Commercial Debt Recovery


Commercial Debt Recovery Solicitors in QueenslandCommercial debt recovery is the recovery of debt between businesses, usually performed by commercial debt recovery solicitors.

If you have ever run a business or company, you will understand the impact that non-paying clients have on your cash flow.

Have you provided your client / customer with goods or services and they are refusing to pay their invoice?  If so then you may need to commence with the process of debt recovery.

The usual commercial debt recovery process will look something like:

  1. Overdue payment reminder letters (up to 3);
  2. Letters of demand for payment;
  3. Demands over the telephone;
  4. Attempt mediation with an objective third-party;
  5. Legal action by commencing court proceedings; and
  6. Payment or enforcement action.

Our experienced debt recovery lawyers will explain the commercial debt recovery process, give you tips and links to helpful debt recovery resources, compare traditional debt recovery methods, and outline our commercial debt recovery services.




Commercial Debt Recovery

A typical scenario in relation to a business debt will be something like this:

  1. You are a small to medium size business offering credit terms to your clients;
  2. You provide goods and/or services to a client, on credit terms for 7, 14 or 30 days typically;
  3. The time for payment of the invoice has passed, and the client has not paid.

Anyone who has had this happen can understand how unfair this is, and how much time you may need to invest to get this debtor to pay.

The first step is to send the debtor reminder letters.

Commercial Overdue Payment Reminder Letters

Overdue payment reminder letters (as I am sure you already know) are letters sent by the creditor business reminding the debtor business that they are behind on their payments.

We typically recommend sending up to three (3) overdue payment reminder letters.

The first overdue payment reminder letter should be a reasonable friendly letter. The debtor could have genuinely forgotten to pay, missed the invoice, been sick, etc.

There is no value in coming straight out of the gate with all guns firing.  We recommend giving them one (1) week to pay, then at the end of that first week, if they have not paid then you can send the second and third letters.  The second and third overdue payment reminder letters can be a little more urgent.

 Commercial Overdue Payment Reminder Letters  Commercial Overdue Payment Reminder Letters  Commercial Overdue Payment Reminder Letters

Be mindful that any communication with a business debtor must be for a reasonable purpose, and should be for the following reasons:

  1. To explain what you will do if they do not pay, including commencing legal proceedings;
  2. To ask why the debts have not been paid, or to ask why any repayments have stopped (if you have agreed to a repayment plan);
  3. To understand why the debtor has not been able to be contacted, and why the business debtor has not responded to your calls or emails;
  4. Make a demand, or demands for payment of the commercial debt;
  5. To provide the business debtor with information in relation to his/her/its business account with you;
  6. To attempt to get updated contact details if the business debtor has moved, or phone numbers have stopped working;
  7. To make arrangements for the payment of the business debt or to enter into a payment plan;
  8. To attempt to settle this matter, or arrange a mediation with the debtor; and
  9. To sight, or seize a security interest, for example collateral under the Personal Properties Securities Act 2009 (CTH) (“PPSA”).

You will only exacerbate matters, potentially prolong any recovery efforts, and even land yourself in trouble with the police if you attempt to do any of the following:

  1. Unreasonably harass or hassle the business debtor;
  2. Attempt to mislead or deceive the business debtor, telling them things that are not true in an attempt to coerce payment from the debtor;
  3. Breach the trust of, or take unfair advantage of, the disability or disabling circumstances of your business debtor, or act in any way unconscionably;
  4. Us any physical force against the debtor, or in any way coerce a business debtor, or a third-party to do anything; and
  5. Take anything belonging to the debtor that you do not have a right to take (secured property under the PPSA for example.

After you have given them some further time to pay the invoice(s) and if they do not, then you will need to engage a solicitor to send a letter of demand.

Letter of Demand for Outstanding Payment

We have written extensively about letters of demand for outstanding payment on this site.

Search our site for letter of demand content

We offer a FREE Letter of demand template below and FREE comprehensive letter of demand checklist written by lawyers.

