Paramount Collections

03/11/2025

One of the core attributes of a good businessperson or professional is knowing which customers are worth working with to keep them buying and which to send to your best competitors

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02/09/2025

We are often asked if we are allowed to charge a debtor our fees.

Here's the position in simple terms:

CHARGING DEBT COLLECTION FEES TO A DEBTOR

• Office of Fair Trading (OFT) stance: In Queensland, the OFT’s guidance (under the Australian Consumer Law and the Fair-Trading Act 1989 (Qld)) is that a business cannot simply add debt collection fees or recovery costs to a consumer’s account unless there is a clear contractual right allowing those charges. Even then, the clause must not be unfair under the unfair contract terms regime.
• Your contract: If your contract expressly states that the debtor must pay collection fees, then contractually, you can claim them. However, enforceability depends on:
1. Whether the contract is with a consumer or another business. Consumer protections are stronger.
2. Whether the clause is considered “unfair” or a penalty. For example, a blanket “all recovery costs no matter what” clause may be struck down. A clause that says “reasonable recovery costs actually incurred” is more defensible.
3. Transparency and disclosure. The clause must be clear and not buried in fine print.
• What “overrules” what:
o If the contract is with a consumer, the law (ACL and Fair-Trading legislation) will override the contract. So even if your contract says you can charge debt collection fees, a court or QCAT may refuse to enforce that clause if it’s deemed unfair.
o If the contract is business-to-business, courts are more likely to uphold the clause, provided it is clear and not extravagant.
In practice, many Queensland businesses do include collection fee clauses, but if challenged (especially in consumer matters), they often cannot enforce them beyond the reasonable actual costs — e.g. legal filing fees or process server costs, but not “admin fees” or an arbitrary 20% loading.
Furthermore:
Legal Context in Queensland
1. Federal and National Law
• At the national level, Australian Consumer Law (ACL) does not allow debt collectors to impose fees unless those are specifically permitted in the original contract.
• The ACCC and ASIC jointly advise that debt collectors must not add fees that were not originally disclosed and agreed to by the debtor.

2. Queensland-Specific Legislation
• Queensland has its own regulatory framework for debt collection—primarily through the Debt Collectors (Field Agents and Collection Agents) Act 2014. This legislation governs the licensing and conduct of agents, but it doesn't expressly authorize the addition of debt collection fees unless already permitted by contract.
• Other guidance from the Queensland Government (e.g. on dealing with debtors) focuses on fair and law-abiding conduct, not fee imposition.
So—Which “Overrules” What?
1. If You're Dealing with Consumers
o The law takes precedence. Regardless of what your contract says, if it includes a debt collection fee clause, that clause may be considered unfair or unenforceable under ACL or Queensland consumer protection laws. Courts and tribunals like QCAT (Queensland Civil and Administrative Tribunal) can refuse enforcement of such terms if they are deemed abusive, punitive, or unfair.
o The OFT's role is to oversee compliance and investigate complaints—so if a consumer challenges a clause, they could raise it with OFT and it may be enforced or considered unlawful.
2. If Your Contract Is Business-to-Business (B2B)
o Contractual terms are generally more likely to be upheld between businesses, especially where both parties have negotiated terms. Provided the fee is reasonable, transparent, and clearly disclosed, it is more likely to be enforceable. But even then, the clause isn't immune—if it's excessively punitive or misleading, it may still be subject to legal challenge.
In Queensland (and generally under the Australian Consumer Law), the safest approach is:
• Case by case assessment. Look at the nature of the debtor (consumer vs business), the wording of your contract, and the reasonableness of the fee being claimed.
• If the debtor is an individual consumer → it’s usually not worth pursuing collection fees. Even if your contract says so, chances are high that QCAT or a court will treat the clause as unenforceable or unfair. Best to focus on recovering the principal debt and any statutory recoverable costs (like court filing fees).
• If the debtor is a business → there’s a stronger chance the clause will be enforceable, especially if it’s framed as reasonable recovery costs actually incurred rather than a flat admin fee or penalty.
👉 So in summary: individual/consumer = usually forget it, business = worth looking at the clause and context.

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24/01/2024

Mates-rates is a term often used in business. The term applies when your friends ask for a discount for your goods or services.
A long-time friend Derek Challis, an experienced debt collector, who unfortunately is no longer with us, had a perfect answer to his friends who asked him about mates-rates if they were to send him business.

