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Debt Collection

Australia has very strict debt collection standards set out by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC). They were implemented to protect companies and individuals alike.

The most common groups conducting debt collection services include collection agencies, debt buy-out services, in-house collection departments of businesses and government departments, and solicitors. All must adhere to the conduct set out by the ACCC and ASIC.

According to the ACCC and ASIC, debtors are legally bound to pay legitimate debts, and should not wilfully try to avoid their obligation. These two Federal Government bodies recommend businesses no longer able to manage their debt should seek assistance from their creditor before it reaches the point of debt collection. If your creditor has already set the debt collection process in motion, you may find it beneficial speaking to a financial counsellor, solicitor, or qualified advisor who may be able to help with debt negotiation.

If, on the other hand, it is your business that must instigate the debt collection process in order to recoup outstanding monies, you must be mindful of the strict guidelines around contacting the debtor regarding debt recovery. These include to:

  • Provide the debtor with information about their account
  • Request payment
  • Outline the consequences of non-payment including legal options and the restriction of services
  • Make debt repayment arrangements
  • Present a settlement or alternative payment proposal
  • Review existing arrangements
  • Ascertain why a previous arrangement has not been adhered to
  • Investigate whether a debtor has changed address without notifying you
  • Not to employ tactics such as embarrassment, intimidation or demoralisation.

In an effort to avoid the debt recovery process, it's important to analyse new businesses, projects or schemes long before you invest any money. A Business Credit Express report can help uncover a chequered credit history before you are financially and contractually committed.

The importance of efficient cash flow can't be understated. With consistent income key to driving business growth and development, any delays could have serious consequences.

Take the example of working with a bad debtor. If a customer is late paying your invoices and has already received the product or service, this can cause a domino effect where not only is your own growth potential slowed, but also your creditors.

Companies and businesses of all sizes must familiarise themselves with Australia's debt collection guidelines. Not learning the regulations laid out by Federal Government bodies such as the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) could result in you unwittingly conducting yourself in a way that constitutes harassment.

Businesses and companies of all sizes will experience debtors who, for any number of reasons, do not honour their debt. When this occurs, you may consider enlisting debt collection services in order to recoup your money.

Before committing to debt collection services, it's an astute move to first educate your staff regarding what is and isn't permitted in the process of debt recovery, and to explore any options available to you other than escalating the matter to a third party.

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