If you offer credit to your customers, chances are you know all about the revised guidelines issued in 2014 by ASIC and the ACCC designed to encourage reform across the debt collection industry.
The guidelines describe reasonable grounds, hours and methods for making contact with your debtors, as well as offer advice on how to avoid harassing them. What you may not know, however, is that these guidelines also stress the importance of good record keeping.
Why we need to keep it on the record
When executed poorly, debt collection can be messy business, but there’s really no need for it to be that way. Accurate record keeping is one way to keep your collections above board and in line with Australian industry standards. Keeping good records makes it easier for disputes to be settled promptly and fairly, and is likely to create more favourable outcomes for all parties involved.
The longer a claim goes on, the closer you get to having to settle in court. As a debt collector the more you can do to facilitate early resolution, the more likely you are to prevent costly legal proceedings.
Good record keeping also makes it easier for you to determine whether a debt is statute-barred, a debt you are not authorised by the courts to pursue, Accurate records ensure you are able to manage viable debts, collection dates and limitation periods with greater ease.
Having records readily accessible can be useful during calls with debtors, allowing you to accurately describe previous correspondence and any prior attempts made to recover debts. It’s important to have your facts straight whenever you talk to debtors, as presenting wrong or misleading information may be grounds for legal action against you. Debtors are also entitled to request copies of documentation relating to their debt, so keep this information handy.
What do you need to record?
Simply put, businesses must keep a record of all contact made (or attempted) with a debtor – electronically, in writing and in person. This includes recording details of any visits, phone calls, letters, emails and voicemails. You will need to note the time, date and nature of all calls, letters and any other form of debtor communication. Your records must be complete, current, and accurate.
It’s equally important to keep good records on any settlements - whether partial or complete. To ensure compliance, all payments records must include the date, amount and payment method.
Making light work of record keeping
The best way to approach record keeping is to be prepared. Create electronic or physical templates you can complete during calls to make it easier to keep track of your conversations. When storing this information electronically, be sure to back up your data. After all, what good is data if you lose it?
As well as keeping record of all verbal conversations with debtors, include letters and other written correspondence to help keep all records in one place. And if you agree to something verbally, remember to follow up with confirmation in writing as soon as possible.
Are your records up to scratch?
Are your debt collection records in order? Why not see how well they stack up:
- Do you have written and signed contracts outlining credit terms for customers?
- Do your customers have the opportunity to approve payment terms ahead of purchase?
- Can you quickly access files with all relevant information on each debtor (i.e., contracts, invoices, letters, emails, and records of all phone conversations)?
- Do you have accessible templates for quickly recording new conversations with debtors?
- Do you centrally store details of all contact you have with debtors?
- Have all reasonable steps been taken to ensure previously paid debts are not included in debts that are assigned, sold or contracted out for collection?
- Is the repayment (full or partial) of debts fully documented and backed up electronically?
If you choose to collect your own debts, it really does pay to behave. Be sure to understand the guidelines to know your rights and those of your debtors. Only then can you do your very best work to recover your debts.
Additional information and a copy of the revised Guideline can be obtained on our resources page. To discuss your debt collection and credit control requirements or to learn more about regulatory compliance, contact BCM.
This article originally appeared in Money in Business.
Published 12 March 2015 at 7:00AM by Natalie Walker