Credit Management for Businesses — Prevent Bad Debts Before They Happen

Why credit management matters

The best debt recovery strategy is preventing bad debts from happening in the first place. Strong credit management protects your cash flow, reduces your exposure to non-paying customers, and puts you in the strongest possible legal position if you ever need to pursue a debt.

At Hilton Bradley, our credit management advisory service draws on our deep experience in debt recovery and corporate insolvency. We know exactly what goes wrong when businesses don't have proper credit protections in place — and we help you avoid those pitfalls.

Terms of trade review and drafting

Your terms of trade are the foundation of your credit management framework. They're the contract between you and your customers, and they determine your legal rights if payment isn't made. Poorly drafted terms — or worse, no terms at all — can leave you with limited options when a customer doesn't pay.

We review and draft terms of trade that include:

• Clear payment terms — specifying when payment is due (e.g., 14 or 30 days from invoice)
• Interest on overdue amounts — incentivising prompt payment and compensating you for delay
• Right to suspend supply — allowing you to stop providing goods or services while payment is outstanding
• Director personal guarantees — making the directors personally liable if their company doesn't pay
• PPSR clause — granting you a security interest in goods supplied on credit
• Legal cost recovery — ensuring you can recover the costs of pursuing a debt
• Retention of title — keeping ownership of goods until they're paid for

PPSR registration

The Personal Property Securities Register (PPSR) is one of the most important — and most overlooked — tools for Australian businesses that supply goods on credit. A valid PPSR registration gives you a security interest in the goods you've supplied, which means:

• If your customer becomes insolvent, you can recover your goods ahead of unsecured creditors
• You may have priority over the company's bank and other secured creditors (depending on the type of registration)
• You have a stronger negotiating position if a dispute arises about payment

PPSR registrations must be done correctly to be effective. The registration must match the collateral description, the grantor's details must be accurate, and the registration must be in place before the goods are supplied (for some types of security). We handle PPSR registrations for businesses across all industries, ensuring they're done right the first time.

Credit policy development

A credit policy sets out the rules your business follows when extending credit to customers. It should cover:

• Credit assessment criteria — what checks you run before extending credit (ABN verification, credit checks, director searches, financial statements, trade references)
• Credit limits — maximum exposure per customer, with escalation processes for increases
• Payment terms — standard terms and any variations for different customer categories
• Collection procedures — what happens at 7 days, 14 days, 21 days, and 30 days overdue
• Escalation triggers — when to engage a lawyer and when to stop supplying

We help businesses develop credit policies that are practical, enforceable, and tailored to their industry and customer base.

Early intervention strategies

The earlier you act on overdue invoices, the more likely you are to recover the full amount. Our recommended escalation timeline:

• 7 days overdue — automated reminder email or SMS
• 14 days overdue — personal phone call from your accounts team
• 21 days overdue — formal written notice with consequences clearly stated
• 30 days overdue — engage Hilton Bradley for a letter of demand
• 44-51 days overdue — if the letter of demand is ignored, escalate to statutory demand or court proceedings

Debts become significantly harder to collect after 90 days. By intervening early, you maximise your chances of recovery and minimise the legal costs involved.

Debtor monitoring

For businesses with large customer portfolios, we can help you set up monitoring processes that flag potential problems early — before an invoice becomes a bad debt. This includes monitoring ASIC records for changes in director details, registered charges, or external administration events that might affect your customers' ability to pay.

The information on this page is general in nature and should not be relied upon as legal advice. Please contact us for advice specific to your situation.