by Matthew GillPayment Agreements
Establishing effective payment agreements lies at the heart of the debt collection process. Whether it’s arranging a swift $100 payment within a week or structuring a six month arrangement to settle a $50,000 debt, debt collection can be the best solution for you. If you find yourself grappling with a debtor who is struggling to meet their financial obligations on a consistent and timely basis, turning to debt collection might be the optimal solution for several compelling reasons.
Negotiation
First and foremost, the debt collection process brings a structured and organized approach to the often challenging task of recovering outstanding payments. Debt collectors are adept at evaluating the financial circumstances of debtors, understanding their capacity to pay, and tailoring payment plans that align with both the debtor’s financial capabilities and the creditor’s need for resolution. This meticulous assessment ensures that the proposed agreements are realistic and achievable, increasing the likelihood of a successful agreement.
Time Savers
In addition to handling negotiations in an ethical manner, debt collection emerges as a reliable strategy to minimize the time spent on completing a job. Debt collectors not only possess the resources such as direct debit software, ensuring timely payments, but they also shoulder the responsibility of managing follow-ups and reminders that would typically demand the attention of creditors. By entrusting these tasks to debt collection professionals, creditors can significantly reduce the time and effort involved in overseeing the entire payment process. This delegation allows creditors to focus on their core responsibilities, while the debt collection agency efficiently manages the intricacies of ensuring prompt and consistent payments, resulting in a more streamlined and time-effective resolution.
Avoid Needless Legal Action
As debt collectors are seasoned with experience, they can see many different paths to recover your money including court. Court can be the wrong answer when dealing with debtors in financial hardship. After a potentially costly and timely process, the courts may only order the debtor to pay in a payment agreement meaningful to their situation. Debt collection can bypass this process to get the same result for so much less.
Security
Debt collectors also bring a level of expertise to the table that is crucial for navigating the legal and regulatory landscape surrounding debt recovery. With a deep understanding of the relevant laws and regulations, debt collectors can ensure that the payment agreements are not only effective but also tick compliance laws and protect you if an agreement goes south.
If you are having issues with a debtor not making regular instalments, please contact us to see how we can best save you time in your situation.
by Henley RecoveriesAvoid Using Debt Collection
Many businesses avoid using debt collection as they have no use for it. By our existence as a company, you can tell many others cannot avoid needing recovery services. How do they do it?
It may seem counter-intuitive for us to advise how to avoid using our services. However, your efforts to mitigate unpaid accounts relieves time and stress on your end and makes collection efforts more straight forward if needed.
Here are simple things you can do to your current system to mitigate debts in the future.
Prepare
To avoid using debt collection, you need to prepare for the journey your invoice may take. Just like a family outing where you need to bring hats, water bottles, food, a book for kid 1, spare change of clothes for kid 2 as they always get messy, GPS tracker for kid 3 as they always run off…..
There are so many things which could happen to your invoice. As the example above also shows, the more work you have, the more that can happen and the more prepared you may need to be.
This can look like changing your workflow from calls to confirmation in writing. Maybe your next step is written and signed contracts. What about having a scheduled process to follow invoices along their perilous journey…
Process
I am a simple guy, my brain works 1-2-3, cause and effect, what is the next step. We believe to avoid debt collection, your accounts should be similar. For example:
- Due Reminder
- Follow-up #1 X days overdue
- Follow-up #2 X days overdue
- Final Warnings X days overdue
- Action
Having a set template for follow-ups keeps the stress of figuring out how to get your payment away. Doing this keeps the pressure on your debtor and creates the urgency for payment to be made. We find creating an ethical sense of urgency and importance to a debt is one of the best ways to recover debts.
A process cannot be the be-all and end-all as a debt is not always cut-and-dried. Sometimes some finesse is needed.
Propose
So there’s more to your debt than meets the eye. Does your debtor dispute the invoice? In financial hardship? Ceasing communication? Making unfair demands? This may hurt, but sometimes you must swallow up your pride to resolve the situation, whether the principle is correct.
Although it may be difficult, proposing alternative ways to resolve the matter can be the final steps you can take to avoid using debt collection. This step really depends on how willing you are to settle for a lower amount or agreement.
As every situation is different, we can recommend is that all proposals is put in writing. If it’s a settlement, put forward a without prejudice offer to save on costs with 7 days to accept – that kind of thing.
Then what?
Worst case scenario, you are left with us, the collectors.
Thankfully, we are used to the situation never being the same and we are ready to deal with what you have to throw at us. If you are unsure if you have done all you can to chase up an unpaid invoice, give us a call. We will be happy to discuss if you have done everything you can to avoid using debt collection and what we can do to assist.
by Henley RecoveriesBetter Accounts Equals Better Profit
A good business owner is always counting the cost of the work they do. For a builder, this is moving their margin when material costs rise (thanks COVID), for a mechanic, it is quoting for the time the job will likely take, for the accountant it is billing for the time spent working on the books. Despite this, time spent chasing up unpaid invoices isn’t always taken into account and it can really eat into your profit by taking you away from what you do best. Whilst it is a necessary evil, we will let you in on a little secret, better accounts equals better profit. Here is why:
Time Wasted
It is easy to get caught up in perfecting your trade and leaving accounts to themselves. Unfortunately, we live in a world where reminders and follow-ups are needed to get things done. Keeping on top of your invoices and payments, increasing your cash flow will also give you peace of mind, help you sleep at night. That being said, every call, text, email, letter and meeting is a time where you could be either working, earning greater profits, living life or anything else that is not wasting your time and effort.
