When to Engage a Debt Collector — Signs It's Time to Act

The signs it's time to refer

Most businesses can manage overdue accounts internally for the first 30–60 days. Beyond that, the calculus changes. Here are the clear signs that it's time to bring in Merion:

The invoice is more than 60 days overdue

The probability of collecting a debt in full drops significantly after 60 days, and again after 90 days. A debt that has sat unpaid for more than three months without resolution is a debt that needs specialist collection activity — not another reminder email.

Our Debt Age Impact Calculator illustrates how recovery likelihood falls month by month.

The debtor is not responding to communications

If a debtor stops returning calls, ignores emails, and is not engaging with your internal follow-up, continued internal chasing is unlikely to produce a result. A formal communication from a collection agency — referencing the creditor's rights, the amount outstanding, and the consequences of non-payment — typically produces a different response.

Promises have not been kept

A debtor who has said "I'll pay by Friday" three times and not paid is not a debtor who will pay without external pressure. This is one of the clearest signals that referral is needed. The promises demonstrate acknowledgement of the debt — which is actually useful evidence — but the pattern of non-compliance means internal management is not working.

Multiple follow-ups with no result

If you have sent automated reminders, made phone calls, and issued a letter of demand — and the debtor has not paid, not responded, or not entered into a payment plan — you have exhausted the standard internal collection toolkit. Continuing the same activity is unlikely to produce a different result.

The amount justifies recovery action

For smaller amounts (typically under $1,000), the economics of referral may not stack up. For amounts above that threshold — and certainly above $2,000–$3,000 — the cost-free nature of commission-only recovery means there is no financial reason not to refer. Use our Recovery ROI Calculator to compare the net benefit of referral versus writing the debt off.

How Merion's recovery process works

Merion operates on a strict commission-only basis — no recovery means no fee, at any stage. The process:

1. Referral: You provide the debtor's details, the amount owed, and copies of any invoices and correspondence. The more information you can provide, the stronger the starting position.
2. Assessment: Merion assesses the account and confirms the commission rate in writing before any work begins. You receive an engagement letter detailing the terms.
3. Collection activity: Merion makes contact with the debtor through its professional collection channels, in accordance with the ACCC's debt collection guidelines. This typically includes formal written demands, telephone contact, and negotiation of resolution — either payment in full, a payment plan, or (where appropriate) referral for legal action.
4. Resolution: When the debtor pays (in full or in agreed instalments), Merion remits your net proceeds promptly after deducting commission.
5. Legal escalation: Where necessary, Merion can refer accounts for court proceedings. This may involve additional costs, which will be discussed with you before any action is taken.

What to prepare before referring

Referral is faster and the outcome is better when you have the following to hand:

• The debtor's full legal name (not just a trading name) and ABN / ACN
• Current contact details: address, phone, email — including any personal contact for the director or principal
• Copies of all outstanding invoices
• A summary of the collection history — what you have sent, when, and any responses
• Copies of any signed credit applications, credit terms, or payment plans
• Any acknowledgements of the debt (emails, letters, text messages)
• Details of any security — personal guarantees, PPSR registrations, charges over property

What to expect

Recovery timelines vary with the debtor's circumstances and cooperation. Most accounts that are ultimately recoverable show some movement within the first 30–60 days of Merion's involvement. Merion will keep you updated on progress and will not take any material steps — such as commencing legal proceedings — without your prior approval.

If the debt cannot be recovered (for example, because the debtor is insolvent with no assets, or has genuinely absconded), there is no charge. You will be advised of this outcome in writing.

This guide is provided for general information only. Recovery outcomes depend on the specific circumstances of each account and cannot be guaranteed.