After numerous attempts, if debt recovery seems doubtful, it’s time to call in a debt collection agency. They have the authority to recover the money you’re owed. It’s important to understand your customers do have legal rights when dealing with debt collectors. The ACCC sets rules as to what they can and can’t do so take a look at these before seeking a debt collector.
Another consideration is to give your customer a heads-up. This is often viewed as a warning and may prompt immediate payment. If not, a formal letter from a collection agency requesting payment will get results in most cases.
Debt collectors charge a flat fee or a percentage of the amount recovered, so do your maths whether to pursue or write off the debt.
You can also send a ‘letter of demand’ to demonstrate legal proceedings are on the cards if the debt is not paid. Remember to attach copies of supporting documentation. This can include the contract, invoice, late payment reminder letters and any other relevant correspondence.
Setting your expectations for payment can minimise potential late payments. Communicate your terms clearly and have a plan in place to manage late payments. It’s in everyone’s best interest that payments are made without too much effort. Constant reminders, as friendly as they may be, can turn off customers.
At the end of the day you have a business to run and a healthy cashflow is vital to your business longevity.