Are you a creditor looking for alternative ways to recover unpaid debts?
If so, you may be overwhelmed by the number of options for debt collection that you have to choose from.
Debt recovery can be a trying and difficult process, so it is important that you know your options.
Different methods and tips can help you in different scenarios and with different types of debtors, so keeping your options open is also a necessity.
In this article our Aussie debt collectors will discuss 5 ways that you can go about recovering debts from clients that won’t pay and how each way will help with different types of debtors/debts.
Recover Unpaid Debts - Invoice
One way that you can recover unpaid debts is by ensuring that you are effectively invoicing to each individual debtor and managing the accounting element of your business well.
Effective invoicing and accounting are more a way that you can stop late payments before they occur, making the debts you need to recover much lower than before.
Doing both of these interconnecting concepts properly can ensure that the financial elements of your business are running well and that debtors are up to date and know what’s happening with their payments.
If the debt remains unpaid, you can then try a slightly different strategy.
Efficiently sending an additional invoice and a reminder to a client can be effective in making sure they are paying on time.
People become busy and can occasionally forget about their debts.
Make sure you are reminding all of your clients about their commitments to you so that the ones that simply forgot a payment was due can pay efficiently.
Either of the two suggested strategies will likely only work on these types of clients, as those aware of their debt but unwilling to pay will likely not react to a reminder.
Recover Unpaid Debts - Communicate
Another way to recover debts from debtors that will not pay is by using communication techniques to make sure all is smooth sailing.
Things can go wrong in the lives of debtors. Whether it be illness or unemployment, things will occasionally come up that make your clients unable to honour the terms of their debts.
Of course, this can be frustrating as a creditor due to the unpredictability of it all, but you must be communicating with debtors to make sure they come to you when necessary.
As a creditor, there is not really much that you can do when clients continually ignore your demands for payment but developing a professional relationship with them can help with debtor-creditor trust, which can benefit you.
A trusting relationship between yourself and your client can mean that if they experience money troubles or any issue that makes them unable to pay, they will communicate it with you personally so you can find a solution that works for both parties.
Friendly communication can help to create this trust, so keep in contact with your clients!
Recover Unpaid Debts - Negotiate
Another way to recover unpaid debts from clients that are yet to pay their dues is by engaging in a professional negotiation with them.
This tip goes hand in hand with the one before, to communicate with debtors, as the communication element is the key to beginning a negotiation.
You may be thinking, why would I want to negotiate with someone who both agreed to the current terms and will not pay their debt? That is a fair question!
Depending on your client and how long this debt has been outstanding for, it’s easy to be frustrated with your clients. It can, however, benefit you greatly if you do choose to negotiate.
Some clients do not have the means to pay their debts anymore or can no longer abide by the terms agreed upon due to financial distress.
If this is the case, they may declare bankruptcy or insolvency due to their seemingly hopeless position, which may mean that you do not receive much if any of the money you are owed.
If you find that a client is struggling to make payments, consider negotiating the terms, such as payment period or dates, to make sure you both get what you need.
Use a Debt Collector
Another way that you can go about recovering debts from clients that are not paying what they owe is by engaging the services of a debt collection agency.
A debt collector is a great tool that you can use if you find yourself unable to get a payment out of a debtor.
Debt collectors are professionals in the debt recovery field, and therefore come equipped with experiences and tools that regular creditors will not have.
Their range of technology can make it much easier to both locate a debtor (if necessary) and making sure that they pay you what is owed as soon as possible.
Furthermore, the experience they have with past clients can mean that they have likely encountered and received payment from a wide range of debtor types/personalities, so they may have the skills and knowledge to get a payment from your client effectively.
Remember, the actions and behaviours of debt collectors are regulated in Australia and any misconduct or poor behaviour toward clients will be the responsibility of the creditor (you)!
When hiring a debt collector, do your research to ensure you are not legally responsible for any law-breaking that may occur.
Take Legal Action
Another way to recover unpaid debts is by taking action within a courtroom.
It is, of course, recommended that you hire a debt recovery lawyer before doing so to give you advice about how to proceed and potentially resolve the issue outside of court.
The court is a big step, so you should make sure you are weighing up your options and exhausting other possibilities to collect your debt before taking any action.
This being said, a court can be very effective in ensuring that justice is served, and you receive your debt as agreed upon, especially if you have tried the other steps mentioned or sent any warnings or demands to your client.
Some debts are simply not worth the costs to go to court, however, so keep that in mind when evaluating your situation.
Recover Unpaid Debts - Key Takeaways
Recovering unpaid debts can be difficult.
With all of the clients you have to manage, it can be a challenge to collect all of your debts effectively.
For this reason, it is important that you have some tools and strategies behind you if you do encounter a debtor that doesn’t want to pay!
If you find yourself in that situation, consider following some of the means discussed on this list to collect debts; they may help you a lot!
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.