For SMEs, the excellent flow of cash management is crucial for the survival and growth of companies. Ensuring that debtors pay their bills is time-consuming, but an essential part of management. The question comes, what is the debt collection process in Australia? It is the process that serves like the basis for recording arrears but can also vary from customer to customer. Without a valid credit check, you run a risk of reduction of working capital and restricting your payment options for the creditors. There are different ways to handle customers who have not cleared their invoices. Nevertheless, if you are collecting debt internally or outsourcing into the contract with the third-party debt collection agency, it is crucial to know the specific processes related to debt collection in Australia. Here is the debt collection process in Australia.

1. Notification of the debt to a debtor

Contacting a debtor becomes the first step of the debt collection process, which usually starts with a humble phone call or a letter. If you have attempted unsuccessfully to contact the debtor several times, you should use more formal procedures to speed up a collection of the debt. This includes sending a debtor collection letter, which is also referred to as a Letter of Demand.

The debt collection letter is the last step to inform a debtor that the account will be forwarded to the collection agency unless the account is cleared within specified days (typically 5 to 14 days), claims that could lead to court.

The debt collection guidelines allow phone contact with a debtor, but it must be done within particular parameters, like within reasonable contact. The phone contact may be used to reaffirm the status and amount of the debt, the specific penalties of the non-payment, a debtor’s payment options, and measures the agency may take if a debt is not paid.

2. Issue of the complaint

If the contact made by a debt collection agency to settle outstanding money fails, the agency will then initiate the Issue of Complaint on behalf of the business. The Issue of Complaint leads to the legal proceedings to collect debts by the judicial system. Even though the goal is always to avoid any legal action, the best way is to leave it with reputable debt collectors. This is because it employs experienced lawyers with experience in submitting detailed documents to the court, which are right and relevant.

3. Claims department

It is the legal recognition that the issue of complaint typically has been filed. A hard copy of the Service of Complaint is sent to a debtor and a creditor. Also, the debtor receives a Defense Notice where he can confirm why he disagrees with a claim or explains his defense. If a debtor does not respond to Service of Complaint, court decides against him and orders the repayment of the debt.

4. Terms of payment

The debtor may propose an installment payment agreement. The court may accept this in most cases. Nevertheless, if it is not possible to pay or if the debtor does not pay, a debt collection agency will look for various ways, including a seizure order, a bankruptcy report, and the winding-up petition.

About the Author
Local Recoveries Group is one of Australia’s leading debt collectors and recovery specialists. With extensive experience as an industry leader in debt recovery and slow payer management, they have built a reputation as one of the best debt collectors for enterprises of all sizes. Servicing businesses from all sectors, they provide specialised debt collection sydney, debt collectors Melbourne and slow payer management services to businesses across Australia, New Zealand and United States of America.