Collectmore Pty Ltd

Rant alert!!

After 25 years doing debt collection the audacity of some business owners continues to shock me. A client of ours just contacted us because they're owed $40,000 and their debtor has emailed them saying they will pay before the end of the year. The invoice is already 60 days overdue. Not a cent has been paid so far. What makes this audacity so grating however is in the director's email signature it has the addresses of their four separate locations including one which is they're "brand new headquarters". I am sorry but if you can afford to move into a brand new headquarters then you can pay your debts. Not only that but the email wasn't even personalised. It was generic which has clearly been sent to everyone they currently owe money to. Needless to say I implored our client to send the debt to us rather than agree to their extension "demand". Wasn't even a request. Businesses like this truly are the worst and you should never, ever, ever, ever agree to be their bank. Put your foot down and say NO!

Cheers guys

Why saying no almost always leads to $$$

If there are multiple outstanding invoices on your customer's Statement then unfortunately my friend, you have a problem. When was the last time you cut off a debtor who owed you money? Said no when they asked you to do more work or provide more stock? Told them you'd only agree once they've paid you in full? If you're like most small businesses the answer is never. The promise of more money casts a spell over almost all of us. Especially when you're new in business. Future money appears more valuable than current money. It takes a very strong will to say no to "Once you do this new job I will pay you for the old job". Or even worse, this- "I need this new work otherwise I can't pay you for the old work". Holding your current invoice to ransom- classic debtor behaviour. One of the oldest tricks in the book. And what breaks our heart is that forgiving, trusting creditors almost always fall for it. Saying NO and meaning NO is an artform. It takes guts. But we simply cannot stress how vital it is. All allowing them to incur more debt does is increase your risk. It enables them. It reinforces a negative. And it almost never gets you paid. Saying yes doesn't get you paid- saying no does. 3 invoices, 1 month apart. That is the limit we recommend. If an invoice is due on the 30th September and it's still outstanding when they ask for more work or place a new order on the 5th November, what should your answer be? Exactly. Still not convinced? We were sent a new debt to collect last Thursday from a client who still owed us commission from December. Did I decline? You're damn right I did. Did they pay the outstanding and apologize profusely that same day? You're damn right they did.

Cheers guys, and happy new year to all! Here's to 2025!

We just collected $4300 from one of the largest and most recognized brands in Australia. A company you would never in a million years expect to be sent to debt collectors. But they did and the invoices that landed on my desk were treated like any other debt we're asked to collect. Our client had done works at one of their sites and followed every single compliance requirement necessary in order to get paid. A Purchase Order was obtained, the works were signed off on, the invoices sent to the dedicated inbox. But each time they were rejected for payment with a "technical error" cited as the reason. Tearing their hair out in frustration they engaged us. I knew straight away that this would need a very different approach. A novel approach and one which I had a feeling would work. Turns out I own shares in this particular company. Knowing the conventional channels above hadn't worked and wouldn't work, I went straight to the top- the CFO. Of the whole company. I had their email address as it was all over their disclosures and lodgments with the ASX. Knowing how many hundreds of emails each day this person probably received however, I knew I had to be strategic. So I disarmed them from the outset. Told them I owned shares, acknowledged their great performance to date and thanked them for the dividend cheque they'd sent me not a month prior. I then explained the situation. Within 30 minutes they replied apologizing profusely and cc'ing in their Senior Financial Controller requesting our client be paid immediately. An hour later the money was in their account. The moral of this story is this- if Plan A isn't working, try Plan B. Or C. Or D. Basically do whatever it takes to get paid. This company had incredibly stringent protocols for paying suppliers. But I knew someone, somewhere, would have the discretion to bypass them. And they did.

Cheers guys

Pty Ltd company vs individual. Which debtor is easier to chase?

Most businesses have a mixture of both customers. But is one easier to get money from than the other? Each have their own pro's and con's and establishing what type of customer you have as early as possible is vital.

Pty Ltd company pros:

- Often multiple people in the business you can speak with, demand payment from or escalate to.
- Often they will have an online profile including website where you can obtain vital info
- Shareholders who are invested in the success of the company meaning you enforcing your debt is the last thing they will want
- If your debt is more than $4000 and not in dispute then you can serve a Statutory Demand which gives them 21 days to pay you in full
- Most legal documents can be served by post meaning no risk of the debtor hiding or actively avoiding service
- Expensive to liquidate a company and risk of insolvent trading claims if they do go under. Often cheaper to just pay the debts and then deregister
- All company information is publicly available meaning it's easy to get their company name correct

Pty Ltd company cons:

- Very easy to abandon a company and start another one under a different name to avoid paying debts
- High failure rate of small businesses in Australia with many being run by people with zero acumen
- High likelihood the company also owes other suppliers money
- Potential for preferential payment action by liquidators if you get paid and then the company goes under

Individual pros:

- Only one of them. This means one credit file, one set of assets, one income.
- Going bankrupt is much more damaging than liquidating a company. Permanent record for life.
- You're dealing with a human with emotions that can feel guilt and remorse meaning they may wake up one day and want to pay you. A company isn't a living, breathing thing. It's merely an entity that exists only on paper.

Individual cons:

- May avoid any type of legal action and evade any attempts to serve them
- Easy to go bankrupt and costs nothing if using the public trustee
- For legal action to be successful you will need to have their name perfectly correct. This can be difficult.

Which do we prefer? Definitely Pty Ltd company's. The fact you can take enforcement action without needing them to co-operate is the biggest benefit. As is the Statutory Demand.

Cheers guys