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  • Xservice Debt Collection

Guarantee and Indemnity: The Most Important Section to Secure Your Commercial Debt Collection

We recently received a few commercial debt collection enquiries that the debtor (business) has already been wound up by other creditors or closed due to insufficient profit. And the client is curious that are we still able to recover this debt?

Generally speaking, the answer is no, however it is still possible if there is a proper trade agreement between the parties, which covers Director’s Personal Guarantee. So what is guarantee in trade agreement? It is a promise by one (or more) entity to meet the set obligations (usually payments) of another entity (the “Principal”) when the Principal fails to do something, such like repay a debt.

Commercial debt collection guarantee and indemnity

Personal guarantees are the best tool that have our back in debt recovery, even if the debtor is insolvent. While a personal guarantee does not ensure the debt will be paid, it adds up to our winning rate, and in the event of the debtor’s insolvency, we’ll still have chances to recover the debt.

The best time to request a personal guarantee is when your customer is applying credit account with you, or before the trade starts. Otherwise try it when your customer needs to increase credit limit. If you have any query in managing credit accounts, do not hesitate to let us know.

Besides personal guarantee, indemnity clauses are also powerful in recovering debts, which will enable us to nominate debt collection costs to the debtor. Indemnity clauses should also be covered in the personal guarantee section to ensure guarantor(s) will be liable for debt collection costs. Therefore it is important to have your trade agreement been drafted effectively.

With Xservices, we specialise in commercial debt recovery, have experienced and licensed debt collectors on board, our services cover Melbourne (Victoria), Sydney (New South Wales), Brisbane/Gold Coast (Queensland) and Perth (Western Australia), no matter you are a small to medium size business or large enterprise, we CAN help. Get in touch now for a free consultation session.


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