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By Melanie Skinner and Johanna Miller.

 

With budgets tightening all round, you may be thinking about how how to collect a debt. The most effective way to collect outstanding debt (and most economical) will always depend on the size of the debt, the nature of the debt, the terms of the agreement, the capacity of the debtor to pay the debt, and the amount you are willing to spend on debt recovery. There is no ‘one size fits all’ approach. 

We can help you assess your circumstances and guide you effectively through the steps in the debt collection process to recover outstanding debt. We may even be able to assist you avoiding such debts accruing in the first place.

How To Prevent Debt and Avoid Unpaid Invoices

In a perfect world, we would all be paid on time. In reality, unfortunately this doesn’t always happen. The good news is there are steps you can take to ensure that you are paid, and paid on time. Below are some of those steps.

  • Document your agreement in writing;
  • Ensure the agreement has simple and clear terms – this will avoid interpretation issues and make the obligations of each party clear;
  • Detailed and precise invoices;
  • Require upfront payment or payment on delivery;
  • Shorten payment terms to ensure that debts do not drag out;
  • Keep track of when invoices are due and follow up overdue invoices in a timely manner; 
  • If you are in the business of supplying goods, consider including a term in your contract or agreement enabling you to register a security interest under the Personal Property Securities Act 2009 (Cth) to the value of any goods being provided; and
  • Consider any requests for payment plans or extensions with scrutiny.

How To Recover Money Owed

Prior to commencing legal proceedings, you should ensure that you have made a clear written demand for payment which is received by the debtor. It may also be more commercially sound to negotiate a payment plan or settle any dispute prior to commencing court proceedings. 

You should also consider whether your contract or agreement allows you to charge interest or costs of debt recovery

How Do I Take Legal Action For Non-payment?

As indicated above, there are various factors (such as the size of the debt and the financial position of the debtor) which will influence what debt recovery steps may be commercial and suitable for you. Every recovery is different. The most effective recoveries take these considerations into account rather than, for example, starting court proceedings where it is not appropriate. 

Where your own attempts to negotiate fail, engaging a solicitor to issue a demand or to contact the debtor on your behalf can make the debtor take the matter more seriously, and engage their own legal representative.

If you are left with no choice but to commence proceedings, you should be conscious of the costs involved with legal proceedings and the amount you can ultimately hope to recover. 

How O’Hearn Lawyers Can Help You

If you are looking for assistance with credit terms and debts, we can:

  1. Draft terms and conditions;
  2. Prepare loan agreements;
  3. Register appropriate security for any debts;
  4. Help you make an informed decision on what steps should be taken to recover the debt;
  5. Provide you with specific legal advice based on your individual circumstances;
  6. Issue a letter of demand for outstanding payment to the debtor;
  7. Negotiate a settlement or payment plan for the debt; and
  8. Commence debt collection legal action where necessary. 

O’Hearn Lawyers are able to provide all of these services electronically and seek to ensure that you use the most effective methods for debt recovery.

To speak with one of our commercial litigation and debt recovery lawyers, contact us today.

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The material included in this website is produced by O’Hearn Lawyers Pty Limited.  It is designed and intended for general information purposes only.  The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.  You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have. By Melanie Skinner & Johanna Miller. 

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