Derek’s reply to a request for mates-rates was “… standard rates plus 20%”. When shocked friends would ask why they had to pay an extra 20%, Derek’s reply was, “… because I know you will not only tell me how to do my job, you will also take your time paying me, because we are mates.

The above story is an example of why working for friends and family is always fraught with danger. When it comes to money, friends, and family, these people often have no qualms about causing payment grief to their friends in business.

05/12/2023

IN BUSINESS, NEVER HAS THERE BEEN A TIME WHERE BUSINESS SURVIVAL HAS BEEN AT GREATER RISK
Business owners and/or managers are now faced with the greatest risks of operating a successful and viable business today more than has been the case in recent times. Today, many businesses are fighting a losing battle to protect their assets and businesses because their rights are being progressively destroyed. The businesses particularly in trouble are those which offer credit facilities in the B2C and B2B environments.
If you believe the above statement is a bit over the top, you are probably not in business and or are in one of two groups who don’t have to pay personally the financial and emotional cost of their thoughts and actions.
There are many negative factors facing business today. One critical factor in the destruction of creditors’ rights, which seems to be increasingly supported by government and people with vested interests. This has resulted in the unfortunate situation where:
1. badly run businesses can avoid paying suppliers invoices and can be excused of their debts because creditors are denied an inexpensive process to exercise their rights,
2. B2C and B2B customers can easily avoid their debts and get away with fraud, and
3. properly run business doing the right thing and acting responsibly to collect their debts in a timely manner, are penalised by preferential payment legislation.
The first of two groups responsible for a loss of creditor rights are the do-gooders of society and those who have never operated or managed a business. These people have good intentions and feel sorry for people who have paid the price of their own bad decisions, or have lost everything because of no perceived fault of theirs.
The second group are those who operate in the protected worlds of a political organisation, a government bureaucracy, or with associated vested interests which allows them to avoid the adverse effects of their actions which they inflict on others.
In the B2B commercial world, delinquent debtors are being given every opportunity to avoid their responsibilities by the Courts via increased costs and the insistence cases go through a pre-mediation process before an actual court hearing. All too often, this process supports the delinquent debtors’ interests and increases the costs to the creditor.
In addition, if the creditor should go through another form of recovery action, i.e., through QCAT in Queensland for example, the delay in hearing the case due to insufficient staff, just allows the debtor to further avoid their responsibilities.
From another perspective, as many in the business community know, even if they are prepared to go through the legal process, the Courts have no responsibility to force the losing debtor to pay their debts. In turn, alternately, many businesses are going to make the decision that it is not worth their while to offer B2B credit, just like the banks are already doing. As a result, the unintended consequences means that usually the start-up businessperson, or the small business operator, will suffer due to a lack of affordable finance.
Yet another example, is when businesses pay for the costs of creating professional and legal terms of trade. Unfortunately, now it appears many of these terms designed to protect the creditor in the event of default, are increasingly being limited to the detriment of the creditor. This is not withstanding the fact that these terms and conditions when signed off by customers, are responsible adults who claim to have read and understood the documents they have signed.
Finally, for this article, let’s talk about the effect of preferential payments refunds and those businesses that maintain an up-to-date process on making sure they are paid within terms agreed upon by the customer. If the customer subsequently goes into an insolvency administration, suddenly the business can be told to refund funds already collected in “the normal course of business”. This is yet another negative against those businesses which operate properly. Unfortunately, we see little evidence that the old legislation is being challenged because it is now so out of date these days. The fact is today, creditors are constantly reminded they need to collect funds from outstanding invoices to maintain cashflow.
Today’s business owners and/or managers are now faced with the greatest risks of operating a successful and viable business like never before. Today, many businesses are fighting a losing battle to protect their assets and businesses because their rights are being progressively destroyed. The businesses particularly in trouble are those which offer credit facilities in the B2C and B2B environments.
The unfortunate and unintended outcome for all concerned, businesses and customers, will be the lack of affordable finance to progress their lives. I say affordable income, because there will always be organisations, or other parties, which are not bound by legislative and legal niceties, which will offer finance at higher rates.

04/10/2023

MONTHLY BUSINESS CONUNDRUM

There are many business examples where we see that money was not spent upfront to avoid a problem in the belief that any future costs, if a problem occurred, would be of a minimal cost. Unfortunately, as too often happens, this belief is soon proven to be incorrect.

