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Dealing with debtors

If someone owes you money and will not pay, you are entitled to contact them to demand payment.

Contact must be reasonable and as a guide, should be limited (unless agreed otherwise) to:

  • a maximum of 3 phone calls or written correspondence per week (or 10 per month)
  • phone contact between the hours of 7:30am–9:00pm on weekdays and 9:00am–9:00pm on weekends
  • face-to-face contact between the hours of 9:00am–9:00pm on weekdays and weekends
  • no contact on national public holidays.

A visit to a debtor’s home or similar location is not recommended unless there is no other way to make contact, or a visit has been agreed on.

If repayment arrangements can be worked out over the phone or by written correspondence, then face-to-face contact should not be necessary.

You must not:

  • threaten
  • harass
  • physically intimidate the debtor.

Preventing bad debts

When you send an invoice, make sure it arrives with your product or service. Make sure:

  • you send it to the right location
  • that the invoice is given to the right person.

Make sure your invoice is accurate, clear and easy to understand—with no unnecessary technical jargon, codes or abbreviations.

Include sufficient detail in your invoice, such as:

  • the time period it covers
  • a clear description of the work you did or the goods/services you provided
  • a summary of the total amount
  • information about any outstanding payments
  • any legal requirements, such as an ABN or the GST amount
  • how they can pay the invoice
  • the payment’s due date, giving sufficient time for the customer to check the invoice and arrange payment
  • details of any agreed discounts and how you worked them out
  • a contact for any queries.

Corrections and adjustments

If you need to correct or adjust an invoice, contact the customer first.

Explain:

  • what changes you are making
  • why you are making the changes.

Encouraging debtors to pay

Consider your options before offering credit to customers you have never dealt with. You could use other payment options, or ask them to pay part of the invoice before or during your service delivery.

Think about offering a discount for early payment. Put a clear statement on quotes and invoices that you reserve the right to charge a set late fee for overdue invoices.

If someone owes you payment, act quickly to follow up on overdue invoices. Think about negotiating a payment plan. We recommend you don’t do more work for the debtor until they pay the outstanding invoice.

If this doesn’t work, try other options including:

  • using a debt collector
  • mediation
  • taking the debtor to court.

You cannot take or sell any of the debtor’s property, unless:

  • you have an order from the court
  • you have a mortgage or other form of security.

Using a debt collector

The Office of Fair Trading (OFT) regulates the debt collection industry in Queensland. Any person who recovers debts face-to-face must be licensed.

If you hire a debt collector:

  • you must appoint them in writing to act on your behalf
  • they must bank any money they take on your behalf into a trust account.

A debt collector cannot:

  • harass a customer
  • threaten to have the debtor sent to jail.

A person cannot be jailed for an unpaid civil debt in Queensland.

Debt disputes

You can lodge a claim through the Queensland Civil and Administrative Tribunal if someone:

  • owes you $25,000 or less and;
  • will not pay.

For amounts above $25,000, we recommend you seek legal and financial advice about the options available to you.

Bankruptcy and insolvency

A person who is declared bankrupt is usually freed from debts that they cannot pay.

Visit the Australian Financial Security Authority for more information.