Debt Collection – What we are hearing from our clients
Regardless of which industry they operate in, clients are expressing to us a sense of dislocation from their usual business networks. Social isolation has meant that feedback from customers, practical guidance from industry associations and even gossip from colleagues has been harder to come by. Under these pressures it is easy to feel as though your business challenges are unique to you.
If COVID-19 has led you to put debt collection down your business priority list you are not alone. Most of the business owners we have spoken to are:
- Not commencing any new legal action against debtors, and/or
- Ceasing debt collection activities all together, regardless of whether the debtor has provided an explanation for the delay in paying.
The current pandemic has, and indeed should, cause a rethink of debt collection practices. However, this is not the same as abandoning debt collection all together. It is possible to continue a disciplined and rigorous approach to debt collection whilst taking into account the difficulties that your customers are facing in light of the current restrictions. You might for example consider implementing a freeze on accumulating interest on outstanding debtors until economic conditions improve. You may also consider putting certain customers on a “cash on delivery” basis for supply in respect of orders going forward, on the basis that you agree not to pursue amounts currently in debt.
Some of our clients have taken the opportunity to improve their security over payment by registering their supply agreements under the Personal Property Securities Register (PPSR). Others have used us to assist them in having their customers acknowledge amounts that are in debt in writing and locking in an instalment arrangement for the payment of those arrears, with stipulated consequences in the event of default in payment. When this process is done right, it can safeguard a customer relationship and provide clarity for both parties so that they can adapt properly to the new challenges thrown up by the current pandemic.
We would love to speak to you to discuss prevailing business conditions and how you might be able to improve upon your debt collection processes during these unusual times.
If you would like to discuss this article, please contact one of our Debt Recovery Lawyers on 9635 7966 or email firstname.lastname@example.org or email@example.com