Debt Collection

Is Your Business in Danger From the Legal Risks Involved in Debt Collection?

image3Chasing clients for unpaid bills can be extremely time-consuming, stressful and, if done incorrectly, legally risky. The easiest way to protect yourself and improve the likelihood of the debt being recovered is to always use a reputable debt collection agency. Should you opt to attempt to recover your own debts, you need to be aware that you comply with Australian laws relating to consumer rights and privacy and also those governing debt collection practices.

Contact laws

Debt collection activities must be carried out in accordance with a range of strict guidelines. You ought to refer to relevant legislation and codes of practice to obtain a full understanding of your obligations. Some of the requirements are :

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How to Collect Your Debts Through The Courts

If you have exhausted all other avenues trying to recover a debt that is owed to you or your business, you may want to explore the option of collecting the debt through the courts. Obviously, it will depend on the amount you are owed, but attempting to gain a judgement from a court of law can be a highly effective course of action.

Once you have obtained judgement, the amount awarded by the court must be paid by the debtor or else they will face serious legal consequences. Where final demands and solicitor’s letters might have failed to sway your debtor in the past, a judgement from a court gives you the legal power to enforce your claim.

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Improving Your Cash Flow with Debt Collection

Debt collection isn’t the most attractive task for business owners, but it’s necessary for keeping a healthy cash flow. Since the economic climate is so uncertain these days, anything that threatens the cash flow of your business needs to be dealt with swiftly and consistently, otherwise you’re at risk of defaulting on your own debts and bills. If you have a lot of outstanding debts, and your cash flow is struggling, then you need to call in those debts asap. If you’re not sure where to start, then read on for some tips.

Establish a Solid Debt Recovery Foundation

The first step to effectively collecting outstanding debts is to lay down a solid foundation for debt recovery and cash flow issues: a contract. The contract you make with your customers will specify how and when payment will be made to you. By signing it, the customer is agreeing to your Terms of Trade before you provide labour or goods to them. Have your solicitor help draw up a contract (or terms and conditions) for your business to ensure you have the right legal protection in case ever you have to start chasing up debts.

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Reigning in Your Outstanding Invoices

Every day, millions of small businesses don’t get paid on time. This is perhaps one of the biggest problems small businesses face, as being denied money that is rightfully owed seriously restricts cash flow. So what can be done about it? If you’re like most small business owners, you don’t necessarily enjoy chasing up delinquent debts from customers you would prefer to stay on good terms with. To take the stress out of recovering your invoices, and speed up payment time, the following are some tips to help you collect debt that is owed to you.

Make a contract

A contract is an amazing document that will significantly reduce the likelihood of any potential recovery problems down the track. A contract should have clear guidelines around the services you promise to perform as well as the payment terms you expect. Being as detailed in your contract as possible regarding your services and what you expect from the customer is the best way to protect your business from having future problems recovering invoices.

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Gathering Information for a Legal Claim

It is an unfortunate, but not uncommon, situation when credit arrangements are extended to customers but they fail to pay for products or services that you have provided. In this situation, there are a number of steps that can be taken to liaise with your debtor to negotiate payment of the outstanding monies. However, few businesses have the internal capacity, skill, experience and confidence to undertake the required tasks, and so the benefits of engaging the services of collection agencies can be immeasurable.

Efforts to seek payment:

While one of the most important things that a business offering credit can do is have explicit terms of trade in place and discuss these in detail with clients and customers seeking credit, there are a number of steps that can be taken if a customer fails to pay.

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