What is collections?

Collections runs in stages that match the age of the debt. In the first two weeks it is prevention: clear invoicing and automated payment reminders. From about day 14 to 30 the account gets calls, SMS and email, and the collector checks for disputes or hardship and offers a payment plan. Between 30 and 60 days the offers become more structured, with formal repayment agreements, settlement discounts or a credit hold for commercial customers.

After 60 to 120 days the account is usually referred to a specialist agency or the legal team for a letter of demand, and legal recovery, judgment and enforcement follow where the amount justifies the cost. Accounts that cannot be recovered are eventually written off but kept on the books for any later recoveries. Timings are longer for commercial debts than for consumer receivables.

Collections is regulated, but not by the guideline alone. The prohibitions on harassment, coercion, misleading conduct and unconscionable conduct sit in the ASIC Act and the Australian Consumer Law, and the ACCC and ASIC debt collection guideline explains how the regulators apply them, so collectors keep scripts, call recordings and authorisation logs. The Privacy Act, overseen by the OAIC, governs how personal information is handled and reported to credit bureaus, and AFCA handles complaints about financial firms.

Hardship matters too: staff are trained to recognise hardship indicators and offer temporary relief, restructured terms or payment pauses where approved, because ignoring hardship leads to complaints and regulator attention. APRA's credit risk guidance (APG 220) also expects regulated lenders to identify problem exposures early and govern remediation and write-offs.

Collections is cross-functional. Collections officers make the calls and negotiate; the credit manager reviews escalation triggers and approves restructures; legal counsel advises on enforceability; finance updates the provision for expected credit losses and books write-offs; and senior risk signs off on policy and material actions. Third-party agencies and debt purchasers are used for scale or specialist recovery, with due diligence, service levels and audit rights in the contract.

The metrics are simple: days sales outstanding, cure rate (accounts returned to current), roll rates between delinquency buckets, recovery rate on charged-off amounts and cost-to-collect. Collections results feed back into provisioning, pricing and credit decisions.