A Guide to Navigating Debt Recovery
25 February 2025

Managing debt recovery can be a challenging task, but understanding the process can help you take control and ensure the successful collection of unpaid debts. This guide provides essential information on how to effectively manage and recover debts from clients or businesses. 


Understanding Debt Recovery 

Debt recovery is the process of collecting unpaid debts from individuals or businesses. It involves various steps, from initial communication with the debtor to legal action if necessary. The aim is to tackle debts as soon as possible before they become unmanageable for both your business and the debtor. 


Steps to Take for Debt Recovery 

  1. Assess Your Debt Situation: Begin by assessing your outstanding debts. Make a list of all the debts owed to your business, including the amount owed, the debtor, and the due dates. This will give you a clear picture of your receivables and help you prioritise which debts to address first.
  2. Communicate with Debtors: Open communication with your debtors is crucial. Contact them to discuss the outstanding debt and explore possible solutions. Early intervention is usually preferable to prevent problem debts from escalating to a level that impacts your business.
  3. Create a Recovery Plan: Develop a realistic debt recovery plan based on your business goals and financial situation. Prioritise high-value debts and allocate resources to recover these debts first. Stick to your plan and follow up consistently to ensure timely recovery.
  4. Seek Professional Advice: If you're struggling to recover debts, consider seeking professional advice. Debt recovery agencies and legal professionals can provide valuable guidance and help you create a tailored debt recovery plan. They can also negotiate with debtors on your behalf.
  5. Explore Legal Options: Legal action can help recover the owed amount, but it's important to seek legal advice before proceeding to minimise the chances of spending time and money pursuing unrecoverable debts. 


Debt recovery can be tough, but with the right steps, you can take control of your receivables. Assess your debt situation, communicate with debtors, create a recovery plan, and seek professional advice if needed. 


For more information, you can also check out the Government's debt management website: https://debtmanagement.treasury.govt.nz/

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