.jpg)
With tight financial margins and a difficult economy, businesses are finding it more important than ever to get their invoices paid on time. When an individual customer does not pay what they owe, there's a set process for recouping debts. But what about when your business is owed money by another business?
There is a set protocol for pursuing business to business debt (AKA B2B debt). By accurately following business to business debt recovery protocol, you stand a far better chance of recovering lost funds, and you'll have access to all the protections that the law provides you. In this article, we will:
- Show you some good business practices to make chasing debts easier
- Walk you through the business to business debt protocol
- Identify the pitfalls to avoid
Our qualified team at AANDI Lawyers has a long history of successfully helping businesses with debt collection. Find out more about our debt recovery services and how we can help.
Follow good business practices
To effectively recoup a business to business debt, it's important that you follow industry best practices for a business.
Correct invoicing
It might sound overly simple, but having invoiced effectively is an important first step in recouping a business to business debt. Further on in the process, when you might have to take somebody to court, you'll have a better case to argue if you have good and reliable records to cite as evidence.
Taking action
Running a business is complicated, and it's hard to keep track of everything that's going on all the time. Especially for sole traders who have to chase up all incoming payments, it is possible to lose track of outstanding invoices. And if you haven't noticed that an invoice is overdue, you're no chance of recovering it!
The first step towards recovering business to business debt is timely awareness that you have a problem. Then, you can take action.
Contact the business who owes you money
Often, failure to pay an invoice is merely an oversight. If you notice that a business is overdue in their payments, getting in contact with them can be a good way of ascertaining whether or not they intend to pay their debt.
Like collecting a debt from an individual, there are strict laws and regulations around what you can and can't do when contacting a debtor. By working with a qualified legal team like the debt recovery specialists at AANDI Lawyers, you can be sure that your efforts to recoup the debts are legal and above board.
Send a Statutory Demand or Letter of Demand
A letter of demand is a formal step in debt recovery that outlines things like:
- When payment was due
- Who the debtor is
- Who the creditor is
- How much is due
- Expectations for the future
A letter of demand sent by your lawyer is usually more effective than one sent from you directly; the presence of a lawyer's letterhead alone strongly indicates you're willing to take legal action to recover the debt.
Another early step in the business to business debt collection process is a statutory demand. The process for a statutory demand differs between Australian jurisdictions, and whether or not you can send one depends on the industry that your debtor is in, and how much they owe you.
Whether you're sending a letter of demand or a statutory demand, it is important that these documents are carefully prepared. Use a specialty debt collection lawyer to ensure that business to business debt recovery protocol is followed to the letter.
Take the debtor business to court
If you've tried other options and aren't getting results, it may be time for your business to take a debtor business to court. Often, merely the prospect of being taken to court is enough to elicit payment from a debtor. However, if you do have to go to court, your chances of success will drastically improve if you are armed with a team of capable and experienced debt collection lawyers.
