Are you looking for steps to take if you’re chasing unpaid debts from customers or other businesses. There are strategies and measures you can put in place to recover the money and avoid it from happening again.
Prevent bad debts
Before doing business with customers, it’s necessary to do background checks on them.
In protecting your business by preventing bad debts from happening, you should:
- have simple, easy and clear payment options
- invoice customers fast
- only after customers pay their bill you should provide services or send out goods
- give discounts to those who pay on time or early
- create credit limits that customers can take out with your business.
A business may not be able to pay you if they’re in administration, liquidation, or deregistered.
To find out whether a company is in liquidation or deregistered, check on ASIC Registers.
Debt recovery process
You’re business’ profitability and cash flow can suffer when you have not been paid for goods and services you provide. A process for payment management and debt recovery should be established.
Include the following steps in your debt recovery process:
- set up regular payment reminders
- check when payments were due in contract terms
- to request payment, contact the customer in writing
- send a formal letter of demand
- keep records of all customer correspondence
- if the customer won’t pay, consider hiring a debt collector
- consider to take legal action
- to recover unpaid goods, do a property search on the Personal Property Security Register (PPSR).
Legal help if customer refuses to pay
Weigh up how much is owed, cost, and time it’ll take when you consider to pursue debts. Deliberate also whether the business is able to pay the debt.
Here are some organisations that offer legal help if your customer doesn’t return calls or refuses to pay.
Small Business Commissioner or Ombudsman
The government appointed the small business commissioners and ombudsmen to advocate the interests of small business. Advice on debt recovery and subsidised or low-cost dispute resolution are some of the services they provide.
Community legal centres
Community legal centres offer letter writing assistance, help with filling out Court forms, and evening advice clinics. You can search for a local community legal centre on the National Association of Community Legal Centre (NACLC).
Legal aid commissions
If you can’t afford to take on serious legal action, legal aid commissions can assist you. Check whether your case fits their guidelines. Free information sessions and initial legal advice, letter preparation, and assistance running a court case are some of the provided services.
Small claims tribunals & lower courts
Small claims tribunals and courts provide simple, quick, and legally-binding solutions without having to use a lawyer or deal with court procedures. General advice, assistance in forms completion, help arranging a summons, and informal dispute settlement before a magistrate are some of the services they provide.
County, district, & supreme courts
When the amount owed is too high for a small claims tribunal or lower court — county, district, and supreme courts will decide on disputes. If your case goes to one of these higher courts, hence, procedures are more formal and complicated, a lawyer should be considered.
Private legal advice
If you’re owed a large amount, using a lawyer can sometimes save you money. Although, there are cases where the Court doesn’t order the company at fault to pay your legal costs. Tailored legal advice and guidance, letters of demand, and court case management from beginning to end are some of the services a lawyer can provide.
Debt collection agencies
Using a debt collection agency can take the burden off you — but you need to work out if the debt collection fee is worth the cost.
Contacting and chasing up debtors, sending a letter of demand, preparing a summons, and running court action are some of the services these agencies provide.
You’ll still need to enforce the order even if an order or judgement is made for a business to pay a debt. This can be difficult and can add cost.
Instant cash loans in Australia
If you’re running a small business or a startup, you can get an instant cash loan. Instant cash loans for businesses in Australia are great for you if you:
- don’t own any assets for collateral
- don’t like to offer up security
- need the money quickly.
Cigno Business Solutions is accommodating to all applicants. It’s an easy process as it’s done online.
What you’ll need for application are some contact details, a 90-day bank statement for your business, and a registered ABN.
You’ll receive the funds within 2 hours once your application has been approved.
