Credit Control Policy Template

Late payments don’t happen by accident—they happen when businesses don’t have a clear system for managing credit and chasing overdue invoices. This guide gives you a practical credit control policy framework and a 90‑day collections timeline you can adapt for your business. It covers everything from setting payment terms to knowing when to involve a lawyer.

If you’re chasing the same invoices month after month, the problem isn’t your customers—it’s your process. A written credit control policy gives your team a clear playbook for who gets credit, on what terms, and what happens when they don’t pay. The 90‑day collections flow tells everyone exactly when to call, when to escalate, and when to get a lawyer involved.

What to include in your credit control policy

Your policy doesn’t need to be long. It needs to be clear, practical, and followed consistently. Here are the core elements:

Tip: Include your payment terms and interest clause in your terms of trade and on every invoice. Under Australian law, you can charge interest on overdue accounts if your contract provides for it—but only if you’ve made the terms clear upfront.

The 90‑day collections flow

This timeline gives your team a structured escalation path from the day an invoice is issued to the point where legal action becomes necessary. Adapt the timing to suit your industry, but don’t skip steps—each one builds pressure and creates a paper trail.

Days 1–30: Internal collections

• Day 1: Issue invoice immediately on supply. Include payment terms, bank details, and your ABN.
• Day 7: Send a friendly email reminder. Reference the invoice number and amount. Keep the tone professional.
• Day 14: Phone the accounts contact directly. Follow up with a written confirmation of the call. Document any promises to pay.
• Day 21: Escalate to your credit manager. Send a formal overdue notice flagging that the account will be reviewed for credit suspension.
• Day 30: Issue a final notice. Suspend further supply on credit. This is your last internal step before external escalation.

Days 31–60: External escalation

• Day 31–35: Engage a specialist debt recovery lawyer. Provide them with the invoice, terms of trade, and all correspondence to date.
• Day 35–45: Your lawyer issues a formal letter of demand giving the debtor 7–14 days to pay. A lawyer’s demand carries more weight than an internal notice—it signals real consequences.
• Day 45–60: If the debtor responds, negotiate a payment plan with clear milestones. If they don’t respond, your lawyer prepares for legal proceedings.

Days 61–90+: Legal action

• For company debtors: Your lawyer can issue a statutory demand under s 459E of the Corporations Act 2001 (Cth). The company has 21 days to pay or face a presumption of insolvency—and the threat of being wound up.
• For individual debtors: File a statement of claim in the appropriate court (NSW Local Court for debts up to $100,000).
• Enforcement: Once you have a judgment, enforcement options include garnishee orders, writs for levy of property, and examination notices.
• Cost recovery: In most cases, the court can order the debtor to pay your legal costs—so the cost of engaging a lawyer doesn’t come out of your recovery.

Three things most credit control policies get wrong

1. No PPSR registration. If you supply goods on credit and don’t register your security interest on the Personal Property Securities Register, you could lose your goods entirely if the buyer becomes insolvent. Registration costs are minimal—the risk of not registering isn’t.
2. No stop-supply trigger. Continuing to supply a customer who isn’t paying only increases your exposure. Set a hard trigger (e.g., 30 days overdue with no arrangement) and enforce it consistently.
3. Waiting too long to escalate. The longer you wait, the harder it is to recover. Debts pursued within 90 days have significantly higher recovery rates than those left for six months or longer. The limitation period for debt recovery in most Australian states is six years, but your practical window is much shorter.

Key takeaways

• ✓ A written credit control policy gives your team consistency and accountability for managing accounts receivable
• ✓ Include credit assessment, clear payment terms, invoicing standards, and a defined escalation process
• ✓ Follow the 90‑day flow: internal reminders (Days 1–30), lawyer letter of demand (Days 31–60), legal action (Days 61–90+)
• ✓ Register security interests on the PPSR for goods supplied on credit
• ✓ Don’t wait—debts pursued within 90 days have significantly better recovery outcomes
• ✓ Engage a specialist debt recovery lawyer by Day 35 if internal efforts fail