At a glance:
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- Keep track of documents outlining payment and credit terms, such as contracts.
- Small businesses are required to maintain business records for at least five years.
- eCollect team will assist you with the collection of your outstanding debt.
The collection of debt does not have to be painful or costly, as many people believe. Keeping comprehensive debt collection records, complying with appropriate contact practices, and respecting the debtor’s privacy can make the debt collection process simpler and more successful.
Debt collection guidelines in Australia
A summary of the rules and responsibilities applicable to Australia’s creditors and the debt collection agency is set out in the 2021 Debt Collection guideline for collectors & creditors.
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
In order for your business to comply with the ACCC guidelines, which information should you track? 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, 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. In addition to 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?
Small businesses are required to maintain business records for at least five years by the ATO. Hard copies or paperless (electronic) copies are allowed as long as they are written in English and clearly explain all transactions.
In case of contractual disputes, keeping paper copies of key documents, such as original contracts, may be helpful. When it comes to routine communications, such as invoices or bookkeeping, electronic archiving may be the preferred option.
Information debt collection agencies need:
Documents substantiating the debt, like invoices and contracts, are useful – collectors can speak more intelligently and forcefully when they have documentation to support their claims. Apart from contracts and invoices, there are basic details a debtor must provide to a collection agency:
Real name, address, phone number, email address, and balance owed. Social Security numbers also make it easier for collection agencies to locate difficult-to-locate debtors – especially those trying to avoid their bills.
What about the physical records you already have?
These documents can be scanned or photographed, stored locally or online, and retrieved easily.
Accounting and bookkeeping strategies should include debt collection records. 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. The period usually lasts six years but can be reset in certain circumstances, including partial payment or admission of debt. In order to extend the timeframe for debt collection, you should maintain accurate records of any such acknowledgments by the debtor.
Record-keeping Benefits
By keeping good records, you will be able to monitor unpaid debts and prioritise your debt recovery efforts. 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, if a claim remains open for too long, it is more likely to end up in court, so resolving it early is beneficial. It is important to point out that 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, begin 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 can also 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. There are various ways to demand payment, including 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 handle all aspects 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.