A perfect example is a business’s terms of trade. In the past, and probably still happens today, money is not spent on your business’s terms and conditions upfront on the grounds that your terms of trade would be honoured by most customers. Reality often proved otherwise when the customer didn’t pay. In that case, the business has few legal options to seek redress for the unpaid invoice and to cover the costs of enforcement.

Today, I suggest that this situation still exists, where proper documentation drawn up is not prepared by appropriate legal experts. The same would also apply for the documentation covering special orders, return of product, change to existing contracts, etc.

Another prime example from the past was the introduction of the PPSR (Personal Property Security Register). It took a number of large dollar loss situations to be exposed in the first few years after its introduction, to convince business owners and managers of its worth.

Spending on risk assessment exercises is still lacking for many businesses in regard to new and existing customers, completing annual reviews, when customers seek increased account limits, employing and finding the best people as employees, etc.

The list goes on where spending on upfront costs is deemed to be of less importance than the actual costs in the future which are often overly minimised, yet prove to be far more costly over the life of the business.

03/09/2023

September Business Conundrum

It may be a simplistic overkill to say it, but unfortunately when you sell your products and services on credit, all too often there is a chance that the customer will not pay for them. When this occurs, it is a time and costly exercise to seek the payment via investigation or negotiation. Alternatively, you can try debt collection or legal action. Irrespective which of these strategies you try, there is no guarantee that you will actually get paid.

The reason for non-payment may be one of many reasons, one of which will be the customer simply refuses or cannot pay. In these cases, you will find many barriers in your way of getting pad.

When you consider the situation for your business, in today’s world, due to these barriers, it may be beneficial to consider not extending credit at all, or only for a few dollars, or for very short period of time, for example seven days. After all, your business is not a bank or a finance company, despite your customer trying to make you act as one.

The above scenarios are easy to put forward, however they are not easy to adhere to or maintain. If you feel that your business must offer credit, you should build a “finance cost” into the price of your product, have a very good terms of trade contract and be willing to enforce your rights to get paid.

31/07/2023

August Business Conundrum
Accumulating bad debt for a business can have severe consequences, jeopardizing its financial stability and long-term viability. Bad debt refers to unpaid or delinquent debts that are unlikely to be recovered, often arising from customers who default on payments or are unable to fulfill their obligations. In this essay, we will explore why accumulating bad debt is detrimental to a business.
Firstly, bad debt directly impacts a company's cash flow and profitability. When customers fail to pay, the business's revenue is reduced, leading to a shortage of funds for operating expenses, inventory replenishment, and investments. This can lead to a vicious cycle where the business struggles to cover its financial obligations, making it increasingly difficult to recover from the losses.
Secondly, accumulating bad debt can damage the business's reputation and customer relationships. Unpaid debts can lead to frustration and disappointment among customers, tarnishing the company's image and credibility. This negative perception can deter potential clients and create a downward spiral in sales and revenue.
Moreover, bad debt can strain the business's relationship with creditors and suppliers. If a company consistently fails to meet its financial commitments due to accumulating bad debt, it may lose access to credit and favourable supplier terms. This can severely limit the business's ability to operate efficiently and meet customer demands.
Furthermore, excessive bad debt can lead to financial distress and potential bankruptcy. In extreme cases, businesses may find themselves unable to recover from the losses caused by bad debt and may be forced to shut down operations, leading to job losses and economic repercussions.
In conclusion, accumulating bad debt is highly detrimental to a business. It impairs cash flow, damages reputation, strains relationships with stakeholders, and can ultimately lead to financial ruin. To mitigate the risk of bad debt, businesses must implement rigorous credit assessment processes, maintain open communication with customers, and pursue prompt debt recovery strategies. By prioritising financial prudence, businesses can safeguard their financial health and ensure sustainable growth in the long run.

03/07/2023

There are so many business pressures these days, that sometimes mistakes are made in a number of areas within your business. One such area is not completing proper due diligence and obtaining authorised orders properly before starting and completing work. Delivering product(s) is another area where this situation occurs.

When purchase orders or requests of any kind are not authorised properly, the fundamental problem is you have delivered a product or completed work which has not been authorised by the customer. As a result, your business is at the mercy of the customer as to whether they pay the invoice in full in a timely manner, part pay the invoice or refuse to pay it all.

