If you are a business owner or individual in Australia struggling with unpaid debts and looking for debt collection services, then you are not alone.
Debt collection can be a complicated and time-consuming process that requires expertise and resources that many people simply do not have.
Fortunately, there are many debt collection services available in Australia that can help you recover your debts quickly and efficiently.
In this guide, our debt collectors will take a look at the top debt collection services in Australia and what you should consider when choosing the right service for your needs.
Understanding Debt Collection in Australia
Debt collection is the process of pursuing unpaid debts from individuals or businesses.
It is governed by the Australian Consumer Law and the Australian Securities and Investments Commission (ASIC) and various State-based legislation.
Debt collection in Australia can be a challenging process, as there are strict laws and regulations that must be followed to avoid legal repercussions.
Debt collectors are also required to provide certain information to debtors, such as the amount owed, the name of the creditor, and how to dispute the debt.
In addition to the ACL, debt collection in Australia is also subject to regulation by the Australian Securities and Investments Commission (ASIC) and various State-based legislation.
These laws and regulations ensure that debt collection is conducted in a fair and transparent manner, protecting the rights of both creditors and debtors.
What Are Debt Collection Services?
Debt collection services are companies that specialise in recovering unpaid debts on behalf of their clients.
These services can be utilised by individuals or businesses who are struggling to recover their debts.
There are a number of different debt collection services available to the creditor depending on the type of the debt, these include:
- Third-party debt collection: These are companies that are hired by creditors to collect debt on their behalf. Third-party debt collection agencies can specialize in specific types of debt or industries.
- Commercial debt collection: This involves the collection of unpaid debts owed by businesses to other businesses.
- Consumer debt collection: This is the collection of unpaid debts owed by consumers to creditors.
- Building and construction debt collection: This is the collection of building and construction debts and using various State security of payment legislation.
- Healthcare debt collection: This involves the collection of unpaid medical bills and other healthcare-related debts.
- International debt collection: These are companies that specialize in the collection of debt across international borders, navigating differences in laws and regulations.
- Retail debt collection: This involves the collection of unpaid debts owed by customers to retail businesses.
- Utility debt collection: This involves the collection of unpaid bills for utilities such as electricity, gas, and water.
- Government debt collection: This involves the collection of unpaid debts owed to government agencies, such as taxes, fines, and other fees.
- Education debt collection: This involves the collection of unpaid student loans and other education-related debts.
- Mortgage debt collection: This involves the collection of unpaid debts owed on mortgages and other types of real estate loans.
- Automotive debt collection: This involves the collection of unpaid debts owed on auto loans and leases.
- Legal debt collection: This involves the collection of unpaid legal fees and other debts owed to law firms and lawyers.
- Small business debt collection: This involves the collection of unpaid debts owed to small businesses by individuals or other businesses.
- Professional debt collection: This involves the collection of unpaid debts owed by professionals such as doctors, lawyers, and accountants.
Debt collection services use a variety of tactics and methods to recover debts, including phone calls, letters, and legal action.
Top Debt Collection Services in Australia
There are many debt collection services in Australia, but not all of them are created equal.
Here are some of the top debt collection services in Australia apart from simply debt collection:
- Skip tracing: Debt collectors may employ skip tracing tactics to track down debtors who have relocated or changed their contact information.
- Negotiation and payment arrangements: Debt collectors may make payment plans with debtors in order to assist them return their debts in a way that is manageable for them.
- Legal action: If a debtor refuses to pay their obligations, debt collectors may sue them to reclaim the debt.
- Credit reporting: Debt collectors may report unpaid bills to credit reporting agencies (if applicable), which can have a negative influence on a debtor's credit score.
- Debt purchasing: Debt purchasing: Debt collectors may purchase debt from creditors at a reduced cost, allowing the creditor to recoup part of their losses while also providing the debt collector with the option to collect the debt themselves.
- Account management: Debt collectors may provide account management services to businesses in order to assist them in managing their overdue accounts and improving their overall credit management procedures.
- Receivables management: Debt collectors may provide receivables management services to assist businesses in improving cash flow and reducing the risk of outstanding bills.
- Education and training: Debt collectors may provide education and training to businesses in order to assist them better understand the debt collection process and improve their credit management procedures.
- Dispute resolution: Debt collectors may offer dispute resolution services to assist debtors and creditors in resolving outstanding debt problems.
How to Choose the Right Debt Collection Service
When choosing a debt collection service, there are several factors to consider, including (inter alia):
- Industry expertise
- Legal compliance
- Cost and fees
- Success rate and reputation
Our debt collectors will explain these in more detail below.
Debt Collection Service - Industry Expertise
Look for a debt collection service that has experience in your industry.
Different industries have different regulations and requirements when it comes to debt collection, so it is important to choose a service provider who understands the nuances of your industry and has a track record of success in recovering debts for businesses or individuals like yours.
Debt collection service providers bring a variety of skills and resources to the table, in addition to industry experience, to assist businesses in efficiently managing their overdue debts.
They may, for example, have access to cutting-edge software and technology that allows them to simplify the debt collection process and track developments in real time.
Companies may also hire expert negotiators who are adept at negotiating mutually advantageous payment agreements with debtors.
Furthermore, debt collection agencies frequently have strong compliance processes in place to guarantee that their actions are ethical, legal, and transparent.
Debt collection service providers may help businesses reduce bad debt write-offs, enhance cash flow, and ultimately prosper in a competitive market by using their talents and capabilities.
Debt Collection Service - Legal Compliance
It is crucial to choose a debt collection service that follows all legal requirements and regulations.
Debt collection laws in Australia are complex and constantly evolving, so it is important to choose a service provider that is up-to-date on all relevant laws and regulations.
Debt collection service companies stress ethical principles in their operations in addition to adhering to legal rules.
This implies they go out of their way to make sure their processes are fair and courteous to all parties involved, including the debtor.
They may, for example, give clear and upfront communication regarding the debt and the collection process, as well as various payment choices to assist debtors in repaying their debts in a reasonable manner.
Customers' privacy and data security are likewise prioritised by reputable debt collection service providers, who take precautions to preserve sensitive information and prevent illegal access.
Debt collection service providers may create long-term relationships with their clients and their clients' consumers by following to ethical standards in their operations, eventually leading to better outcomes for all.
Debt Collection Service - Cost and Fees
Debt collection services typically charge a fee for their services, which can vary widely.
Some debt collection services may charge a flat fee, while others may charge a percentage of the amount recovered.
It is critical for a person looking for debt collection services to comprehend the numerous prices and fees linked with the procedure.
Debt collection service companies charge fees for their services, which vary based on the specific services given, the amount of debt being collected, and the success rate of the collection attempts.
Debt collection service companies may charge additional costs for services such as skip tracing or legal representation.
When employing a debt collection service provider, it is critical to thoroughly study any fee agreements to verify that the prices are transparent and reasonable.
Debt Collection Service - Success Rate and Reputation
When choosing a debt collection service, it is important to consider their success rate and reputation.
Look for a debt collection service provider with a proven track record of success in recovering debts for businesses or individuals like yours. You can also research customer reviews and ratings to get a sense of a service provider's reputation.
The success rate and reputation of a debt collection firm are two critical aspects that may make or ruin a business.
A high success rate suggests that the service is effective at debt collection and is a viable option for people or businesses wanting to recover their debts.
Another key element to consider when selecting a debt collecting business is reputation. The reputation of a firm reflects the quality of its services and can affect whether individuals or companies choose to deal with it.
Clients are more inclined to trust a debt collection business with a strong reputation.
The Debt Collection Process
Debt collection is a multi-step process that typically involves the following stages:
- Pre-collection
- Initial contact
- Debt recovery
- Legal action
Our debt collectors will explain these in more detail below.
Debt Collection Service - Pre-Collection
Before engaging a debt collection service, it is important to take certain steps to increase the likelihood of a successful recovery.
This may include sending demand letters or reminders to the debtor, making phone calls & text messages, or doing a skip trace to locate the debtor.
Other steps that can be taken include:
- Checking the debtor's credit due diligence to determine their payment history and creditworthiness.
- Contacting the debtor's employer to verify employment information.
- Reviewing any relevant contracts, agreements, or documents related to the debt to ensure that the debt is valid and enforceable.
Once any pre-collection steps have been conducted, it can be time to contact the debtor.
Debt Collection Service - Initial Contact
Once you engage a debt collection service, they will typically begin by making initial contact with the debtor.
This may involve:
- Send a debt collection letter: The first step in contacting a debtor is often sending a formal debt collection letter. This letter will typically outline the details of the debt, including the amount owed, the creditor's information, and instructions on how to make a payment.
- Make a phone call: Debt collectors may also try to contact debtors by phone. They will likely introduce themselves and explain the purpose of the call, which is to collect the debt. They may ask for additional information, such as the debtor's current address or employment status.
- Send an email: In some cases, debt collectors may send an email to the debtor's known email address, providing the details of the debt and requesting payment.
- Send a text message: Debt collectors in Australia may use text messages as a means of contacting debtors. Debt collectors must ensure that the content of the text message does not breach any of the regulations and that the debtor's privacy is protected.
These processes are continued until there is some response from the debtor.
Debt Collection Service - Debt Recovery
If initial contact is unsuccessful, the debt collection service will typically begin the process of debt recovery.
A debt collector may attempt to negotiate a payment plan or settlement with the debtor in order to resolve the debt.
This may involve sending more formal demand letters, making additional phone calls, or sending additional text messages.
