All businesses have a range of unpaid debts owed to them and it can be a timely exercise chasing up unpaid invoices constantly, but the reality is that if you do not get paid, you cannot survive.
If you have taken all of the necessary steps to try to recover some of these debts, it can often be time to pursue legal action, especially when owed to you by another company rather than an individual.
Serving a statutory demand
A statutory demand is one of the most common means of recovering a debt that is owed to you by a company. It has a relatively high rate of return in payment. A statutory demand is a formal demand governed by the Corporations Act 2001 and can be made when the debt, totals more than the statutory minimum, currently A$2,000.
A statutory demand requires the other company to pay the debt within 21 days or make an application to set aside the statutory demand, though the latter is typically only made when there is a genuine dispute or technical defect in the demand.
When serving a statutory demand, you must also provide sufficient proof of the debt owed. This is why it is incredibly important to get everything in writing and keep a good record of the attempts you have made to collect the payments owed. If a company fails to respond to the statutory demand, it is then presumed to be insolvent and will then follow steps to be wound-up. In the situation you are owned payment from several different invoices from the same company, these can all be bundled together into the one statutory demand rather than submitting multiple demands.
If a statutory demand is not a suitable option for you or you are seeking more than just the repayment of an invoice, you may choose to seek to pursue with legal proceedings against the debtor company. This would depend on the amount of money involved as to which Court or Tribunal would handle the claim. If you are successful and the Court orders the debtor to pay the debt owed to you, you will still need to follow the appropriate steps to enforce the Court Order. This can be difficult and can be an added cost.
You may even find that in many situations, the complexity, time and cost involved in going to court is enough to convince the debtor company to settle the matter and repay your debt before the legal proceedings commence.
For more information
Seeking legal advice early can go a long way in recovering debts owed to you in a timely and cost-effective manner. If you would like to understand more about debt recovery in Queensland or need assistance recovering debts you are owed, get in touch with one of our experienced lawyers for advice and support.