Nobody likes to provide goods or services to customers and not be paid. One of the prime objectives of all businesses should be to minimise bad debts.

Credit Management Practices

It is a matter of commercial practicality as to which of the following options will be best for a client's business:

• credit application/credit check/references check;
• cash up front;
• cash on delivery;
• worker's lien over chattels for work performed;
• director's personal guarantee;retention of title clause;
• security for supply of goods eg. Bill of Sale, Company Charge etc.

Debt Management Strategies

If a customer has not paid their account within the normal terms of trade then one or more of the following options should be considered:

• letter of demand for payment within 7 days;
• acknowledgement of Debt and agreement to pay within a specified period plus interest;
• retake possession of goods under Retention of Title Clause;
• serve Creditors Statutory Demand pursuant to Part 5.4 of the Corporations Law to pay amount in excess of $2,000 within 21 days or wind up company;
• action for small claim or minor debt in Magistrates Court for liquidated debt to $7,500;
• action in relevant court to obtain judgment for goods/services supplied;
• action against directors on personal guarantee;action against directors of insolvent company;
• take action pursuant to security for default.

Debt Recovery Procedures

Once a judgement has been obtained against a debtor then one or more of the following can be considered:

• enforcement Hearing of debtor as to assets
• garnishee order against money owing to debtor (including wages)
• enforcement Warrant against property of debtor (including land)
• serve Bankruptcy Notice and file petition after 21 days
• appointment of Receiver of partnership business (if secured creditor)
• order for payment of debt by instalments
• application to wind up company

We will assist clients in making a commercial judgement about pursuing debtors for outstanding amounts and whether it is likely to be "good money after bad". A judgement against the debtor preserves the debt for 12 years and clients can execute the judgement at any time in that period.

Please contact Ian Kennedy to discuss the above or for further information on any debt recovery problems.