Can We Recoup Collection Costs From Debtors?
Generally speaking, it is possible under certain circumstances.
First of all, each state has its own legislation regarding debt collection fees, particularly QLD and TAS prohibits debt collectors from recovering costs from the debtor. Taking QLD as example, subject to Clause 27(1) of Debt Collectors (Field Agents and Collection Agents) Act 2014, “A person must not recover or attempt to recover from a debtor the costs or expenses of a debt collector for performing a debt collection activity or a repossession activity”. Therefore we cannot recoup the costs.
Except QLD and TAS, we can expect to recover costs when there is proper Trade Agreement in place. For example, a company in Victoria has set up a Credit Application Form through Xservices. The form contains terms and conditions that your customer need to be aware and agree, moving forward, all your customers that have properly signed the Credit Application Form will need to indemnify you any associated costs arising from the collection of outstanding payments, which including but not limited to interest, debt collection costs and legal expenses.
In such situation (eg Trade Agreement plus trading outside QLD & TAS) we would be able to add our debt collection costs on top of the original debts, and pursue total amount from the debtor.
Get in touch if you are owed any money and/or interested to get debt collection costs to be recovered in future.
Need more advice about debt collection? Read our blog “How To Use Debt Collection Services?”.
Consider our “Commercial Debt Collection” service.
Learn more about “Clients not paying invoices”.
*Disclaimer: This blog is for general information only, Xservices are not lawyers, you should seek independent legal advice if you have any concerns about your legal rights.