3 X Easy Steps to Collecting Outstanding Accounts
Essentially Debt Collection Made Easy (2024)
Three easy steps you can implement to save your business the expense, time and aggravation of having to continually chase up your outstanding accounts.
Essentially Debt Collection made Easy
The key points
- Inbuilt Consequences,
- Take Back Control,
- Get Paid On Time,
Inbuilt Consequences
Up To Date Terms and Conditions
Having Up To Date Terms and Conditions are the cornerstone of any credit management policy. They form the rules by which you extend credit to your clients. They can be the difference to the financial success of your business provided they incorporate the appropriate legislation and leverage required when it comes to chasing your delinquent or unpaid accounts.
Registering On The PPSR
Provided you have the appropriate legislation included in your Terms and Conditions, you have the legal right to Register a Security Interest against your clients business when they either complete your client documentation during the process of opening an account or alternatively agree to your Quotation or Work Approval Forms. This automatically makes you a secured creditor with the same protection as the banks.
Marking a Clients Credit File
Again provided you have the appropriate legislation included in your Terms and Conditions, you have the legal right to be able to mark a client’s credit file negating their ability to seek credit anywhere in Australia for 5 years. It adds enormous leverage when it comes to chasing your outstanding accounts.
Take Back Control
Having A Set of Rules
In order to maintain any sort of leverage when a business extends credit to their clients, there must be a set of rules. These rules are simply applied if there is an issue or dispute when one of their clients fail to meet their financial obligations. They are what is known as your Terms and Conditions.
Appropriate Legislation
It’s one thing to have a set of rules, but if there isn’t any consequence in the enforcement of those rules, very little changes. That’s why including the appropriate legislation into your Terms and Conditions is vitally important. These include the ability to on-charge collection costs and penalty interest, a Privacy Waiver allowing you to market a debtors credit file, and of course the appropriate PPSA Legislation allowing for a legally binding, valid PPSR.
Implementation of Terms and Conditions
Getting Paid On Time
Protection Against Preferential Payment Clawback
Since the introduction of the PPSA Legislation, you are either a Secured Creditor, or you are not. Unfortunately, if a business hasn’t registered on the PPSR and one of the businesses clients file for Liquidation, as an Unsecured Creditor the business leaves itself open to Preferential Payment Clawback.
Preferential Payment Clawback occurs when there is a shortfall between the liquidated assets of a business, and the amount of money owed to Secured Creditors. Essentially the liquidator now has the legal right to demand the return of any money paid to an Unsecured in the previous 6 months to the date of liquidation.
Being a Secured Creditor protects your business and avoids being subject to Preferential Payment Clawback. Remembering Preferential Payment Clawback is designed to ensure secured creditors get paid especially when a business files for liquidation.
Getting Paid On Time
Another clear advantage to having up to date Terms and Conditions is the flexibility and leverage it gives a business’s accounts staff when chasing unpaid or delinquent debtors.
Winding Up A Debtors Business
As a Secured Creditor, you have the legal right to appoint a receiver as you hold a security interest in the debtor’s company assets.
The only way to appoint a receiver as an unsecured creditor is to take the debtor to court and ask a judge for a Court Order. This is rarely done as most unsecured creditors are last on any list of creditors.