$700k AUD Collected Within 7 Days: How Did I Do It?

If you’re like me, you probably read that line and thought that doesn’t seem possible. But as crazy as it sounds, this is one of the results we were able to attain recently for one of our large international clients in the airport logistics industry.

As this is the largest collection in my career I wanted to take the time to share how I did it in the hope that I can help you protect yourself from a difficult situation of being owed a lot of money. This kind of cash is a serious amount of money obviously, but even being owed $5k to $10k for a lot of businesses can be the kind of cash flow that makes a difference.

I sincerely hope the tips found in this article can assist you in getting your money collected. If you have any questions regarding this article, debt recovery or anything else please don’t hesitate to contact us anytime!

Know Your Client

For businesses and individuals alike, it is important to really know who owes you the money. This may seem like an obvious statement, but it is an under-rated concept to keep in mind.

It is easy to get caught out in this current business climate. You would like to think that businesses and your prospective clients are doing the right thing, but I see all too often well-meaning clients of mine trusting that their clients have good intentions. Don’t get me wrong, I enjoy good trusting client relationships as much as the next, but if you are dealing with a good quality client they will have no issue with making it very clear what their entity details are.

Unfortunately, my client in this situation had got caught in a difficult bind whereby their debtor was quite a confusing entity. Being an international business made this all the more confusing. My team and I had to spend many hours hunting down who the exact debtor actually was. Turns out there was multiple! This was one of the main reasons that our client was not able to get this payment sorted prior to us being involved.

Be sure to clarify early on the specific entity details of your client/s – ABN/ACN, legal entity details, any relevant or associated licenses (QBCC if you are in construction for example) or industry accreditations, addresses, contact details, and more etc. Doing a little bit of this leg work prior to conducting the work or providing the goods/services goes a long way.

For more tips on this process read our blog on Looking for the Warning Signs Before a Client Becomes a Debtor!

Review Your Accounting Practices

Ensure that you have good follow up practices in place for your accounts receivables. Set yourself or your team a clear time frame for following up.  By doing so, you are minimizing the amount of overdue accounts that you are left with. That way, only accounts that need a push to recover get sent through to your debt recovery agents.

It is very easy and tempting to let things slide out of either good-faith or putting it in the too-hard basket. Although we certainly love to help our clients when it does get to this stage, we know that good accounts management can mean all the difference for our clients to not have to go through these situations.

Now I’m not saying that our client didn’t or doesn’t have good follow up accounts receivables policies and procedures in place. But the truth is that keeping on to these large outstanding debts and making sure that it is not left behind is vital.

Implement an Escalation Strategy

One of the most important steps you can take is to show clearly to your debtor that there are consequences to non-payment. I see regularly that many debtors simply do not fear or do not take seriously the debt. And to be honest there are times where I don’t blame them.

Legal action is costly and I regularly indicate to my clients that there is a difference between getting a judgement and getting the cash. So the key tip here is to try and create leverage that makes you irreplaceable – if you disappeared then this would cause some kind of hurt for your client. This is not about causing pain, it is about being smart and holding leverage.

In this day and age you must think practically and logically when it comes to accounts management and you can only be too careful. In this case we showed clearly what the implications of withholding payment would be. That’s something the debtor did not want to risk!

Be Persistent and Communicate Clearly

Ensure that your debtor knows that there is an issue and that this issue is not going to go away. This harks back to my earlier point about strong accounts receivables practices. Some of our clients have teams for this process and for some of our clients this falls on to the lap of the decision maker in the business.

It is very easy to let these problems slip into tomorrow’s problem. But as tempting as it is to think this is something I can do tomorrow, acting persistently and communicating clearly with your debtor on a regular basis is a very important part of getting these types of collections sorted.

Of course, we are always readily available to jump in and handle your outstanding invoices for you. Time is money. We can take on these difficult ones for you to leave you with time to run your business and do what makes you money in the first place!

Consider Implementing Clear and Precise Contracts

If you are a service-based business, or one that provides goods on credit accounts, then it is always a great idea to organize your contracts and agreement terms. Ensure that you have clauses to protect your business and that your agreement allows you to minimize the potential of non-payment. 

One very helpful and vital method that helped me get this matter collected so quickly was that the client had already done a bunch of the ground work by establishing very clear contractual terms. Of course, it doesn’t always mean that you are never going to be owed money. In my experience people often think that the contract doesn’t seem to apply to them!

Nonetheless, because these agreements were in place this made everything very clear and there was no wiggle room for the debtor to try and delay. In addition, by putting in clauses that allow for on-charging debt recovery fees and interest being accrued is another bonus for having your agreements and contracts water tight.

For more details and information about what terms of agreement you should implement read our article here!

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Written by Patrick Henley – Director and GM of Henley Recoveries Group

For more insights, tips and all things debt recovery, connect with Patrick on LinkedIn!

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If you have overdue invoices that need recovery, you can easily submit a debt for collection by our expert agents in only five minutes, using our online form. The best part? It’s totally FREE!