Despite all the time and money saving you are achieving in your work, the time wasted here can make a large debt in your earnings.
Lack of Accountability
Forgetful clients are one thing, what about the evaders or fighters? Unfortunately they exist, many for very good reasons. Ensuring that they are aware that you are watching all your outstanding debt and incoming payments, makes them more likely to pay. The squeaky wheel gets the grease, so to speak. Even so, following these clients up can be one of the more time consuming processes. Long term outstanding accounts can be the difference between a successful and stressful year.
An example we hear all to often is a small $2k invoice which has had hours upon hours of discussions, meetings and attempts to contact without payment. Unfortunately in some of these cases, the client had no reason to pay immediately as there was no real pressure to do so. Having the correct forms, contracts and plans for these clients is imperative to ensure you are paid.
Some ways to combat this are having the paper work and repercussions set up, like what we assist with in our free protection audit (shameless plug). Being able to legally on-charge admin fees, collection fees, interest and potential legal fees will allow you to be able to hand the matter to debt collectors without having to worry about more time and money wasted.
Lack of Process
So you are a smaller business. Family run? Sole Trader? You may not have or have needed a real process to your accounts management. What steps do you take to ensure you are paid? How can you get better accounts and also get better profit? Some important steps are:
- Credit check prior to engagement
- Quoted works in writing
- Consistent follow-ups for a set period of time
- Firm dates and firm repercussions as a result of prior written agreements
Lack of Time
Especially if you are a smaller business or maybe a larger one with too many invoices to chase up, there is not enough time in the day to recover everything. Most businesses will hire a bookkeeper for a few days a week to cover this. Well done, what a great first step! If you are unsure of what you could do next, our next shameless plug is our Accounts Receivable Process.
Let us handle your accounts for you. Guaranteed, consistent follow-ups, advice and ease of moving those harder cases straight to collection. Have a look at our page here for more info on what this looks like for you and if we can fill the gap in your business. We hope that we can give you a better accounts process so you can have a better profit. Let us take on the stress of collecting your payments so you can continue doing what you do best. Making money.
by Henley RecoveriesCommon Reasons Why Court Won’t Work For You
Some of the most common reasons why court won’t work for you are simple, others are more complex. We want to make sure that if legal action is necessary to recover a debt that you are making a well-informed decision. To help you along, here are some of the reasons we advise against court with out clients.
Not the End of the Road
Let’s take an example from the Victorian Civil and Administrative Tribunal (VCAT). We have a client whose debtor has stated that we can take him to court and he is still not going to pay the $300 owed. VCAT and other tribunals will provide a judgement, but does not end with a physical enforcement of the result. If we take him through VCAT, we will then need to take the matter further to an enforcement hearing.
An enforcement hearing at magistrates court can be costly in terms of payment and time set aside. With solicitor involvement, the matter starts to blow up to the next level. Is it worth it for the $300?
Lack of Information
Some recoveries we do start with a first name, 10k owed and a disconnected phone number. We welcome a challenge but the courts may not look too kindly towards it. Court requires the respondent served the documents so they actually know that there is a case against them. We do skip tracing to find more details on the subject, but sometimes they can be incredibly hard to find. Melbourne Investigations explain the process of skip tracing well in their blog here.
Without a means to take person to court, it can be a fruitless process.
Costly
We hear some horror stories of clients spending 25k to recover 20k. Our court cases are paid upfront prior to moving forward to avoid this. When a case moves forward to the next step like the aforementioned enforcement hearing, things could get out of control. If we can see this being the case, we may advise against court.
Court costs can be recovered to an extent, but sometimes it is hard to count the cost.
Time
Preparing for court can be time consuming, even if you have someone like a collector or solicitor preparing the way for you. For some businesses, it’s not worth chasing $6,000 in court as they would lose this in time spent preparing for court. On the other end, some courts can be slow with 10 month wait times to get the case on the table. Maybe this is too long for you to wait for a solution.
Other Options
Debt collectors like ourselves are always looking for the best way to resolve a case. We try to avoid some of the issues court produces. We avoid costs, time extensions, hassle on your end and any nerves the word ‘court’ might produce. This could be by trying another avenue first like:
- In-House Escalation
- QBCC / DBDRV / Fair Trading
- Credit File Implications
- Statutory Demands
Whatever the situation, we hope we can give you the options forward to recover your debt. This can sometimes mean court is the only option, even if it’s not a good one. Are you confused on what avenues you have? Feel free to contact us on info@henleyrecoveriesgroup.com.au with your situation and our collection agents will be happy to advise on what we can do in your situation. Otherwise, you can submit a debt with us and we will let you know what options should present themselves as we move through collecting your case.