Time to get your debtors under control?

2 March 2012

Time to get your debtors under control?

It’s the start of a New Year – the perfect time to think about the cash flow of your business, and whether it might be time to reign in old debtors.

There are a number of ways to do this.  What you choose to do will depend on the amount owed to you and the length of time that your debtor has been lurking around.

On most occasions, nothing beats having a conversation with your debtor to find out why they’re not paying your account and when they expect to be able to do so.  However, this may not always produce the result you’re after.

There may come a time when you need to take control and put real pressure on your debtor.  You may do this by:-

  • Instructing a solicitor to write a letter of demand to the debtor.
  • Inviting the debtor to attend mediation at a Dispute Resolution Centre (the Department of Justice and Attorney offers a free mediation service).
  • Filing an Application for Minor Civil Dispute (Minor Debt) in the Queensland Civil and Administrative Tribunal (“QCAT”).
  • Instituting court proceedings.

There are important differences in QCAT and court proceedings.

QCAT

  • Parties can institute proceedings and appear in court themselves.  The process is relatively straightforward and in most cases, does not require legal expertise.
  • Parties can seek legal advice about their rights and responsibilities; however they usually cannot be represented in QCAT by a solicitor unless the other party agrees or QCAT gives its permission.
  • QCAT is a “no costs” jurisdiction, meaning that if you succeed in your action you cannot recover any of your legal costs against your debtor.
  • If your debtor owes more than $25,000, it will not fall within the jurisdiction of QCAT.  If you wish to take the matter further, you will need to institute court proceedings.

Court proceedings

  • It can be difficult to conduct court proceedings when you are self-represented.
  • Court proceedings involve complex rules, so you should obtain legal advice before proceeding.  In addition, they can be time consuming and necessarily involve legal fees (however, unlike QCAT you can recover some of those legal fees from your debtor if you succeed in your action).

Stay on top of your debtors at all times – don’t wait until the end of financial year to assess your business’ position.  To ensure your rights are always protected, do yourself and your business a favour and make sure you obtain legal advice before taking court action.

For more information please contact Rhiannon  Saunders at Williams Graham and Carman on 07 4046 1118.

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