Reading time: 3 minutes

All businesses, regardless of their size, encounter customers who can’t or won’t pay their debts. Customers failing to pay within a specified time can cause serious cash-flow problems for your business as well as avoidable financial stress. But what can your business do in this situation? We have put together a list of actions and strategies you can employ to recover a debt

Require Upfront Payment

Requiring upfront payment is the easiest and most reliable method to ensure that you get paid for your products and services. This not only helps your cash flow but saves you time chasing customers for payment. While this previously was seen as unusual in many industries, upfront payments are becoming increasingly common.

Credit Checks

If you decide to use credit accounts for your customers, all new customers should undergo a credit check. Although there are several online service providers who can provide you with credit checking services, it’s ultimately up to your business to decide whether to accept a new customer. Remember, not all sales are a good sale, and you may be better off refusing to supply/service a customer you feel may be a credit risk.

Have An Agreement in Place

Before providing your new customers with any products, or perform any services, you should discuss your prices, service fees and payment requirements. The easiest way to do this is to have your Terms and Conditions (T&Cs) in one accessible document that contains the following information about your business: 

  • Company details;
  • When the T&Cs apply;
  • What your credit terms are e.g. 30 days; and
  • What will happen if they don’t pay on time.

If your business is online, then your customers should agree to your T&Cs each time they purchase a good or service from you.

Follow Up On Overdue Amounts

It is easy to overlook reminder notices, but a person on the phone is a little harder to ignore. While you cannot harass, coerce or mislead your customers, you can communicate with them to secure money owed to you. Over the phone, you can immediately provide your customer with up-to-date information about their account, request payment for the overdue amount as well as explain the consequences of non-payment. Non-payment is usually a sign that your customer has either forgotten or is having cash flow issues. You may consider making an alternative payment arrangement or a settlement proposal to ensure the customer pays the debt, and maintain your business relationship.

The Last Resort

If, after these steps, the customer still owes you money, then you can engage a lawyer to recover the debt. The value of debt and prospects for success will ultimately determine how you proceed. If it is a minor debt, the costs of pursuing legal action may outweigh the money owed. Especially if engaging a lawyer will sever your business relationship.

Questions about debt recovery? Get in touch.


Negative Online Reviews: What are the Legal Options?

Wednesday 22 September | 11:00 - 11:45am

Negative or false online reviews of your business can be disheartening and damaging. Understand your legal rights and options with this free webinar.
Register Now

Australia’s Global Talent Visa: How to Attract Top Talent

Thursday 7 October | 11:00 - 11:45am

Understand how to navigate Australia’s complex migration system to attract top overseas talent with our free webinar.
Register Now

5 Essential Contracts for your Online Business

Thursday 14 October | 11:00 - 11:45am

Learn which key contracts will best protect your online business with our free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer