Jump in Queensland court fees will make it harder for SMEs to chase bad debts: Expert
Included in this is a $1,000 fee to book a day in court, a hearing fee starting at $450 a day, and a 50% increase in the cost of filing documents to start legal actions.
The measures, published in the Government Gazette last Friday without prior notice or consultation, are expected to raise $3 million to be spent on the Queensland legal system.
Claims involving less than $150,000 will be exempt, and litigants could seek hardship exemptions.
The Queensland Bar Association and the Queensland Law Society have both written highly critical letters to Queensland Attorney-General Paul Lucas, according to a report in yesterday's Courier Mail.
Queensland Bar Association president Richard Douglas SC said the new fees were "tantamount to a new tax being imposed on Queenslanders in respect of services to which they ought to be entitled in the event that, usually through no particular choice, they are forced to litigate".
Law Society president Bruce Doyle told the newspaper the new fees were "likely to cause substantial inconvenience for litigants."
"Access to the Supreme and District Courts should not be limited to those who have the wealth to pay the new fees," he said.
Senior consultant at debt-recovery firm OPS Global Michael Todd says "even if you do get the money back, it still it a huge risk for businesses to take."
He says businesses often take outstanding debt cases to court in a bid to become impossible to ignore.
"You get to the point with unpaid debt that using the courtroom is a tactic to try and recover you money. But now, the risk is far too high to do that."
Todd, whose company specialises in recovering debt without using the legal system, says it is important for companies to pay attention to good account management.
"A good business with bad invoicing can quickly turn into no business at all."
"It's important for businesses, especially service-providers, to discuss their trading terms [with clients]. And if any customers baulk at these details that should be a warning sign that they're not comfortable with having to pay for services."
Todd was confident that if businesses employed good account managing practices, they could avoid the courtroom unless in the uncommon cases where someone was "beyond reasonable."
Top five tips for avoiding the courts:
1. Have a good invoicing structure – invoice all customers on time and have strict trading terms that suit your business.
2. Have a mediator to chase slow payments – having someone else follow up payments will remove the emotional connection you have with your customers.
3. Don't let your invoicing get behind – if you let two to three months' worth of invoicing pile up, you will end up with no cashflow.
4. Be very hard to ignore – don't let customers get behind on their accounts. Follow up with nice calls and letters to ensure they don't forget. No one will pay unless they're asked.
5. Always be the good guy – account management is a psychological process. If you can tap into how you need to approach debtors and the best way to work with them, you will get what you want.