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Tips for Managing Debt Recovery in Trades and Small Businesses

Small businesses and independent contractors in the building and construction industry are often left vulnerable to unpaid debt. Invoicing early and chasing payment are two important ways to help keep cashflow flowing but polite reminders aren’t always enough. Knowing what you can do to recover the debt you’re owed is not always easy.

Customers who ignore your early requests to repay their debts are likely to continue to do so until something changes so businesses should not feel bad about putting on pressure. Remember it’s a contractual relationship so it’s important that you have a copy of the terms and conditions signed by your customer, the relevant invoices, proof of delivery and any other communication or paperwork about the debt.

Independent contractors in the building and construction industry can also get help to recover unpaid debts under state and territory security of payment laws. These laws usually provide a dispute resolution mechanism for building and construction contractors who are owed progress payments for work performed for a hirer. While the laws differ between states and territories, generally they allow you to issue the hirer with a payment claim, which gives the hirer a strict timeframe in which to respond with either payment or a payment schedule.

Ultimately, you will still have to decide if you’re going to spend a lot of your working time trying to get customers to pay the debt yourself, or pay a debt collection agency or use debt collection software. Many small businesses and independent contractors see professional help with debt collection as a form of insurance and a way to reduce worry and stress about money.

AUTHOR

Dave Manville

All stories by: Dave Manville