Debt Recovery  – Unpaid Invoices?  Debt Ledger out of control?

Unpaid invoices destroy cash flow and can be commercially destructive for all businesses. 

Generally, unpaid invoices (and debts that need to be written off) arise as a result of:

• Insufficient customer details – A customer intake and detailed information management system (including a good customer intake process) is essential to maintain high recovery rates.  A good customer information management system captures all of the customers details including information that will become information you need, if your customer does not pay.   If you don’t have accurate information or sufficient information to sue customers in the event of non-payment, then it will be most likely you will need to write off a lot of debts as bad debts, as without evidence of the transaction and information to sue the debtor, the debt will be more expensive to recovery and generally will not be recoverable.
• No signed trading terms/credit terms – failing to have your customer sign terms that clearly set out the terms of the arrangement, or having legally ineffective trading terms/credit terms (such as non-binding guarantees or security terms for credit extended). It is essential that your terms / credit terms are effective and legally binding to protect you if you are not paid and need to recover your unpaid invoices.   It is essential to ensure you obtain sufficient signed terms, with sufficient security for any credit loaned, and that you have a well drafted, and binding guarantee on funds owed to your business, by the principal debtor.   Legally binding terms/credit terms and guarantee, with relevant security taken for debts, will ensure you get paid if the principal debtor becomes insolvent.  The signed terms will also ensure recovery of debts can be quicker, cheaper and occur with less stress.
• No proof of quality of work done – if a dispute arises about workmanship or quality, then if there is no proof to say otherwise it might be difficult to recover an unpaid invoice.
• Late / poor invoicing systems – If invoicing occurs too late, then it is possible your customer may already have gone insolvent, or there may be disputes about the quality of work that will arise, and given the lapse of time, and facts of the case, it may be difficult to prove against any allegations as to fitness, quality or otherwise. The best time to invoice and collect payment is when the work is done (upon completion) particularly with one off situations and for tradespersons. 
• No debtor control/slow follow up on outstanding invoices. Don’t let people obtain your work for free.  Ensure you have a debt recovery system in your business to follow up payment. 
• Lack of communication leading to or causing disputes. Most of all, disputes and unpaid invoices arise because of communication breakdowns. Usually creditors have lost the desire to speak with a debtor due to a communication breakdown.

If you are experiencing slow collection rates, please review the above areas of your business or ask how we can assist and review these for you to assist you in recovery of your unpaid invoices.

Once the above areas are resolved, sometimes inevitably you will have unpaid debts.  What happens when debts are unpaid and you want to sue the debtor for payment?

Depending on the size of the debt, usually a letter of demand will be issued followed by issuing a court proceeding.  The costs of this will depend on the volume of debts to be recovered (if more than one) and also the court that you will be suing the debtor (usually the court close to the debtor’s place of residence).

If you have unpaid invoices, then please get in touch, so we can help you recover it fast and effectively, with less stress and fuss.

Are court proceedings necessary to recover an unpaid debt?

There are several ways to pursue an unpaid debt. Choosing the most appropriate method in your circumstances is important to obtain effective results and minimise costs. Issuing court proceedings incurs legal and court filing fees. To provide an informed opinion, we will consider:

• the amount due and whether the likelihood of obtaining and enforcing judgment warrants the expense involved in pursuing legal action;
• the appropriate processes and court division;
• identifying the correct legal entity of the debtor;
• whether all the facts are properly set out in the statement of claim; and
• if relevant supporting evidence is available.

Generally, the size and nature of the debt determines the division and court in which to file a claim and the processes relevant in conducting the proceedings.

Retaining a lawyer experienced in debt recovery is advisable to minimize costly mistakes by ensuring the most effective course of action is pursued.

Recovering a debt does not always mean you have to start legal proceedings.

While we are experienced commercial litigators and able to commence proceedings for recovery on your behalf, we are often able to advise clients on a range of alternative strategies that are faster and less expensive than formal litigation.

We can contact the individual or organisation debtor to open lines of communication with a view to getting the debt paid. We can conduct negotiations on your behalf, mediate a settlement and prepare formal deeds of settlement. 

Want to send a Letter of Demand?

A well-drafted letter of demand is often the first step in persuading a slow debtor to pay up. The letter of demand should clearly state the amount owed, what it relates to, and how or where money should be paid. The letter should threaten legal action (including a claim for the recovery of legal fees) if the debt is not paid by a specified date.

I have a judgment already and need them to pay…

Do you already have judgment and need them to pay?  We also assist with enforcement action including the issue of Writs (seizure of goods to sell to repay debt), Examination Summons (requiring a debtor to attend court to show how they will satisfy a Judgement), and Garnishee Orders (court orders for a third party to pay money to a creditor instead of a debtor).

Protecting your brand… Corporate Debt Recovery – special prices / fixed / capped fees

Are you wanting to protect your brand with ethical debt recovery?  The old methods of hiring a debt collection ‘bully’ are well and truly over.  Well branded organisations are compelled to adopt ethical debt recovery processes that are not only compliant but avoid potentially harmful media attention.

