Proven Debt Collection Process To Recover Debt

Est. Reading: 3 minutes

You may be considering writing off a debt as unrecoverable or bringing in a debt collector or taking legal action. Are you sure you’ve tried everything yourself first when it comes to the debt collection?

To avoid future debt collection issues, I highly recommend implementing a process to follow when it comes to all customer invoices. A process makes it easier in the future when you know the steps to follow at each stage.

This is a process that I’ve implemented in my own business and keep on using it because it works!

Follow to step by step process below to create your debt collection process:

  1. You’ve sent the invoice and the debt is now sitting outside your terms and a reminder has been sent


  1. Give the customer a courtesy call with the benefit of the doubt - they may have forgotten or not received it. Then resend the invoice and see if you can get an agreed day to pay from them. (In Xero you can automate your invoice reminders moving forward see -


  1. Give the customer a set an agreed-upon number of days to respond and pay.


  1. Give them another call after 7 days at the very latest. Have a goal or set objective to make sure you get an agreed payment date from them. Communicate to them that if you know the date they will pay, you won’t have to continue to follow up and bother them about it.


  1. If they are showing signs of apprehension in paying, ensure you understand and be open to discuss if there were any issues with the invoice, or if they may be experiencing any difficulties paying. Consider offering them an agreed payment agreement with definite dates to pay by, but only if you are in a position to do so. It’s better for them to attempt to pay it, then to not pay it at all and it shows goodwill from both sides. In addition, make it clear that any late payments will result in cancellation of products or services and further action will need to be taken.

Also, be human here. If they have been regular payers in the past, a courtesy call to check everything is ok also is always a good idea. Remember - be sure to follow through though if you need to take the action and have said you will.


  1. If the customer is ignoring your communications after you have sent your reminders, you may need to consider issuing them with a final invoice reminder. A final reminder is your last chance to collect money with you. At this point be clear on what your next step will be. In a lot of cases, these final notices will state that if it is not paid by a certain date you will pursue further debt collection action. Be firm on this and ensure you follow through.


  1. The next step if you follow through with your pursuit to action is to take legal action or refer the matter to a debt collector who will discuss with you how they approach this and their costs, and how their process works and at what stage legal action will take place.

It is important to remain calm and professional at all stages of your communications. Collecting money is always difficult in the beginning but once you create a clear process it gets much. If however, you do feel that the situation is too far gone, seek advice.

I’d also suggest you evaluate your time in this process. If you are spending a lot of time chasing up on $100 you may want to pursue the debt for the principal of it, or, you may decide that it is non-recoverable. Your efforts and costs may not make it worth pursuing the money, at which point you may conclude to write off the debt.

If you encounter any situations where you are following up debts, consider reviewing not only your debt collection process but also your payment terms. Try and determine if changes can be made to the way you collect money more effectively. For example using an automated payment tool that takes the customers’ credit card details on acceptance of a job, or collecting money or a deposit prior to commencement of work.

I hope this helps and you’ve found some good key takeaways to assist you in your debt collection process.

If you have any questions regarding this blog article, please don’t hesitate to reach out to me.


Vanessa Bamford



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