If these things yield no results, then they can help you with pursuing debt recovery legal action in the Court or Tribunal.
Commence Legal Action in Court
If debt recovery efforts are unsuccessful, the debt collection service may recommend pursuing legal action to recover the debt.
This may involve filing a claim and statement of claim in the court (or an application in the Tribunal).
The purpose of debt collection legal action is for obtaining a judgment against the debtor.
A creditor can issue a statutory demand for payment of a debt owed by a company if the debt is due and payable and is over the minimum statutory amount of $4,000, and there is no genuine dispute.
The demand must be in the prescribed form and served on the debtor. The debtor has 21 days to either pay the debt, enter into a payment arrangement, or apply to set aside the demand.
Failure to respond within 21 days may result in the presumption that the debtor is insolvent, which may allow the creditor to take further legal action.
A creditor can issue a bankruptcy notice to a debtor if they owe a debt of at least $10,000 and have a judgment or final order.
Once the notice is issued, the debtor has 21 days to either pay the debt or make arrangements to pay it, such as by entering into a payment plan with the creditor.
If the debtor fails to comply with the bankruptcy notice, the creditor can apply to the Federal Circuit Court to have the debtor declared bankrupt.
Traditional Debt Recovery Methods
Traditional debt collection methods are the more traditional methods of recovering outstanding debts, often without the use of legal actions.
Sending letters, making phone calls & text messages, and engaging debt collection companies are all examples of these tactics.
Letters are generally the first tactic employed since they are inexpensive to send and may be used to contact the debtor. Phone calls, which allow for direct connection between the creditor and debtor, can be more successful in promoting payment.
Debt collection services are a popular option for companies looking to outsource their debt collection activities. These agencies utilise a variety of ways to discover debtors and exert pressure to induce repayment, including skip tracing.
When to use a Debt Collection Service
Many small businesses nowadays find it prudent to have a debt collection partner in place long before ageing debts affect the profitability of the business operations.
You may also hire a debt collection service to optimise your whole billing cycle, not simply the amounts owing to you.
Rather than being viewed as a reactive procedure to recover money, debt collection is increasingly being viewed as an integral element of the whole accounts receivable process.
Given the significance of good cash flow to the survival of small businesses, the advantages of implementing debt collection systems early on cannot be overstated.
When it comes to collecting overdue accounts, small company owners frequently question whether they should bring in specialists debt collectors.
People frequently wonder how old a debt obligation must be before it may be sent to a collection agency.
Debts are traditionally transferred to a collection agency when they are 90 to 120 days past due. Yet, this is a very long period for your small firm to be without critical cash flow.
In general, it is preferable to begin collecting action no later than 2.5 times the length of your typical terms of trade, if not sooner. Taking quick action on outstanding accounts increases the likelihood of collection.
What About Debt Purchasing or Debt Buying?
Debt purchasing, also known as debt buying, is the process by which an organisation or individual purchases a debt from a creditor, such as a bank or credit card company, for a cheaper price.
The debt purchaser then becomes the new owner of the debt and is in charge of collecting the debtor's outstanding sum.
Debt purchase has grown in popularity as a means for creditors to recuperate some of their losses on outstanding debts while also freeing up resources to focus on other elements of their business.
Debt buyers can buy debts in bulk or individually, and they can use a variety of methods to recover the unpaid sum, such as discussing payment arrangements with the debtor or initiating legal action.
Key Takeaways
When choosing a debt collection service, be sure to consider factors such as industry expertise, legal compliance, cost and fees, and reputation.
By choosing the right debt collection service, you can ensure the best possible outcome for your debt recovery efforts.
There are a number of reasons to use our debt collection services, including we offer:
- Cash flow management services.
- Corporate "bad debt ledger" collection services.
- Debt collection services.
- Field services (via third parties)
- Litigation services; and
- Receivables management services.
Please submit your debt online today!
Debt Collection - FAQ
We get asked a number of questions in relation to debt collection services.
We have outlined some of the more frequently asked debt collection service questions below.
How long does the debt collection process typically take?
The time of the debt collection process varies according to a number of circumstances, including the size of the debt and the debtor's desire to pay.
Outstanding or overdue debts can be collected in a few days or weeks, whilst others take months or even years.
How much do debt collection services typically charge?
Debt collection services typically charge a fee for their services, which can vary widely depending on the provider and the specific services offered.
Some debt collection services may charge a flat fee, while others may charge a percentage of the amount recovered.
Can I pursue legal action on my own to recover a debt?
While it is possible to pursue legal action on your own to recover a debt, it is generally not recommended. Debt collection laws in Australia are complex and constantly evolving.
What happens if a debt cannot be recovered?
In some cases, debts may be difficult or impossible to recover. If this is the case, it is important to consult with a debt collection lawyer to see if it can be recovered legally.
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.
