When you are running a business in Australia, liquidity is essential to the long-term success of your operations. However, there are many parts of your business that you need to monitor and manage in order to minimise the potential f debtors not paying on time or perhaps not at all for that matter. Too much bad debt builds up or just slow payers can significantly compromise not only your financial position, but also the survival of the company due to it severely impacts your ability to meet your own financial obligations..
Interestingly, Australia prides itself on a comprehensive guideline for debt collectors and businesses to collect money owed. By understanding these guidelines and policies set down by ACCC, you’ll be in a much better position to make sure you know the right processes that need to be followed in order to increase your chances of debt recovery.
Statute of debt limitation
Possibly you are wondering what’s the statute of limitations for debt collection in Australia. Well, you are not alone. First, remember that this statute will vary depending on the debt and area of jurisdiction within the country. For example, if your business is located in Melbourne, it makes sense to engage the services of debt collectors Melbourne, as they will be more aware and knowledgeable about local laws in order to help you recover your debt as quickly as possible. It’s important that this point isn’t underestimated, as some laws between different states can be significantly different and thus have a direct impact on how you go about debt collection.
Usually, this limitation covers up to six years in Australia, except for its Northern Territory, where the limit is three years. The limitation addresses when you can file a relevant claim, and not necessarily the collection of your debt.
On the other hand, you could end up enjoying up to 12 years before exercising limitations. Such will happen if a judgment from the courts is in your favour. However, if you are in South Australia or Victoria, you could have up to 15 years.
Once your limitation expires, the debt is considered statute-barred. As such, the debtor will be free to argue that the obligation is not legally enforceable. But the big question would be whether you know when the limitation period begins.
Various aspects go into determining when the start date for the limitation is. Usually, the jurisdiction, terms of your contract, and type of debt will be essential factors. Further, the starting date can be altered or reset. As such, perhaps it would be best for you to consult your debt recovery expert before proceeding.
Principles of debt collection in the country
Often, you will need to exercise respect, courtesy, and fairness when pursuing debt collection. As such, you should not consider harassing or even coercing your defaulters. Besides, you are prohibited from misleading them about the nature of the date.
In most cases, the law would require you to be prudent when pursuing the debt. We have different reasonable grounds that you should consider. Perhaps you should be conversant with some of the reasons for contacting your debtor.
You should only contact the debtor when conveying a demand for payment, explaining the consequences of non-payment, reviewing existing arrangements, investigating if the debtor has changed addresses, putting settlement proposals, or providing information about their account.
However, it would be best if you avoided coercion, physical force, and harassment during this process. Never mislead them or even make the most out of their vulnerability. This move is not only illegal but could also compromise your position in the long run.
Recovering your debt in Australia is relatively straightforward. With this statute of limitations in place, you will no longer need to hassle way too much before getting what belongs to you. Above all, aim at abiding by it.
About the Author
Marshall Freeman is one of Australia’s leading debt collectors and recovery specialists. With extensive experience as an industry leader in professional collection services and slow payer management, they have built a reputation as one of the best collection agency in Australia for enterprises of all sizes. Servicing businesses from all sectors, they provide specialised debt collection Sydney, debt collectors Perth, debt collectors Brisbane and slow payer management services to businesses across Australia, New Zealand and United States of America.