Tips for managing unpaid debts

Tips for managing unpaid debts

Running a business can be hard work, and the last thing you want is to be following up unpaid debts. If you are a business that provides credit to your customers there are a few important things that you should always do.

Written terms and conditions

Having a written contract is critical. While verbal contracts are still enforceable, having clear and defined recorded terms of the agreement makes recovery action much easier.

We recommend a business has a credit account application form that sets out all your terms and conditions. It is also important that the party who is responsible for the debt is clearly identifiable and has signed your terms and conditions – especially when dealing with companies as opposed to individuals. If a company goes into liquidation, leaving your account unpaid and unsecured, you may have little chance of recovering your debt. Having a personal guarantee as a part of your terms and conditions could give you more chance of recovering your debt.

Another important consideration for business is to actively monitor the credit you are issuing. If someone is recording a very large debt on their account and never making payments it could be a warning sign that you may not get paid.

What to do if someone won’t pay their account

There are a broad range of options available to you to help recover any unpaid debts.

Act early – when someone won’t pay you a debt that you are owed you can apply to the Courts for a Judgement against them. This will provide you with a range of options to recover your money, from garnishing bank accounts or wages, to seizure of their personal property. Often the commencement of legal action will be enough to urge the debtor to pay, or to enter into a repayment plan with you. You can also enter into a Deed of Agreement to settle the debt and end any further legal action.

Seek legal advice – if you are considering legal action, you have probably been trying for some time to get your debtor to pay their account. Once you commence court action time limits do apply. We will assist in maximising your chances of recovery, while minimising your costs and delays.

Be organised – have all relevant statements, records, terms and conditions, emails or requests for payment available, in order. If we have all the information early, organised and comprehensible, we can prepare your case in the clearest way possible – without delays and additional costs to you.

What to do if I am being pursued but don’t owe the debt

Act early – if you are being pursued for a debt that you do not owe, time limits are strictly enforceable. It is best to get legal advice before the commencement of any legal action against you. If you receive a Letter of Demand or are served a Statement of Claim, seek legal advice immediately. The Court has the power to enter a default judgement against you and, if ignored, any number of enforcement actions may commence. To minimise costs and delay, be prepared and have ready all relevant documents in your possession.

Whether you are owed a debt or being pursued for one, we will work with you to get the best possible outcome. Talk to one of our team today to discuss your options.

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