FACCS - Formation & Corporate Compliance Services

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Once a Letter of Demand is issued by a suitably experienced law firm, many debts are resolved satisfactorily without court action needing to be taken.

For various reasons, some debtors won't pay your debt until they realise you are serious by receiving formal notification from your solicitor. See Debt Collection Steps.

FACCS assists you to achieve a higher rate of collection success by working closely with a solicitor with over 25 years experience, Peter Townsend, and his team at Townsends Business & Corporate Lawyers. Should you wish to contact the firm they are located at Level 9, 65 York Street, Sydney NSW 2000 telephone: (02) 8296 6222, fax 8296 6200 email peter@townsendslaw.com.au.

By completing our straight forward, online debt collection documentation, for just $35.00 your debtor will receive a Letter of Demand directly from Townsends Business & Corporate Lawyers. If your debtor still does not respond, then the solicitors will contact you to seek your further instructions.

How is FACCS different from a debt collector?
Is it worth trying to recover this debt?
How much does it cost?
What are the steps of successful debtor management?
Other Frequently Asked Questions

How is FACCS different from a debt collector?

A conventional debt collector is a licensed Commercial Agent. Commercial Agents are not permitted to pass their charges on to the debtor and so they generally take a percentage of what they collect for you.

Commercial Agents have limited rights to appear in a Court and so they try and collect a debt by telephoning and writing to the debtor to pressure the money from the debtor. When the debtor refuses to pay, the Commercial Agent has little choice but to commence legal action and they usually do this through an associated law firm.

This means you often end up paying both a commission to the Commercial Agent and fees to a Solicitor.

FACCS operates a business that concentrates on providing high volume, standardised business services. Because of our superior use of technology and our lean cost structure, we generally provide these services at a significantly lower cost.

FACCS does not provide legal advice. Nonetheless, when using FACCS you get the best of both worlds. FACCS provides a low cost, fixed price facility to address the early stages of your debt collection activity where much collection success is gained, and then if necessary, Townsends Business & Corporate Lawyers undertakes any additional required activity according to your specific instructions.

Once you complete your application on the FACCS website FACCS will arrange for a Letter of Demand to be issued by Townsends Business & Corporate Lawyers on their letterhead. Each letter is individual to your debtor. Each letter is individually reviewed by a professional solicitor, and individually signed. Your debtor will know that you are serious!

Townsends Business & Corporate Lawyers naturally has the usual solicitor's rights to appear in Court, and use the strength of the legal system to extract payment. And of course, Townsends Business & Corporate Lawyers are able to recover a major proportion of their fees by applying to the Court for a costs order.

Is it worth trying to recover this debt?

It used to be the case that debts under $1,000 just weren't worth collecting. The legal costs were too high.

FACCS research shows that when a solicitor's Letter of Demand is issued, debts are more likely to be resolved speedily, often without court action.

Your fee to FACCS is just $35.00.

So, if you pay $35.00 for each debtor you send to FACCS, and you collect only 50% of your debts, then you can chase debts worth as little as $75.

You may decide it is worthwhile proceeding with debts smaller than this, if only to ensure all of your customers understand you are serious about money owed to you.

Of course no debt recovery action will be successful if

the debtor cannot be located
the debtor (either company or individual) has nil or insufficient assets and income
the debtor has a genuine and provable complaint with your goods or service
the debtor (being an individual) is declared bankrupt, or
the debtor (being a company) is placed in liquidation, or a receiver or an administrator is appointed.

How much does it cost?

The FACCS fee to issue a Letter of Demand is $35.00. If you are registered for the GST, you should recover $3.18 of this. There are no disbursements for a Letter of Demand.

The Letter of Demand is on Townsends Business & Corporate Lawyers letterhead. Your debtor will know you are serious! FACCS research shows that many debtors will contact you to resolve the debt at this stage.

So, in many cases this is all you will have to pay!

If the debtor does not then respond, and you choose to pursue the matter further, then subsequent fees will be charged by Townsends Business & Corporate Lawyers in line with the instructions you give them and their Costs Agreement with you.

Independently of FACCS, the Costs Agreement you make with Townsends Business & Corporate Lawyers will detail the specific scale of fees for your unique circumstances. However FACCS experience with similar matters is that fees generally seem to fall within the following ranges. Of course, many of these fees are recoverable from the Debtor when you win.

