20 Oct 3 Guidelines to Adhere to When Collecting Debt
Collecting the debts you’re owed can be a tricky process. Since the vast majority of your clients and suppliers are honest businesses, it’s often the case that bad debts are caused by an inability or unwillingness to pay. If you find yourself in that situation, collecting the money you’re owed is challenging, and it’s even harder if you’re unsure about your rights and obligations as a creditor.
Below, we’re going to cover our 3 main guidelines for debt collection and how they can help your business manage its risk of bad debts ethically.
1. Keep Detailed Records
The most important rule of debt collection is to maintain detailed records of the work you’re doing.
Unpaid invoices and other bad debts are an unfortunate reality of doing business. While you’re entitled to collect any money a debtor owes, this can often prove to be complex. The best defence you have against a non-paying debtor is to maintain written records of your contracts, the work you’re doing, invoices and any debt collection communications. This doesn’t need to be complex. Using email is enough to create a record that can be used as evidence when you need to collect a debt. As a guide, your records should include information such as:
If you’re unsure, speak to your debt collector about which records you should keep to simplify the collections process.
Struggling to Collect the Money You’re Owed?
Developing a relationship with a debt collection agency such as Dynamic Commercial Collections ensures you always have support for pursuing bad debts.
Our commercial debt collection and skip tracing services are available to all businesses and professionals. We take an ethical approach to our debt collection, that maintains your reputation and avoids impacting relationships with clients.
For more information you can contact us online to book an appointment with our team.
2. Know Your Rights as a Creditor
If a debtor owes you money but is unwilling or unable to pay, you are entitled to contact them and request payment. Any contact you have must be reasonable - that means you’re never allowed to threaten, harass or physically intimidate a debtor.
To avoid harassing a debtor, it’s recommended that you minimise your contact to reasonable amounts at reasonable times of the day:
While collecting payments is a pressing issue, it’s important not to harass your debtor. Stick to phone calls and emails wherever possible. If you’re able to sort out a payment plan by phone or email, it’s not necessary to visit the debtor in person.
3. Work with a Professional Debt Collector
After you’ve made a reasonable attempt to collect the money you’re owed it’s time to pass the job onto a debt collector. A debt collection agency can offer ethical advice and services to help you manage bad debts without damaging your client relationships. In Queensland, professional collectors are licensed and regulated by the Office of Fair Trading. That means they’re always up to date on the rights and obligations of all parties involved.
Working with a debt collection agency is an important part of developing your business. Building a strong working relationship gives you easy access to a solution for recovering money you’re owed. It also frees up your time and allows you to focus on running your business, rather than collecting debts. As a bonus, your collection agency can offer advice and help you take proactive steps to minimise the risk of being left holding bad debts.
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