Debt collection agencies in Australia

Avoid the cost of debt collectors with CreditorWatch Collect

While debt collection service providers are sometimes necessary, many Australian businesses aren’t using the most effective tools to recoup funds and avoid paying these additional costs.

CreditorWatch Collect relieves you of the burden of chasing down debtors and staying on top of debtor data and communications history. Automating the process from pre-reminders right through to payment portals CreditorWatch Collect reduces manual collections tasks, saves you time and gets you paid faster (without bringing in debt collection agencies).

To learn how CreditorWatch Collect could work for your business and see features such as customisable workflows and SMS reminders in action, speak to our expert team today.

What is debt collection?

A debt collector represents a last resort for creditors seeking payment from unwilling or late paying debtors. Businesses, banks, lenders, credit unions and other creditors can enlist the services of private debt collectors or a debt collection company if they believe they have exhausted in-house options to collect outstanding funds.

Debt collection can be a long and complicated process. Businesses with an automated, consistent collections process can often avoid the need for external debt collection. CreditorWatch Collect helps businesses avoid the pain and cost of external debt collection by maximising in-house tools to collect debt before it goes bad.

How does debt collection work?

Debt collectors offer three different types of service to creditors:

Traditional debt resolution services

For a service fee between 5-30%, charged to the creditor, the debt collector will communicate with the late or non-paying debtor via ‘Letters of Demand’ outlining potential legal action if the payment remains outstanding. Should the debtor fail to respond, the debt collector can attempt to communicate with them via phone, according to Australian Competition and Consumer Commission (ACCC) guidelines. Any recouped payment is returned to the creditor minus the fee.

Online debt collecting

Some debt collection providers have transitioned to conducting services and communication online, offering the potential for lower fees and quicker turnarounds for clients. However, some creditors may find traditional means of communication more effective for recouping owed money.

Debt purchasing

In the first two options, the creditors remain the ‘owner’ of the debt and receive the bulk of the payment if the debtor meets their obligations. Debt purchasing, or buying, is different in that the debt collector pays out the creditor and assumes ownership of the remainder. The creditor forgoes entitlement to further compensation for the debt, but they can also wash their hands of the affair.

How do you know if a debt collection agency is legitimate?

Different state accreditations and licences must be obtained to provide legitimate debt collection in Australia. For example, in New South Wales (NSW), a debt collector operating as a ‘field agent’ (meeting face-to-face with debtors) must successfully apply for a Commercial Agent licence to commence offering these services.

By contrast, in Victoria, no such licence is required, although there are still criteria that must be satisfied to conduct this work. For certain credit activities, ASIC requires that a business holds an Australian Credit Licence.

When engaging a debt collection agency for the first time, it’s advisable to ask any potential agency for proof of their accreditation and any necessary licenses.