Uncontested Legal Action	$tba
To prepare, file and serve a "summons", obtain default judgement, take enforcement action and send you the proceeds of the action.
Initial preparations for contested action	$tba
To deal with defences, request for further particulars, notices to admit, offers of compromise, attend pre-trial review, etc.
Final hearing of Small Claims Division action	$tba
To prepare witness statements; conduct final hearing of claims of $10,000 and under
Prepare more complex General Division action	$tba
To arrange & attend call-over, prepare witness statements, brief of evidence, attend hearing, instruct barrister, etc. for claims over $10,000
Disbursements
Disbursements are the external expenses, other than solicitor's costs, involved in taking legal action.

The most common disbursements are court filing fees and fees for serving documents on people. These are controlled by the various State and Territory governments and vary according to the amount of the claim and the State or Territory in which the action is taken. Disbursements must be paid at the time they are incurred but most can be added to the debt and are therefore paid back to you when the debt is finally paid.

What are the Steps of Successful Debt Collection?

There is a lot of psychology associated with debtor management. The core of effective debt management is to manage all components of debtor management as a single process rather than focussing just on the external legal processes.

Overview to the Process
Why do people not pay their bills?
Your Internal Processes
How FACCS contributes to your success
What happens if the FACCS Letter of Demand is ignored?
Will an action be successful?

Overview to the Process

Internal persuasion, and negotiation
Letter of Demand, and negotiation
Issue Court proceedings
Obtain a Court judgement
Calculate interest on debt
Enforcement of Court judgement
- Summons for oral examination
- Warrant for asset seizure and sale
- Proceedings for garnishee of wages
- Notice of Intention to Bankrupt
- Notice of Intention to Commit Winding up Proceedings

Why do people not pay their bills?

Many companies "write-off" debts far too early, which can actually worsen their debtor management situation. It can create a culture that debtors can "get away with it".

Case Study

There is an interesting study in which a large newspaper dealing with many small amounts for advertising had an increasingly escalating bad debt issue. They had earlier made a decision that the cost of collecting each individual debt was too high to bother.

This became generally known with the obvious horrific consequences.

To solve the problem, the newspaper had to change the customer-culture. To do this, for an extended period they vigorously pursued EVERY debtor to a conclusion, irrespective of the individual collection cost.

The issue went away and errant debtors have returned to a commercially acceptable figure that is actually lower than industry norms.

Some debtors are genuinely unhappy with the product or service they obtained from you and flatly refuse to pay. Some debtors however choose the wrong product and expect you to wear the cost of their bad decision.
Some debtors don't pay because they unexpectedly find themselves without funds and just need more time to pay
Some debtors just can't manage their finances and need external controls put on their management of money, even if this management is court imposed.
Unfortunately, some are just "playing the system" and simply rely on the fact that only a few of their creditors will fully pursue collection of the debt.
Many debtors will "fob off" or ignore your demands and will only take you seriously if you involve a professional third party such as a solicitor.

You need to have processes in place for each of these areas.

Your Internal Processes

Effective debt collection is an art. In most cases, you do not want to have a fight with your debtor, but you do want to be paid. Therefore you need to strike a delicate balance between collecting your money, keeping your customer, making sure your community knows that you are not an easy target, and your overall collection costs.

Businesses engaging in the supply of credit on a regular basis should include in their terms and conditions of sale a right to recover all legal costs that the creditor incurs as a consequence of any debt recovery action. Townsends Business & Corporate Lawyers can help improve your Terms of Trade in ways that can maximise your chances of success in debt recovery. They can also teach you and your staff important tricks for collecting debts.

Of course, you need to be willing to recognise when your customer may have valid reasons to not pay you. So, you need to work with your debtor using gentle persuasion. Nonetheless, your "persuasion" is only as good as your willingness to back up your demands with legal action.

If persuasion does not work, then you should immediately use an appropriate amount of force. Once you involve a professional third party most debtors realise that you are determined to obtain payment and they will usually begin to co-operate.

Our one piece of advice in this respect is.

"Do it fairly, do it promptly, and do it firmly."

What then?

