Debt Recovery: What You Need to Know

Running a small business is no easy thing, as you are no doubt aware and one important aspect of managing a business is dealing with unpaid invoices, or debts as they are commonly known. If, for example, an organisation is owed money, they might not be able to settle their bills, so a debt can be passed down the line; what do you do if a customer is unable/unwilling to settle an invoice?

In this short article, we present information about debt recovery in a business setting, which can cause serious issues for a small business.

No hidden fees

When dealing with a debt collection agency, it is important to be clear about the agency’s pricing structure. A leading Australian debt recovery agency, for example, would not charge clients a fee for joining, nor would they charge for uncollected debts, rather they would charge a small commission on recovered funds. Look for an agency that has a recovery rate that is higher than 90%, which demonstrates a high level of efficiency.

Follow the law

When chasing commercial debts, it is paramount that you do not operate outside the law and by using a leading debt collection company. If such an agency operated outside of Australian law, this would reflect on you badly and your reputation would be damaged. A good debt collection agency would have in-house legal professionals to guide processes and they would take the utmost care to ensure they operate within legal guidelines. Click here to learn more about business growth with asset-based loans.

Various stages of debt recovery

As you would expect, there are various stages of debt collection, which would begin with registered letters and could go as far as filing a lawsuit. If the truth be known, a large percentage of commercial debt is settled before it reaches court proceedings, as no one wants to be involved in court cases. Let’s look at a common example; a business is owed several unpaid invoices and in order to protect their cash flow state, the general manager instructs the accounting department to ‘hold off’ on settling some accounts. They might do this until the matter is handed over to a reputable debt collector and as soon as they receive official documentation, they settle the invoice. This is the way that business works and in some cases, a few days can make all the difference.

Various types of commercial debt

There are numerous types of commercial debt, which are as follows:

• Consumer debt – When a consumer refuses to settle an invoice.

• Supplier debt – When a supplier has outstanding accounts.

• Bank debt – When a business defaults on a commercial debt.

• Contractual issues – It is sometimes the case when one party of a contract refuses to settle their account, which can lead to litigation.

• Taxation debt – In the event a company cannot settle their tax bill, there are serious consequences that could lead to bankruptcy.

If your business is suffering due to unpaid bills, you should make contact with a leading Australian debt recovery service and let the professionals handle the delicate situation.