We have experience working with government, large financial institutions, public companies  and small business, and we are able to assist with large volume ledger recoveries that are geared towards effective solutions, that are ethical preserving brand and reputation. If you have 10 or more debt matters on money / breach of contract claims from $10,000 upwards, please contact us to discuss volume recovery. Interstate enquiries are welcome.

Debt portfolio out of control?

Is your debt portfolio out of control?  We can meet and work with you to understand your sales process and bad debt portfolio and how our legal services can be added on to your present recoveries routine. We can discuss our rates and how we can provide a budgeted formula with no surprises, in the event a debtor becomes litigious. Depending on your business model, this might include volume discounts, fixed fees or a monthly fee plan.

We provide recoveries (secured and unsecured) legal services for the following:

• Lending facilities and financial agreements
• Loan transactions
• Chattel leases
• Novated and ex-novated leases
• Commercial leasing
• Contractual debt recovery
• Advice and strategic planning for recoveries processes in general, and compliance
• Dispute resolution methods

Unpaid debts can put a serious strain on your business cashflow. From an initial telephone call through to preparing a letter of demand and, if needed, conducting litigation, and enforcing a judgment, our experienced commercial lawyers will advise and guide you through each stage of the debt recovery process.

Missing Debtors?  What if your debtor is missing?  Skip trace/Agent Visit

Sometimes a debtor will go missing, or does not respond to letters and communications.  If your debtor is missing, then we can carry out a skip trace to locate them.  We can send an agent to locate them.

Does your debtor have assets? Asset searches

Sometimes it will not be commercial to pursue a debtor. However, if you suspect your debtor may have assets that are undisclosed, then we can assist you to find out and if so, whether it is commercial to pursue them in the courts for recovery of your unpaid invoices.

Customer Verification/Litigation Searches

Sometimes, you may just need to check if a potential customer is currently being sued or is insolvent.  We can help you with customer verification/litigation searches to understand if your customer might be currently before the Courts and to understand if legal proceedings are commercially viable to pursue.

Database Searches/Pre-Litigation Searches

Sometimes you need to know who you are dealing with.  With access to all leading databases, we can in most cases, assist to carry out searches on customers/possible debtors/defendants to litigation, including Package and Title searches, Property Enquiries, ASIC searches, PPSR Searches, Bankruptcy Browse/Extracts, Asset Searches, Settle IT, Court Sync and AFSA including ASIC personal name searches (to understand involvement in companies), to see if your customer is under bankruptcy arrangements or owns property.  Depending on your circumstances, it is crucial to success to ensure due diligence is carried out prior to debt recovery, suing or engaging in litigation.

Second Opinion on Litigation

If you are after a second opinion as to how to recover debt or for a defended/disputed debt (Commercial Litigation), then we are happy to assist.

Needing to attend to recovery of secured and unsecured recoveries..

We attend to recoveries (secured and unsecured) legal services in the following:

• Lending facilities and financial agreements
• Loan transactions
• Chattel leases
• Novated and Ex-novated leases
• Commercial leasing
• Contractual debt recovery
• Advice and strategic planning for recoveries processes in general and compliance

Considering a debt collection agency? Read this:

Are you owed money that you would like to collect?   If so, you can take legal action to recover it. Legal collection is cheaper than using a debt collection agency in some situations and your legal costs are recoverable on court scale.*  Lawyers are prohibited from charging a commission when recovering debts pursuant to s. 183 of the Legal Profession Uniform Law.

Generally, the process would be a letter of demand is issued, then if no payment is made court proceedings are initiated, and if no payment is made or a defence is not filed, judgment is entered. If a defence is filed then the matter becomes defended and usual rules of civil procedure will apply, depending on the Court involved.

If judgment is entered, a number of procedures are available to enforce it. The process will depend upon the circumstances of the case.

We can assist you with Writs (seizure of goods to sell in order to repay the debt), Examination Summons (requiring the debtor to attend Court to display how they will satisfy the Judgement), and Garnishees Orders (whereby the Court can order a third party to pay money to a creditor instead of a debtor).

*debt collection agencies generally charge their commission on recovery.  A commission is usually anywhere between 10 – 30% of the debt, payable on recovery. If legal proceedings are necessary, then the debt collection agency will need to engage a lawyer for debt collection proceedings in Court.  Depending on the debt collection agency, the legal costs will be paid by you on top of the commission payable by you.  Lawyers must not act for debt collection agencies without disclosure of their relationship with the client.  Costs charged by debt collection agencies and lawyers and debt collection conduct are regulated inter alia by the Legal Profession Uniform Rules, Legal Profession Conduct Rules and ACCC Debt Collection Guidelines.

If you need help with debt recovery s [email protected] or call 03 9607 8279 for a no-obligation discussion and for expert advice.