Good debt collection techniques start even before the debt is issued.
Some businesses can afford to avoid debt. They can apply a ‘no release until payment’ policy, enforcing strict cash-on-delivery. This isn’t always the case though. Many businesses run on the 90-day-payment rule. Unfortunately, once your 90 days stretch to 180 days, it’s far more difficult to recover, so before you sign that three-month line, check your client’s credit status and financial background. Run due diligence and keep clear records.
Have it all on paper
Once you’re satisfied that your client can pay, draft distinct legal documents (have your lawyers approve them). They should include all the details – delivery details, due dates, penalties, and interest rates. The client can confirm whether they’d like payment prompts and if so, you could send them weekly, reminding them when their debt is due. Be sure to get their permission for the pre-payment notifications, so they don’t feel harassed.
Both before and after the due date, keep track of how often you contacted them. This matters because ACCC (Australian Competition and Consumer Commission) and ASIC (Australian Securities and Investment Commission) stipulate you can only reach a debtor up to ten times a month. Be sure to just get in touch during work hours – that’s in the rules too. If you accidentally break these conditions, it could affect your ability to have your debts paid.
Keep it friendly
When the due date arrives, you can send a formal notice, just in case they forgot. Genuine cases will respond immediately, and you can begin to resolve the issue. If there’s no answer, wait a week or so, then send a second reminder. Your third reminder of overdue payment should be the final one before you try to raise them on the phone. This would be nearly a month after the due date, and it’s a good time to seek professional debt collectors in Sydney. They can open communication lines and – if needed – issue a formal demand for payment.
By the time you’ve been nudged into making a phone call, your debtor has probably ignored your emails, so you’re fairly agitated. Don’t make the call yourself. Let your debt collectors do it for you. They’ll have better results. Here at Boston Commercial Services, we specialise in initiating phone contact and cordially renegotiating late payments. We’ll keep records of every action we take on your behalf, and in the unlikely eventuality that things end up in court, our partnering law firm is on hand to help.
For assistance with debt collection, call Boston Commercial Services today.