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Debt Collection is a common issue for many businesses. Unpaid goods and services can affect profitability and cash flow and can often result in lengthy and costly disputes.
To prevent the accumulation of debt, it’s a good idea to have clear business terms in place to make sure your clients are aware of their payment obligations and your business’ services.
However, if you are experiencing debt collection issues with customers, there are a number of options available. Once you’ve exhausted internal debt collection methods, including reminder invoices, follow-up emails and phone calls, you may consider engaging a debt collector to recover the outstanding amount.
Why You Need A Debt Collection Agreement Before Hiring A Debt Collection Agency
Debt collectors often have the knowledge and skills to recoup the unpaid debt, however it’s a good idea to have a Debt Collection Agreement in place before hiring an agency.
A Debt Collection Agreement sets out the responsibilities of the individual debt collector and the agency and covers other important terms and conditions.
This is particularly important because there are a number of ways Debt Collectors calculate their fees, including a flat rate or commission basis. To make sure you are aware of the cost of the agency as well as any relevant guarantees, it’s a good idea to have a clear Debt Collection Agreement in place. Not only will this facilitate smooth relations between your business and the agency, it will also ensure you can recover your debts as quickly and efficiently as possible.
What’s Included?
As well as outlining the debt collector’s responsibilities, a Debt Collection Agreement will also cover:
- Services provided
- Fees and cost
- Handling of data
Need Help?
Whether you’re a debt collection agency or have just hired a debt collection agency, you’ll need a Debt Collection Agreement. We’d be more than happy to help!
You can reach out to our friendly team on 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations consultation about your specific situation and the legal documents that are right for you.
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