Business debt recovery is the process of chasing businesses to pay back money they owe.
Good commercial debt collectors:
- Promote amicable debt collection and good relations between parties
- Liaise with debtors across jurisdictions and time zones
- Assess the financial situation of the debtor and guarantors (if any)
- Recommend whether legal proceedings are necessary
Best practice debt collection
The role of business debt collectors can vary according to where in the world the debt is and why the debt was incurred. Every jurisdiction has its own rules on how the debt recovery process should be carried out. In Australia each territory has its own rules. However, the Australian Competition and Consumer Commission along with the Australian Securities Investments Commission has published a set of best practice debt collection guidelines.
The debt recovery process
Managing commercial debts is not just about collecting money from customers who won’t pay. When handled well business debt collection provides an opportunity for building better relationships with your debtors and recovering debts while avoiding often costly litigation.
Atradius Collections is a specialist debt collector and can support you in every area from amicable collections to formal litigation. Our debt recovery process follows Australian best practice guidelines and is outlined below.
Step 1: You notify us of non-payment
We contact your debtor using a structured approach of letters, emails and phone calls as appropriate. These are often known as dunning letters.
Step 2: Evaluation of collection progress
Working closely with you and your debtor, we implement a strategy that best suits the situation:
- Payment plan based on the financial situation of the debtor
- Legal action
- Continual monitoring of the debtor
Step 3: Liaison with debtor or liquidators
We implement the strategy that best suits the situation. This may involve the development of a repayment plan, court action or liaison with the receivers.
We reimburse you directly with payments from your debtor, either in full, in part, or in stages.
If you also have an Atradius Credit Insurance policy, any unrecoverable debt may be reimbursed according to the details of your policy. All Atradius Credit Insurance policy-holders have automatic access to Atradius Collections. Our worldwide network of offices means our expertise can be found wherever you trade and support you with the rules of different jurisdictions and the challenges of other languages and even time zones.
If you don’t have a credit insurance policy, don’t worry, Atradius Collections can also help you recovery non-insured debts.
What does the debt recovery process cost?
The cost of debt recovery varies and is usually priced as a percentage of the debt. Atradius Collections operates as both a standalone business debt collection agency offering Third Party collection services and as a service for credit insurance policy holders. These policy-holders enjoy access to the debt collection service and will only pay the goods and services tax (GST) applicable on the total cost incurred in the debt recovery process as long as policy conditions have been met.
How long does debt recovery take?
The length of time the debt collection process takes is individual to the circumstances of the debt. However, as a rule, the sooner you can identify a debt and alert your collection agency, the quicker the debt can be resolved. This is because older debts can take more work in locating debtor details and paperwork and there is higher risk that companies may be insolvent. Some debtors will pay up when first contacted, others may require a staged payment plan and others may be subject to legal proceedings.