Dealing with debtors |
If someone owes you money and will not pay, you are entitled to contact them by letter or telephone, or in person to demand payment.
You must do this within reasonable hours and not threaten, harass or physically intimidate the debtor.
Preventing bad debts
When you send an invoice, make sure it arrives with your product or service. Ensure you send it to the correct location and that the invoice is given to the appropriate person.
Make sure your invoice is accurate, clear and easy to understand, with no unnecessary technical jargon, codes or abbreviations.
Your invoice must contain sufficient detail, including:
- the time period it covers
- a clear description of the work you did or the goods/services you provided
- a summary of the total amount
- information about any outstanding payments
- any legal requirements, such as an ABN or the GST amount
- how they can pay the invoice
- the payment´s due date, giving sufficient time for the customer to check the invoice and arrange payment
- details of any agreed discounts and how you determined them
- a contact telephone number for any queries.
Handle any queries about the invoice or payment fairly and quickly.
Before you make any adjustments or corrections and send an amended invoice, contact the customer and tell them what corrections or adjustments you´re making and why.
Quote any relevant customer reference number they have provided to you, or you have provided to them.
Encouraging debtors to pay
Do not automatically offer credit to customers you have never dealt with. Use other payment options, or request they pay part of the invoice before or during your service delivery.
Consider offering a discount for early payment. State clearly on quotes and invoices that you reserve the right to charge a set late fee for overdue invoices.
If someone owes you payment, act quickly to follow up overdue invoices. Consider negotiating a payment plan and don´t do more work for the debtor until they pay the outstanding invoice.
If these approaches do not work, try other options, such as using a debt collector, mediation or taking the debtor to court.
Unless you have an order from the court, you cannot take or sell any of the debtor´s property over which you do not have a mortgage or other form of security.
Using a debt collector
All debt collectors in Queensland are licensed. They are also bound by a code of conduct that sets down standards, provides a complaint resolution system and ensures consumers do not feel unduly harassed by the debt collector.
By law, a debt collector cannot threaten to have the debtor sent to jail, as a person cannot be jailed for an unpaid civil debt in Queensland.
Minor debt claims
If someone owes you $25 000 or less and will not pay, you can make a claim through the Queensland Civil and Administrative Tribunal to recover the money.
Bankruptcy
If someone that owes you money is declared bankrupt, they are usually freed from debts that they cannot pay.
As a creditor, you can make a claim called a provable debt. This entitles you to share in the distribution of debtor funds and vote at meetings related to the bankruptcy.
The Insolvency and Trustee Service Australia is a government agency that provides information for both debtors and creditors affected by bankruptcy.
Last reviewed 18/11/2011 |
 |
