An extraordinary number of businesses in Australia struggle to get their debtors to pay on time. There are a number of good reasons for this. If you’re in the B2C (business to customer) space, you might be familiar with the struggle to manage your invoices and keep track of which client has paid what and when. If you’re in the B2B (business to business) space, you’ve probably been on the other end of some crafty manoeuvring, empty promises, or more straightforward incompetence when it comes to being paid.

What you might not realise is that having a debt owing can be an incredible boon in times of financial stress and can greatly increase your cashflow if handled correctly. But while turning an outstanding debt into a benefit can be a real challenge for the average business owner, to a debt collections service it can be a simple task.  

When should I consider contacting a debt collection firm? 

If one of the following applies to you, you should think about talking to a debt collection firm:

1. Your customer has exceeded their credit terms 
2. You have attempted contact and had no response/payment for 90 days OR 
3. You have been in contact three or more times with no payment OR 
4. If your customer has indicated a refusal to pay your account 

If any number of the above apply to you, then you’re in luck. Any debt collections service would generally be happy to take the stress of the debt collection process off your hands. In fact, the sooner you hand them over, the better the outcome tends to be.

How do I find out what services I’ll need? 

Many debt collection firms have a free consultation service. Simply call or email your preferred firm to arrange a free consultation and they will be able to determine what specific services will suit your individual needs. If a firm doesn’t provide a free consultation, it’s worthwhile shopping around until you find one. It may suggest that their business is too small to operate effectively.

What information will I need to provide? 

Although it would depend on the particular circumstances, a debt collection firm would usually require: 

• Any written agreements between you and the debtor
• Copies of relevant statements, invoices or dishonour cheques 
• A Director’s guarantee

However, if at any time you are unsure about what information you should provide, you should get in touch with your collector or collections firm to clarify. The point is to hand off the stress of collections to someone else. 

What if I don’t know where my debtor is? 

I cannot speak for other firms, but all that should be needed is the last known address and contact details. From there firms will locate the debtor and charge you only when they are found on a previously agreed fee. 

What happens if the debt is not collectable? 

This is especially the case for debts that have been outstanding for a long time – the customer may have gone into administration or liquidation, or may have had action taken by another creditor that impedes their ability to pay you. If you haven’t acted quickly enough, these debts may prove uncollectable. Again, I cannot speak for other firms, but when a debt is considered uncollectable they should inform you immediately and close the file and collect no fee.