Small Business Debt Recovery - 8 Practical Tips

Small Business Debt Recovery in New Zealand

Running a small business is a juggle. You’ve got customers to look after, bills to pay, and a mountain of other tasks to manage. The last thing you need is the stress of chasing unpaid invoices. But if you’re dealing with slow-paying clients, don’t worry; you’re not alone. Many Kiwi business owners face the same struggle. The good news is that there are ways to simplify small business debt recovery, and it doesn’t have to feel like a full-time job. Here are eight practical tips to help you recover outstanding payments without losing sleep (or your sanity).

Do Your Homework on New Customers

Before you commit to working with a new client, it’s essential to do your homework. Not all customers are reliable payers, and a bit of research can save you a world of trouble. One simple way to check their reliability is by looking at their credit history. Many businesses don’t do this, but it’s a crucial step that can help you avoid future issues with debt recovery. You can ask new clients to fill out a Credit Application Form, Quotation Form, or Work Authorisation Form.

Pro Tip: Use online credit-checking tools to speed up this process. Some small business debt recovery agencies (like us) can even aid with these checks as part of a broader credit management service, making it more seamless for you.

Be Smart About Whom You Trust

When it comes to clients, some are easier to trust than others. If you’re working with a business, consider asking for a Director’s Guarantee. This gives you extra security if things go wrong. For newer businesses, continue with caution. While they may have potential, a startup is typically riskier than an established company with a proven history. Weigh the risks carefully before agreeing to a contract with a brand-new business.

Why it matters: A little caution upfront can save you a lot of stress down the line when it comes to chasing unpaid invoices.

Set Your Terms in Stone (Before You Start Work)

Your Terms of Trade function as your safety net. In New Zealand, under the Fair Trading Act, you are required to ensure your terms are clear before starting any work or supplying goods. Having well-defined terms upfront makes it clear what both parties can expect. It reduces the chances of awkward disputes in the future and sets you up for smoother debt collection if necessary.

Pro Tip: Always attach your Terms of Trade to your first client paperwork. It sets up expectations from the start, making you appear more professional, and helps prevent misunderstandings later.

A Handshake is Nice, but Paperwork is Better

While Kiwis love a good handshake deal, verbal agreements don’t always cut it when it comes to small business debt collection. If things turn sour, a handshake won’t hold up in court. So, make sure everything is in writing, whether it’s a contract, an invoice, or even an email confirmation. Having everything documented protects both you and your client and makes debt recovery easier if you ever need to escalate the situation.

Why it matters: Having written agreements means you’re covered in case the relationship turns difficult, and it can also speed up the debt collection process if needed.

Have a Solid System for your Debt Recovery

A solid system for handling overdue invoices is a must. If you don’t already have a structured approach in place, now is the time to set one up. A clear debt recovery process should include:

• Sending invoices promptly once work is completed.
• Following up with reminders—whether that’s through monthly statements, emails, phone calls, or text messages.
• Regularly reviewing accounts to catch late payments early.
• If a debt stays unpaid for more than 60 days, escalate it to a small business debt recovery agency.

Why it works: A consistent system helps you stay organised and professional, which increases your chances of getting paid on time.

Don’t Just Stick to Emails – Mix It Up

Emails are easy to ignore, and some clients may even screen their phone calls. To increase your chances of recovering unpaid debts, use multiple methods to communicate. Here are some options you can use:

• Emails
• Text messages
• Phone calls
• Physical letters (avoid using these too much as they can seem too formal)
• Social media (if appropriate and applicable)

Pro Tip: Collect multiple contact details when you first onboard a client. Make sure you have their email, phone number, and even a postal address if needed. Having more ways to reach them ensures you don’t lose contact with them in case one method isn’t effective.

Put One Person in Charge Debt Recovery

If your business has a team, appoint one person to manage your debt recovery process. This ensures that nothing falls through the cracks and that you have one consistent point of contact for managing unpaid invoices. It also frees up everyone else in your team to focus on the core business functions.

Pro Tip: Document your debt collection process thoroughly. This ensures that someone else can easily step in if necessary, so your process is always followed, and the system is still consistent.

Know When to Call in the Experts

Once an invoice is more than 60 days overdue, the likelihood of collecting it on your own drops significantly. That’s when it’s time to call in the experts. A professional small business debt recovery agency can step in and help recover your funds, often with better success than you would have on your own.

At Sentinel, we’re more than just debt collectors—we’re your partners in keeping your business financially healthy. We offer services that range from conducting credit checks to providing legal support, making sure your business gets the help it needs when it needs it most.

Why work with Sentinel for Debt Recovery?

• We specialise in small business debt collection.
• Our process is simple, stress-free, and tailored to your needs.
• You won’t pay anything until we recover your debt.
• We help you focus on growing your business rather than chasing unpaid invoices.
• Your privacy and the confidentiality of your clients are our top priorities.

Need a Hand with Small Business Debt Recovery?

Unpaid invoices don’t have to slow your business down. Whether you need expert advice, credit checks, or full debt collection services, we’re here to help. Get in touch with us today, and let’s tackle your debt recovery challenges together! We’ll work with you every step of the way to ensure your small business stays financially strong.