Credit Tips

Correct acceptance & credit procedures are the keys to successful debt collection and avoidance of bad debt regardless of whether the debt is current or delinquent...

It should be mandatory to clearly establish what 'entity' you are dealing with prior to the establishment of a credit account.

Is the 'entity' an individual, a company, a registered business name, or an unregistered business or partnership? If you have not clearly established the entity that you are to trade with then the chances of successful recovery diminish significantly.

Some tips…

  • A company must be registered with ASIC (Australian Securities & Investments Commission)
  • A business name must be registered with CAV (Consumer Affairs Victoria) or other similar government bodies interstate
  • Unregistered business or company names should provide a warning of a potential problem
  • Take care when opening an account with an individual. Are they the real entity?
  • Liability; and asset & income availability; varies in the debt collection process according to the entity type. Beware!
  • Written credit applications should be mandatory
  • ABN numbers should be used to assist in debtor identification
  • Credit checks should be mandatory
  • Consider guarantees of directors or related entities
  • Delivery must be able to be proven
  • Watch for variations in the debtor's payment habits
  • Adequate records should be kept
  • Accounts should always be reconciled
  • All correspondence, orders or variations should be written
  • Take care with ownership details. Has ownership of the business changed?

Score Debt collection has produced a simple document to assist you in evaluating your own procedures and to ensure that you understand the important issues we have raised briefly above. This document explains in detail each of these items, validation procedures, what to look for, and how to overcome any potential problems.

This e-mail address is being protected from spambots. You need JavaScript enabled to view it Please type "Free Copy Credit & Acceptance Procedures"in the subject line and clearly identify your name, your company name and a contact telephone number.