You can start all the legal action you like, threaten the customer in any number of ways. Irrespective of your action of choice, all that happens is that you have a costly dollar write off, or are publicly humiliated for incompetence, or increased the potential for a fraud to succeed.

In today’s business environment, there is no excuse for not having a properly prepared and signed authorisation to complete work, change existing work requirements, or when delivering goods and services.

Failure to do so, is always costly, and in a low profit or reduced sales environment, such as now, not having a properly authorised purchase or work order is just another way of losing money.

27/04/2023

Monthly Conundrum

There is no doubt a properly worded and designed contract and terms of trade, that has been signed off properly by the customer, is an asset for your organisation.

Unfortunately, too many businesspeople fail to appreciate its value and use this asset to protect their business’s interests. Often, businesspeople and employees with vested interests within the business fail to enforce the business’s rights keep putting forward the rationale “… that legal action is just throwing good money after bad.”

In reality, this philosophy is the root cause of why so many businesses continue to lose money to fraudulent and non-paying customers. The fact is today, many customers have now realised that the majority of situations that their suppliers will not take legal action. Alternatively, if the customer has developed a non-paying strategy, the supplier will accept a lower payment just to clear the debt from their books.

The argument about throwing good money after bad however, has an element of truth as creditor rights have been gradually stripped away over the years because of mounting costs, some of which have been enforced by the courts, public bureaucrats, and the rise of the entitlement generation.

Off course, inappropriate actions of the creditors themselves have not helped their cause.

At the end of the day, it appears too often creditors have not been prepared to fight for their rights, especially those which have the appropriate contracts and terms of trade signed off by the customer. In such circumstances, creditors cannot therefore blame their customers for taking advantage of them.

If the above situation has occurred over the good times, imagine how effective debtors will be avoiding their responsibilities in the future as economic times become more difficult.

02/04/2023

Historically, from the world of business, it was noted that about 10 percent of all customers would be completely honest, 10 percent would be dishonest, and the balance, 80 percent would only be as honest as you forced them to be.

Currently, especially in the world of consumer finance, the figures could be up to 10 percent honest, 30 per cent dishonest and 60 percent as honest as circumstances allowed them to be. In the business world, you will probably find the ratios something like 10 percent honest, 20 percent dishonest and 70 percent as honest as you force them to be.

On reviewing the above information, it is also essential to understand and manage the different types of customers and the levels of B2B debt you have with each customer type. After all, if the numbers of dishonest customers have large unpaid debts or are slow paying your invoices, this impacts on the financial sustainability of your business.

In light of the looming recession which seems to be an obvious outcome from the increasing interest rate rises, there are certain positive actions which all business can undertake. These include maintaining strong business disciplines, having available up-to-date sales solutions and contracts for different types of customers, plus creating variable sales strategies for customers with poor payment reputations and problems by processing invalid credit claims.

Knowing that a larger number of customers might have payment and financial issues moving forward, is an important factor. It is not just knowing this fact is enough, you need to be taking positive actions about minimising the effect on your business which is essential for the ongoing survival of your business.

28/02/2023

In every recession or downturn that I have experienced, and there have been quite a few, one constant business factor has remained. Many of those businesses which had restrictive credit term policies, or a focus on one type of customer, soon took on all sorts of different jobs and customers. The reason; to survive in the long term.

Survival is a wonderful motivator to help businesses focus on the need to find customers and profits to keep their business alive and themselves in a job. In order to survive however, businesses need to change as follows.

1 Management will have to become entrepreneurs again and not just managers of a “static-bureaucratic-red tape” type of business.

2 Salespersons will have to become “salespersons” again and not just order takers.

3 Credit management professionals will have an increasing role in taking on more risky customers and more respect will be given to due diligence.

4 New innovative sales programs will be required, which will include cash sales, cash-to-credit incentive programs, part-payment programs, etc.

5 Communication and customer services of the best quality will need to be established.

6 A WAR on identifying and fixing the causes of profit-robbing credit claims and slow-payment tactics of those customers which are adept at not paying within terms.

7 Business disciplines adhered to, and if changed for a particular customer or situation, a statement of why the discipline was overruled and the benefits for the business to warrant the change will be required.

In conclusion, no longer can a business rely on a static sales strategy program with strong defensive practices to eliminate bad customers and bad debts. There has to be an element of justified offensive strategies available to take on any customer which may lead to a profitable sale.

Get this process right, and your business may not only survive the business downturn or recession, but it may also grow to be a bigger and better business.