Effective debt recovery

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Published by Preston Law on 17/04/2018

Debt collection is not something any business in Cairns wants to have to engage in, but it is an inevitable part of business that from time to time your customers either won’t pay your invoices on time or will simply refuse to.Debt collection is quite often seen as “throwing good money after bad” and many businesses are reluctant to spend more money seeking to recover their aged receivable invoices and simply write the accounts off. 

Our team of debt collection lawyers in Cairns have extensive legal experience in assisting our clients to both avoid debt collection issues to begin with (through the preparation of appropriate credit terms and PPSR security arrangements) and to recover debts in circumstances where a debtor fails or refuses to pay. 

In this article we seek to share some key things we have learned through our Cairns debt collection lawyers experience to help you both avoid debt collections in the first instance and/or to recover debts in circumstances where a customer fails or refuses to pay. 

Avoiding debt collection issues

There is no doubt that the best thing any business can do in seeking to avoid costly and prolonged debt collection disputes is to have effective legal agreements in place with their customers (usually in the form of terms of credit or terms of trade).Appropriately prepared terms of credit will ordinarily give a business the “upper hand” in circumstances where it is ultimately necessary for them to engage in debt collection.Moreover, where appropriate mechanisms are built into terms of trade (such as the right to enter a customer into Veda, the grant of a security interest under the Personal Property and Securities Act 2009 (Cth), and/or security over the assets of a customer to secure the payment of the debt), a business will find itself having exceptional leverage over its customers and will be in a better position to force an unwilling customer to pay a debt they may otherwise dispute.The easiest way to do this is with the legal advice and assistance of an experienced Cairns Lawyer.

Collecting a debt when a customer refuses to pay

If you don’t have the benefit of terms of trade or security, it is, in our experience, important to act swiftly.There is little doubt that, in debt collection particularly, “a stitch in time saves nine”.

In our experience, a customer who is not paying your debt is also likely not paying other suppliers debts at the same time.Accordingly, you may find yourself in a situation where the customer is choosing to pay its other creditors in lieu of paying you.Our experience shows that “the squeaky wheel gets the oil” and we often encourage a strong early intervention approach which, at a minimum, is comprised of:

  • a letter of demand on our letterhead;
  • the provision of a “copy claim” and statement of claim to be filed in a Court of competent jurisdiction;
  • the foreshadowing of the issue of a statutory demand and/or winding up proceedings;
  • the issue of a statutory demand; and
  • the commencement of a winding up application. 

Our team of Cairns debt collection lawyers have encountered countless incidences over the years where our clients have been paid by a customer in circumstances where the customer’s other creditors have not, only to see the customer go into liquidation or receivership sometime after our recovery resulting in its remaining creditors having no rights of recourse to recover their debts. 

If you are encountering debt collection problems please contact our team of Cairns debt collection lawyers to discuss your options on a no obligation basis.Contact our experienced Lawyers at Preston Law today on 4052 0700

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