Debt Recovery Lawyer – Do I Need One?

Debt Recovery can be a long and protracted exercise. So why not use an Expert Debt Recovery Lawyer to help you with the problem? This article explains more about the Debt Recovery process and seeks to flush-out the facts!  

Four Reasons Why You Wouldn’t Use a Debt Recovery Lawyer.

The idea of appointing a Lawyer to help recover a commercial debt may seem over-the-top. Some may also consider it to be the ‘last resort’. However, despite the fact that benefit will always outweigh opinion, there may still be reasons why you wouldn’t use the services of an expert.

So why wouldn’t you use a lawyer?

  1. A lack of experience. The client appoints a general practitioner and not an experienced Debt Recovery Lawyer;
  2. The notion that a law firm is an expensive option; only to add more costs to the problem (after all, isn’t it thought that lawyers tend to draw the process out to gain more fees?);
  3. The length of time the matter may take; and
  4. Lawyers get too much into the detail and miss the real problem (getting the debt paid).

Even though some of the above may be true (well at least #1 in any case), using an experienced Debt Recovery Lawyer makes total and utter sense. Furthermore, if we take a closer look at the issue surrounding non-payment of outstanding invoices, the layers of potential complexities can be many.

Here’s why…

When someone agrees to do business, they don’t intentionally believe they will receive your service or product for free. The intention is that payment will need to be made to settle the contract or agreement to supply.

A contract is clear when there has been an offer (i.e. a written quote) and acceptance (i.e. a signed written quote). In our experience (and this is from a combined 25-years of commercial legal services and an extensive asset-based lending career), a customer will fail to make a payment because of a handful of circumstances, but they don’t include:

  • Being unaware of the costs and terms of supply;
  • Having been on vacation and ‘just forgot’; or
  • The dog ate the chequebook!

Customers don’t pay because:

  • Inadequate credit control and debt recovery procedures (didn’t chase on time);
  • The customer has suffered a catastrophic business failure and the business is now in financial distress. Paying outstanding invoices is not on the priority list (in other words, your business suffers because of the customer’s lack of sound commercial management);
  • Poor communication;
  • Inadequate Terms of Trade; or
  • Poor cashflow, no cashflow or the customer is simply ‘trying it on’!

Debt recovery is an art. It is also a time-consuming and demanding task for any SME to manage. It takes a process, consistency and the right team to do the job. In a former life, I spent years assisting SMEs with debt management systems, financing invoices to assist with cashflow, advising on credit control policies but none of it beats good old ‘common-sense’.

KYC – Know Your Client

An oldie for sure but one that still makes sense today.

  • Don’t extend trade credit to a potential customer if it simply doesn’t ‘make sense’. Know who you are doing business with and get comfortable with the commercial decision;
  • Do your checks. Get references (trade and bank);
  • Take a deposit;
  • Offer a discount for early payment (don’t have your capital tied-up in overdue invoices);
  • Make sure your Terms of Trade are robust and adequate (so important);
  • Leverage off technology where you can; and
  • If you are going to offer credit terms, stick to them!

Should You Use A Debt Recovery Lawyer?

If you have an invoice outstanding beyond agreed terms of trade (worldwide this is as much as sixty per cent of all businesses), and your customer is not answering your calls, emails or demands – then the answer is YES!

Alternatively, you can try your luck and wait for the formation and approval of the Federal Governments new Payments Register but seriously, is this going to get your invoice paid?

To clarify, an experienced Debt Recovery Lawyer will act fast (Harbourside will issue a Letter of Demand within 24hrs from enquiry), and the cost is small in comparison to the outcome – try $99.00 plus GST and see how we do!

Better still, don’t let the situation get out of hand after all prevention is better than cure. Call today and get advice on your Terms of Trade, Supply Contracts, Agreements and any other commercial legal service you or your business may need.

In conclusion, for a relatively small fee, you can get on with what you do best and that’s growing your business. Harbourside Legal can do the rest. We can even work on a Retainer tailored just for your business needs!

Call today and speak with an Expert Debt Recovery Lawyer.

Email or call +61 (0) 2 9955 6692.

Free Consultations are Available by Appointment Only.