Debt Recovery Can Recoup the Money Owed to Your Business
These debtors usually have a time period to pay the debt off but as a business owner
you'll know all too well that this is not always the case, and many debtors will refuse to pay their bill despite numerous reminders. In order to recover the money that is owed to you there are some options available to you.If a debtor seems to have disregarded all of your previous attempts to receive payment it may be wise to send a letter of demand to them. You will need the help of a lawyer to do this as a defective letter (one which is not written properly) can result in harassment complaints against you. The letter of demand reminds the debtor of the contract originally entered into and the amount which is owed. What makes this different from a reminder, is that a time period will be given for the client to pay the monies owed in full or reach a mutually agreed upon payment arrangement with you. If they fail to do so further legal action will be taken.
When the debtor is a company and a letter of demand has failed to recover your debt, you can, with the assistance of a lawyer, issue a statutory demand if the debt exceeds $2,000. This, like a letter of demand, allows you to exercise your right to demand payment without the need to commence legal proceedings. The debtor will have 21 days to either meet the conditions of the demand or reach a compromise with your business to pay back the debt. If your debtor once again ignores you, the company can be presumed to be insolvent and your business can make an application to the court to have the company wound up.
Further legal action can be taken if neither the letter of demand or statutory demand have been able to recover your money, or at least enter into a negotiation with the debtor. The amount of the outstanding sum due to you and your business will determine how you go about the legal proceedings.
There are 2 divisions in the local court. The Small Claims Division deals with claims that are under $10,000, while The General Division deals with claims over $10,000 but less than $60,000.
Debts under $750,000 are dealt with by The District Court of NSW.
Any claims over $750,000 are heard in The Supreme Court of NSW.
Some controls which you may put in place over accounts receivable in order to minimise the need for the debt recovery process include:
Establish collection and credit policies in writing.
Complete credit checks on all prospective clients applying for credit.
Frequently age your accounts, and get an independent examination of the report.
Go over the credit transactions and write-off bad debts.
Put in place a thorough policy for the following-up of accounts that are overdue.
Debt Recovery Can Recoup the Money Owed to Your Business
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