Collection Consultancy Australia

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

For your Terms and Conditions to be valid they need to be disclosed to a debtor prior to the start of the relationship. In some cases such as the PPSR, these Terms and Conditions need to be agreed to in writing.

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

It makes a lot more sense being A Secured Creditor when deciding to instigate winding-up orders on a delinquent debtor. As a Secured Creditor, a business is in the best position to ensure they get paid during the liquidation process.

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.