Debt Collection: How to recover my outstanding invoices?

Recovering outstanding invoices can be a frustrating ordeal, especially when it consumes valuable time that could otherwise be dedicated to revenue-generating activities. A significant portion of invoices issued end up overdue, with a majority requiring three or more follow-ups before they're settled. Below are some practical steps which you can take when attempting to recover outstanding invoices.

Direct follow-up with the customer

The most economical approach is to engage directly with the customer. Initiating contact via phone the day after an invoice becomes overdue, followed by another call within the week, can significantly increase the likelihood of payment.

Phone calls facilitate meaningful discussions. By telephoning the customer, you are able to more effectively discuss the outstanding invoice and get to the bottom of why the invoice hasn’t been paid. Another advantage is that it is much easier to draw a commitment from the customer to pay by a specific date than if you were to send an email.

Following the phone discussion, we recommend that you promptly send an email to the customer confirming what was discussed and holding them to the date of payment promised. The advantage of sending a follow up email is that it will create a paper trail that you can rely on if the invoice remains unpaid.

Issue a letter of demand for payment

If, after repeated follow ups, payment has not been received, then consider issuing a letter of demand. A letter of demand is a formal letter demanding payment of the debt by a certain date. A letter of demand, when prepared and issued by a lawyer, will carry substantial weight as it will signal your seriousness about payment of the outstanding invoice.

Abboud & Associates Law Firm offers a Standard Letter of Demand for $50+GST, providing a cost-effective option, especially for smaller debts. Alternatively, a more comprehensive letter can be tailored to your needs, with estimated costs provided to you upfront.

Commencing legal proceedings for debt collection

In the unlikely event that the letter of demand does not have the desired effect, then you will need to commence proceedings in the appropriate Court to recover the debt. Your lawyer will need to prepare a Statement of Claim (SOC) which outlines the amount you are claiming and why you are owed the money. It will then be up to the debtor to defend the claim if they dispute the amount owing.

The SOC often results in the debtor paying the outstanding invoice. This is because the debtor, in the majority of instances, would prefer to avoid incurring legal fees and defending a claim where they know that the money is in fact owing.

Delaying action on overdue accounts can jeopardise recovery efforts, with debts left outstanding for over 30 days becoming increasingly difficult to recoup. Don't hesitate to contact Abboud & Associates Law Firm for expert assistance in debt collection. Timely intervention is required for the safeguarding of your financial interests.