Every business has one (or more) debtor(s) which drops off the radar and does not settle their bill. Clients ask us, is it worth pursuing a debt under $500?
Our answer varies depending on the nature of the debt. For instance, if your business has a credit agreement which provides an “indemnity clause” (which means that if your debtor does not pay their bill, you are able to as a matter of right recover reasonable mercantile and legal fees), then our answer is generally “yes.” If, however, that debt is highly contested by the debtor (for example, they say you sent a screw, and they ordered a hammer), then the answer is going to be “no.”
This is where the benefit of having a mercantile agency, and law firm working in concert can give you maximum benefits.
Nautilus Law Group refers clients to Kemp Petersons for standard “debt recovery” – that is, you have a debtor and you think it just needs a few phone calls and it will be resolved. Kemp Petersons works on a “no win-no fee” basis – so if they do not recover, you can refer the matter back to us.
If we then take it on, we assess the file for its strengths and weaknesses, and advise you whether its worth perusing the debt. We can offer simple, low cost options, such as a “solicitor’s demand” – which is the step before taking the matter to court. A debtor’s response to a solicitor’s demand can help us understand why they are not paying the debt. Depending on their response, we may make a number of recommendations (we don’t want to give away our secrets in an article, so you will have to be a client to find out what those recommendations will be).
Our systems are all transparent, and you will be assigned a “client log on” to view your matter each step of the way. This log on gives you access to your file 24 hours a day, 7 days a week.
So, in sum, is pursuing a debt of $500 worth it? Our answer – you will not know unless you try and between Kemps Petersons and Nautilus Law Group, we can offer a solution which takes most of the risk out of asking.
As a heads up, though, we recommend you:
- Ensure you have the right Terms and Conditions, incorporating default provisions if a debtor fails to pay, security rights (so you have something to claim as yours if they do not pay), indemnity rights as to costs associated with chasing the debtor, and interest provision for overdue monies;
- You need to know your debtor! This one of the most common mistakes we see – you need to make sure you have the right debtor signing credit agreements and being invoiced. This may seem logical, but we see it too often that credit agreements are reached between clients and “shell companies,” but the products are shipped to a “trading company.” Wherever possible, obtain directors guarantees.
- Chase your debtors immediately. If your debtors know you are serious, they are less likely to become delinquent. A delinquent debtor is either a habitual debtor (knowing the tricks of the trade in terms of frustrating their suppliers) or they are non-financial (which means if you wait too long, you are going to be chasing a Liquidator or Bankruptcy Trustee for payment).
- Ask for help!
So a thought to remember, the squeaky wheel gets the oil!
We welcome you to contact our team on (07) 5574 3560 or email us info@nautiluslaw.com.au. Thank you for considering Nautilus Law Group.
Submitted by: Nautilus Law Gropu
