Best Practice Series – Debt Recovery

With the world facing one of the worst global financial crisis, it will continue to be an uphill task for businesses to extract payments from non-paying clients.


If a debtor refuses or delays inordinately in paying its debt, a business may have no alternative but to initiate legal proceedings to recover the debt.


Listed below are some best practices that may be adopted by a business to enhance its prospects of recovering the debts owed to them. Businesses must be prepared to review their internal debt management system with a view to adopting these practices.



Ensure a good system of file management

The importance of having a good file management system cannot be overstated. This can be achieved by ensuring that a copy of all invoices, bills and delivery orders issued to the debtor are kept together. The documents should be filed in a systematic manner (usually in chronological order) for ease of reference.


If there has been any part payment of the debt, the statement of accounts should be updated to take into account such payment. A copy of the receipt should also be retained.


Any telephone conversation between the debtor and your staff whereby the debtor agrees to pay the sum owed should be confirmed in writing and dated.


If a request is made by the debtor for an extension of time to pay the debt, or for installment payments, this too should be put down in writing as it may be evidence of admission of the debt by the debtor.



Issue reminders regularly

It is good practice to issue to the debtor reminder letters for payment at regular intervals. These letters help to build up evidence of indebtedness and may, in appropriate circumstances, be construed by the Court as an admission of the debt by the debtor.



Be flexible and open to negotiations

More often than not, legal action can be avoided in recovering the debt owed. This would mean that creditors may need to offer flexible terms of repayment i.e. payment by installments, or to re-schedule the debt repayment scheme.


Creditors should ensure that negotiations are carried out on a ‘without prejudice’ basis.



Remain professional at all times

Do not resort to underhanded tactics or unlawful threats to recover the debt. Such tactics may jeopardise the prospects of recovery and destroy the business relationship between the parties. The use of unlawful means may also result in the debtor taking legal action against the creditor, causing damage to the creditor in terms of reputation, costs, time and resources.


Businesses are encouraged to implement the practices listed above. These practices will not only enhance the prospects of recovering debts, but reduce the time and effort required in doing so.



ROSEY LIM ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )


The Chambers Asia Pacific 2018 Rankings

Skrine has been ranked as Leading Firm for Dispute Resolution, Intellectual Property and Projects, Infrastructure & Energy.


The Legal 500 Asia Pacific 2018 Rankings

Skrine is pleased to announce that the Firm has achieved seven Tier 1 practice area rankings in The Legal 500 Asia Pacific 2018.

Our Tier 1 rankings are in the following areas: 
  • Banking and Finance
  • Corporate and M&A
  • Dispute Resolution
  • Intellectual Property
  • Technology, Media & Telecommunications
  • Real Estate and Construction
  • Labour and Employement

Skrine was also listed as one of the leading firms in the areas of Projects & Energy, and Shipping. 

Four Skrine partners were ranked as leading lawyers in their respective areas. 


Skrine Retains Who’s Who Legal Accolade for Malaysia

On 15th May 2017, the Who’s Who Global Awards was held in London, United Kingdom and Skrine was conferred the Award:

Malaysia Law Firm of the Year 2017

Skrine previously received this Award in 2013, 2014, 2015 and 2016.



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