The law requires that an appropriate demand for payment be made upon a debtor before legal action can be taken.

If payment is still not made to you, you should write a letter setting a deadline for final payment and warning the debtor that legal action will be taken if the deadline is not met. You may include in that letter a suggestion that the debtor contact you to discuss any difficulties they may have with the debt.

How FACCS contributes to your success.

Let us assume that you have gone through these internal procedures. You've been fair, now you must act promptly and firmly to ensure that the debtor knows you are serious.

The next part of the process is very simple and designed so that you do not have to delay progressing your collection activities further.

Simply complete the form on our web site and FACCS will arrange the issue of a Letter of Demand on the letterhead of Townsends Business & Corporate Lawyers

It is that simple.

On receiving a letter of demand from Townsends Business & Corporate Lawyers, many debtors will immediately negotiate payment or settlement with you.

Townsends Business & Corporate Lawyers will contact you to seek your instructions about any remaining debtors.

What happens if the FACCS Letter of Demand is ignored?

Once you have decided to pursue further any remaining debtors and have instructed Townsends Business & Corporate Lawyers, the following legal processes can happen [note these processes are not included in the $35.00 fee which covers only the issue of a letter of demand].

As you peruse these processes, it will become obvious that it is clearly in the debtor's interests to settle the claim before Court action is initiated. This explains somewhat why the FACCS Letter of Demand is so successful.

A Statement of Claim is prepared and served on the debtor. It takes approximately two weeks to draft and file documents with the court and then arrange for service upon the debtor.
The Statement of Claim requires the debtor to not only pay the amount of the debt, but also the disbursements, statutory interest and a prescribed amount of legal costs.
If the debtor is a company then the proceedings must be forwarded by mail to its registered office. However, if the debtor is an individual, proceedings must be personally served upon the individual. From this time on, the debt is in the hands of Townsends Business & Corporate Lawyers and you should avoid dealing directly with the debtor.
For most people, being served with court proceedings is an unpleasant experience that will prompt them to try and resolve the debt.
Once served, in NSW the debtor has 28 days in which to pay the debt, make arrangements to pay it, settle the matter through negotiation or file a defence and fight the case. A defence must state why they believe the debit is not due and payable. An inability to pay a debt is not a defence. If the debtor pays, they are required to pay the money to Townsends Business & Corporate Lawyers who will account to you immediately.
Only a minority of legal actions to collect debts are fully defended. A small fraction ever end up in a Court hearing.
If the debtor offers payment by instalments Townsends Business & Corporate Lawyers will ascertain the appropriateness of such an offer with regard to the debtor's real ability to pay and will probe the debtor's sources of income, savings and assets and liaise with you regarding acceptance of that offer.
If the debtor ignores the summons, Townsends Business & Corporate Lawyers will apply to the court for a default judgment and then through the Sheriff's Office use a Writ of Execution to have the money legally extracted from the debtor. This is done by selling the debtor's goods, seizing the debtor's bank savings or seizing part of his or her wages.
The appearance of the Sheriff at the debtor's premises often ensures immediate payment or a court approved instalment payment process.
In relevant cases Townsends Business & Corporate Lawyers will advise you about commencing bankruptcy or company liquidation proceedings. At each stage of the action, the solicitors are permitted by law to charge fees to the debtor for their work. For example, when the solicitors serve the statement of claim upon the debtor the claim will seek payment of your debt, any accrued interest, court disbursements paid by you plus they will charge the debtor the fee allowed by the Court for their work.
If your solicitors then need to proceed to judgment, they can charge the debtor further fees for the steps they take.
If your solicitors need to take enforcement action; a further fee is passed on to the debtor.
If the debtor fights the case he must prepare and file a notice of grounds of defence, which sets out the details of his argument.
If this happens Townsends Business & Corporate Lawyers will advise you. They will obtain full particulars of the proposed defence, obtain any necessary documents from you and the debtor, advise you as to the legal prospects of success and liaise with you about the commercial viability of proceeding.
Of course if the matter goes as far as a Court hearing, you will be represented by your solicitor or barrister who will appear in Court for you and attempt to win the case and recover your costs.
In most cases, the court will order the unsuccessful debtor to repay to you a substantial part of the legal costs that you have incurred.