Last Quarter Before EOFY - How Is Your Debtor’s Ledger Looking?

Unpaid debts can significantly impact your cash flow, especially as we approach the end of the financial year. Allowing debts to accumulate without addressing them can lead to financial strain, affecting your ability to reinvest or meet other important obligations.

Now is the perfect time to take stock of your debtor’s ledger.

“Too often, overdue debts are pushed to the back burner and fall into the 'too hard' basket, which only makes them harder to recover over time,” says Law Squared Disputes + Litigation lawyer, Natalie Markovski.

“In our experience, the longer debt remains unaddressed, the harder it becomes to collect. Not only can a debtor’s financial situation deteriorate, but you may also lose contact with them, complicating the recovery process.”

Don’t Let Overdue Debts Linger - Take Action Now

One of the simplest and most effective methods for encouraging a debtor to respond is by sending a letter of demand on a law firm’s letterhead. This can be an effective strategy, often prompting debtors to either pay in full or enter into an instalment payment arrangement.

At Law Squared, we operate exclusively on fixed-fee model for debt recovery— and across all other disputes and litigation matters. This ensures complete cost certainty from the outset, helping clients make informed, commercial decisions about pursuing debtors.

In a recent case, Law Squared successfully recovered 55% of the total debt due to a client after sending letters of demand to their debtor’s ledger. For the remaining 45%, detailed searches and investigations were conducted to assess the prospects for recovery.

Natalie reflects: “We were able to advise our client on whether pursuing litigation was commercially viable, providing them with the clarity and options they needed to move forward.”

Prevent Future Debts with Strong Credit Control Measures

Adopting proactive credit control measures is key to preventing overdue debts from accumulating in the first place. Businesses should consider performing credit checks before extending credit to new clients and consider obtaining a director guarantee or security deposit to secure any credit extended to the client.

Additionally, ensure that any terms and conditions include provisions for charging interest on unpaid invoices and claiming debt collection and legal costs.

Consider Alternative Dispute Resolution Before Litigation

Before escalating matters to litigation, Natalie also recommends considering alternative dispute resolution methods like mediation or structured negotiation. These methods can help resolve payment disagreements efficiently, saving you both time and money compared to traditional court proceedings.

The Key Takeaway?

Don’t let overdue debts pile up. Take a moment now to review your debtor’s ledger and assess how much debt you're likely to carry into the new financial year. Proactive management can help you save time, money, and stress.

Here To Help

If you need assistance reviewing your debtor’s ledger or would like to discuss a strategy for debt recovery, we’re here to help. Reach out to our Disputes + Litigation team here.