If you get no luck, or your solicitors get no luck, from the letter of demand, then you may have to commence legal proceedings to recover this commercial debt.

Commence Legal Action for Commercial Debt Recovery

The recovery of business debts is usually commenced by claim and statement of claim.

You can commence action in the Courts or in the Queensland Civil and Administrative Tribunal (“QCAT”).

Jurisdiction of the Courts and QCAT

The monetary jurisdiction of the Queensland Courts are:

The monetary jurisdiction of the QCAT is:

  • QCAT – small claims of up to $25,000.00

Advantages and Disadvantages of QCAT in Small Claim for Minor Debt

The advantages of commencing proceedings in QCAT are:

  1. It is a lot less expensive than commencing in the Queensland Courts;
  2. The process can be a lot quicker than the Queensland Courts;
  3. QCAT is designed for self-represented people, and lawyers need leave to appear.

The disadvantages of commencing proceedings in QCAT are:

  1. The minor debt jurisdiction is mostly a no costs jurisdiction.  This means that you will not be able to recover your costs save for a few designated items as mentioned above;
  2. Legal representatives do not have an automatic right of appearance.  This means that if you want us to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.

Enforcement of Money Orders

The purpose of commencing legal proceedings is (amongst other possible reasons) to secure a judgment.

Once you have a judgment from the Courts, or a decision from QCAT registered in the Court, then if the debtor continues to not pay the judgment debt, then you will have to commence enforcement proceedings to enforce the judgment debt against the debtor.

You can enforce the judgment debt by one of the following enforcement warrants (if applicable):

  1. Enforcement Warrants for Seizure and Sale of Property;
  2. Enforcement Warrants for Redirection of Debts;
  3. Enforcement Warrants for Redirection of Earnings;
  4. Order for Payment of Order Debt By Instalments;
  5. Enforcement Warrants for Charging Orders;
  6. Money In Court and Stop Orders; and/or
  7. Enforcement Warrants for Appointment of a Receiver.

If you are unable to enforce the judgment debt through the Queensland Courts then you may want to consider insolvency as an enforcement option.  We can assist you with issuing:

  1. A statutory demand for payment; or
  2. A bankruptcy notice.

Non-compliance with a statutory demand raises the legal presumption of insolvency, and based on that legal presumption, a creditor can apply to wind up the debtor company.

Non-compliance with a bankruptcy notice allows a judgment creditor to present a creditor’s petition in the Federal Circuit Court of Australia.

To ensure that you do everything correctly, you are advised of the risks, and that your interests are properly protected, it is advisable to engage a suitably qualified commercial debt recovery solicitor.

Why use a Commercial Debt Recovery Lawyer

The law around debt recovery, securities, enforcement and insolvency is very complicated, and if you are not careful, you could have a costs order made against you.  Commercial debt recovery lawyers are fit and proper people, lawyers have to comply with strict rules and legislation.  A good debt recovery lawyer can help you with all of that and the following:

  1. Create and enforce due diligence procedures in relation to whether a new customer is eligible for a credit account;
  2. Obtain the correct security or charge which secures the debt in case of a default;
  3. Issue letters of demand outlining the rights of the creditor and foreshadowing what may happen if the debtor does not pay;
  4. Issue a debtor company with a statutory demand for payment, advise on the strict time requirements, and then the winding up procedure;
  5. Enforce any or all security or charge, by enforcement in the Court with jurisdiction, or the seizure and sale of the collateral under the PPSA.
  6. Commence legal proceedings in the Court with jurisdiction, or in the tribunal for the recovery of commercial debts;
  7. Commence enforcement proceedings to enforce a money order, enforcement warrants, enforcement hearings, issuing statutory demands, issuing bankruptcy notices;
  8. Make applications such as a Mareva injunctions or freezing orders to secure the assets of the judgment debtor; and
  9. Draft or update credit contracts to ensure that you are able to recover your debts effectively, you are able to recover as much of your costs as possible, and the debt is secured.




Disclaimer: The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.


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