will tell you what is available and the cost to you.

It’s not always easy to get an accurate picture of a business’s financial position, so all you can do is gather the available intelligence and try to figure out what is going on.

However, if you are certain that the company does not have any money and is not going to obtain any money in the future, even eCollect is unlikely to be able to assist you. However, this situation is very unlikely and does not occur often.

There are often doubts about a company’s financial position and capacity to pay, but creditors will rarely know this as absolute truth.

Take Action Immediately

It’s essential to take action quickly. If a company is in financial trouble, they often have some funds available and generally deal with creditors based on whoever makes the loudest noise and then gives them the most attention. Starting litigation will often put the company in a situation where that litigation needs to be settled for the company to continue to operate. Creditors should get their claim in first and take advantage of this position if it’s available.

Often, it’s possible to negotiate a payment arrangement that includes increased security for payment of the debt, e.g. personal guarantees, charges over assets, etc. Companies that are short of funds and want to continue operation are often prepared to make these commitments.

If you have trading arrangements with a retention of title clause, consider putting this into effect, i.e. attending at the debtor’s premises and removing your goods. This also puts pressure on the client to come up with the payment.

In any debt recovery action, prompt and ongoing action is the key, and this is even more important where a debtor is in financial difficulties.

If you are ever struggling to recover debt from an insolvent company, you can contact eCollect. They are one of the best debt collection agencies in Australia and have the skill and experience required to deal with debtors. They opt for a friendly approach to maintain a relationship with the debtors so that their clients get paid before any other creditors.

The best part about hiring eCollect is that in most circumstances, they do not have an upfront fee, and they get paid only if they collect the debt for you. Also, they do not operate through a call centre, and account managers are appointed to each client to handle their debt. If you want your debt to be collected, get in touch with eCollect now.