Whilst the world deals with the COVID-19 pandemic and the financial flow on effects, it will be of particular importance to understand a debtors financial position and
The key to any successful recovery, especially one via arrangement is to work with the debtor, not against them. You need to let them know you working towards a mutually beneficial solution to resolve the debt.
Always start the negotiations with the expectation the debtor will pay in full. You never know if you do not ask, so always start the negotiations by making it clear to the debtor that you want payment in full. Then work down from there. The next desirable outcome is a reduced lump sum, which is often better than accepting a long, drawn out instalment arrangement.
Assuming you have already been down this track, consider a payment arrangement. A payment arrangement is a privilege and has many benefits for both parties. Making an arrangement will result in cessation of interest, the preservation of credit rating and the avoidance of court action.
Locking in the arrangements.
Once you have agreed on terms, give the debtor very clear instructions on when to pay, how much is expected and how to pay.
Put the instructions in writing to avoid misunderstandings. Make sure that the debtor agrees with the written document by confirming and signing.
Ensure, above all, that the instalment amount agreed upon is viable in line with the debtors financial position. Many arrangements haven fallen through simply because the instalment amount was set beyond the debtors reach. Consider using a financial questionnaire to assist in determining what is an acceptable amount.
Set firm deadlines for receiving the payment and clearly establish consequences.
When the arrangements break down.
If you find yourself getting excuses from the debtor, from losing their job or bounced payments, be flexible and empathetic. If the debtor calls in advance to inform you to change arrangements, put your guard down. However, if there is no notice from the debtor and the payment is very late, inform the debtor that the arrangement was not followed and advise them payment in full is now due. Start negotiations again from there. If the default once, they will default again, so be firm with them.
Review your arrangements regularly, the quicker you act on a default in payment, the quicker you can get it back on track, to the benefit of all parties involved.
Outsource to a Collection Agency.
If you don’t have systems in place to handle instalment recoveries, give them to an expert who can deal with them. Debt Recoveries Australia conducts credit collections and accounts receivables for corporations, businesses and sole traders. We collaborate with ADC Legal- Litigation Lawyers to provide a “one stop shop” for debt recovery and legal services. If you want to seek help or get free advice on how to recover debt from clients, please send an email to email@example.com or call us on 1300 799 511. For more information, please visit www.debtrecoveries.com.au
Call Us: +61 1300 799 820