By 
Contrary to popular belief, the collection of debt does not have to be painful or costly. Keeping comprehensive debt collection records, adhering to appropriate contact practices, and respecting the debtor’s privacy can make the debt collection process simpler and more successful.
Debt collection guidelines in Australia
The 2021 Debt Collection guideline for collectors & creditors sets out a summary of the rules and responsibilities applicable to Australia’s creditors and the debt collection agency
There are certain actions that creditors, including banks, loan companies, and debt collection agencies, are permitted and prohibited to take under Australian law, according to the guideline.
Maintaining Good Records
What is the information you should track for your business to comply with the ACCC guidelines? According to the guidelines, all communications with debtors, including any transactions, as well as any relevant documentation, must be maintained in a current, accurate, and complete manner.
To begin with, let’s discuss communication. Invoices, past-due notices, and any correspondence (electronic or hard copy) related to the debt should be maintained in the communication records. Apart from the date, amount, and payment method, transaction records should also include any partial or full settlements. The final step is to keep track of any documents that outline payment and credit terms, such as contracts.
How about record archiving and storage?
The ATO requires small businesses to maintain business records for at least five years. Hard copies or paperless (electronic) copies are allowed so long as they are written in English and clearly explain all transactions.
Keeping paper copies of key documents, such as original contracts, may be helpful in case of contractual disputes. In terms of routine communications, such as invoices or bookkeeping, electronic archiving may be the preferred option.
What about the physical records you already have?
These documents can be scanned or photographed, stored locally or online, and retrieved easily. Debt collection records must form part of accounting and bookkeeping strategies. A sound record-keeping procedure is vital to establishing a successful debt recovery, in which relevant information becomes instinctively part of the customer’s history.
Time-barred debt
Statute-barred debt refers to a liability where the legal limitation period has expired, so the liability cannot be taken to court. It is limited to a certain number of years for a debt agency to sue a debtor for money owed to them. Statutes of limitations define this period which varies based on the state and type of debt. Usually, the period lasts six years but can be reset in certain circumstances, including partial payment or admission of debt. To extend the timeframe for debt collection, you should maintain accurate records of any such acknowledgements by the debtor.
Record-keeping Benefits
You will be able to monitor unpaid debts and prioritise your debt recovery efforts by keeping good records. By keeping accurate records, you can identify and calculate any relevant dates, such as when the debtor last made a payment, to determine whether a debt is statute-barred. You can recover overdue payments from customers and optimise your cash flow by keeping good records.
Additionally, resolving a claim is beneficial because it is more likely to end up in court if it remains open for too long. Importantly, debtors are entitled to request copies of their debt documentation. A debt recovery lawsuit can be brought against you if you provide inaccurate or misleading information, so documenting your debtors’ financial obligations is crucial if the process leads to litigation.
Collection of debts
Creditors, or their debt collectors, commence the process of debt collection by contacting a debtor to seek payment. Creditors must follow strict rules around how, when, and how often they contact debtors.
A creditor or debt collection agency can retake any items used to secure a loan that debtors owe money on. Creditors are also allowed to file a lawsuit to recover their debts.
eCollect collects payments on behalf of another company or individual for outstanding debts that people or businesses are legally obligated to pay. The various ways to demand payment include writing, verbally, by telephone, by email, or in person.
Whether you are looking for a debt collection agency in Sydney, Melbourne, or Brisbane, the eCollect team will assist you with the collection of your outstanding debt. We take care of all facets of the process, including finding debtors, contacting them (by mail, phone, or in person), negotiating and collecting payments, and enforcing agreements if necessary. Having the experience necessary for the efficient payment of your invoices, we act according to your instructions.
Comments