Debt Collection Trends and Risks in the Market 2015

The dramatic rise in insolvencies over the last 6 months comes as no surprise to those professionals who are in, or on the fringe of the insolvency industry. There are many contributing factors including the debt recovery drive by the ATO, banks reluctance to lend money, falling property and share prices that have historically secured company loans by directors and the insolvency of company “A” causing a snow ball effect to their creditors.

SME’s with a dedicated Credit Manager have been frantically assessing their potential exposure risks and understanding the introduction of the Personal Property Securities Register (PPSR). Couple this with a good management structure, having their debtors book insured, an adequate line of credit readily available and a willingness to place customers on “stop credit” have made some companies somewhat immune to insolvencies effecting them.

Debt Collection – Current Trends and Risks in the Market

Slater Byrne Recoveries Pty Ltd (a national debt collection and credit management firm with offices in Sydney, Melbourne, and Brisbane) has noticed a dramatic spike of enquiries from those SME’s who are not fortunate enough to have all the safeguards in place. Once a consultation on a particular debt recovery matter has taken place, the advice and findings are all too familiar.

Below are the most common areas that need attention:

  • Renew and review of credit applications and clients need to understand what is in their terms of trade
  • Review the client database ensuring all customer details are correct
  • For a large purchase from a customer a request directors guarantee needs to be made
  • Listen to advice from paid advisors or specialist employees
  • Directors need to regularly review their aged receivables
  • Place customers on stop credit
  • Look for warning signs – Request for contra deals, bounced cheques, payment arrangements
  • Generate purchase orders, delivery dockets.
  • Invoice regularly and write credit notes immediately
  • When disputes arise, get them in writing (emails). Identify that the balance of the invoice has been completed or is undisputed
  • Have a consistent approach to debtors – A series of reminder letters right through to demand letters and the engagement of a debt collection agent or solicitor With slow paying debtors or debtors offering a payment arrangement, it is vital to get some type of admission in writing that the debt is due and owing. If possible confirm the dollar amount and invoice numbers. Many debtors at a later date (usually when the threat of legal action is mentioned) use disputes as smokescreens where the real issue is they have cash flow problems.

Industries presently at risk where a consultation may be required include:

  • Transport Industry
  • Civil construction & earthworks
  • Building suppliers
  • Building Contractors
  • Steel manufacturing and fabrication
  • Retail wholesale & distribution

Industries we do NOT collect:

  • Consumer Rental Debt
  • Childcare
  • Whitegood Hire Rental
  • Veterinary

Should you or any of your clients have any questions please contact Peter Levis from Slater Byrne Recoveries at or 1300 794 290.

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