Late payment is one of the biggest cash-flow problems facing New Zealand small businesses. The good news is that most unpaid invoices are recovered with a clear, consistent process — not threats or lawyers. Here is how to collect what you are owed, in the order you should try it.
Please note: this guide is general information, not legal advice. For formal steps such as statutory demands or court proceedings, talk to a solicitor.
1. Prevent late payment before it starts
The easiest debt to collect is the one that never becomes overdue. Before you extend credit:
- Check the customer. Run a credit check and search the Companies Register for business customers.
- Get terms of trade signed. A verbal agreement is the most common reason debts become hard to recover. Signed terms let you charge agreed interest and collection costs, and set clear due dates.
- Register security on the PPSR if you supply goods on credit, so you can rank as a secured creditor if the customer fails.
- Invoice promptly with the due date, payment options and a reference on every invoice.
Debtorinfo subscribers get personalised credit control documents — credit applications, terms of trade and deferred payment agreements — in their own business name.
2. The first 30 days overdue: friendly, fast and consistent
Most late payers have simply forgotten, lost the invoice or are juggling cash flow. Your first goal is to make paying you easy and to keep the relationship intact.
- On the due date: a short, polite reminder with the invoice attached and a payment link.
- One to two weeks overdue: a second reminder thanking them for their business and confirming the account is still unpaid.
- Two to four weeks overdue: a phone call or a firmer reminder asking for a payment date.
Consistency matters more than tone. Customers prioritise the suppliers who follow up reliably. Automating these reminders — for example through Xero debt collection — means nothing goes quiet when you get busy.
3. Escalate with a third party
Once an invoice passes about 30 days and your own reminders have not worked, a message from a third party changes the dynamic. It tells the debtor that your overdue accounts are actively managed and that the matter will not simply go away.
Debtorinfo's escalation ladder is built around this moment: two reminders from your business, then four from Debtorinfo — a friendly third-party reminder, a credit rating warning, confirmation that the rating has been downgraded, and finally a Credit Stop. Third-party intervention succeeds where in-house chasing has already failed.
4. Offer a payment plan
A customer who genuinely can't pay in full can often pay in instalments. A documented payment plan is far better than an open-ended promise:
- Put the agreement in writing — amounts, dates and what happens if a payment is missed.
- Make it easy to pay: card, bank transfer or POLi through a self-service portal.
- Track every part-payment, promise to pay and follow-up. If you later go to the Disputes Tribunal, this record is your evidence.
5. Use credit reporting — the leverage debtors respect
Some debtors will delay for as long as there are no repercussions. Most, however, want to protect their credit rating so they can keep getting credit for a car, a mortgage or trade accounts. That is why debtors always pay the accounts that protect their A1 credit rating.
Credit reporting in New Zealand is regulated by the Privacy Act 2020 and the Credit Reporting Privacy Code. You need a lawful basis and appropriate notice — typically in your terms of trade or credit application — before a debtor's information is reported.
6. The Disputes Tribunal and the courts
If a debt is disputed or the debtor simply refuses to pay, you can take the matter further:
- Disputes Tribunal — generally for claims up to $30,000. It is informal, lawyers usually can't appear, and the fee is modest. See the official guide to making a claim.
- District Court — for larger claims. A solicitor is usually recommended.
Either way, success depends on organised evidence: the invoice, your terms, every reminder sent, notes of calls, any part-payments and the debtor's responses. Debtorinfo keeps all of this in one timeline and can help you prepare a Disputes Tribunal claim or Notice of Proceedings.
7. Statutory demands for company debts
Where a company owes you a debt that is due and not genuinely disputed, a statutory demand under section 289 of the Companies Act 1993 is a powerful tool. The company has 15 working days to pay, settle or secure the debt. If it doesn't, you may apply to the High Court to put the company into liquidation.
Because the consequences are serious — and serving a demand on a disputed debt can see costs awarded against you — always get legal advice first. Debtorinfo's statutory demand support gets your file complete and referral-ready.
8. Stay on the right side of the law
New Zealand's Fair Trading Act 1986 prohibits harassment and coercion when collecting debts, and misleading statements about what will happen if a debt isn't paid. Keep every communication:
- Accurate about the amount owed and the consequences
- Reasonable in frequency and timing
- Professional — no threats you can't or won't carry out
- Respectful of the debtor's privacy
Most claims for money owed under a contract must generally be brought within six years under the Limitation Act 2010, but don't wait — the older a debt, the harder it is to recover.
9. Debt collection agency or debt collection software?
Traditional debt collection agencies typically take a percentage of what they recover and step in once a debt is already old. Debt collection software lets you start earlier, stay in control of the customer relationship and keep every dollar.
Debtorinfo combines both worlds: automated debt collection software with the third-party escalation, credit-rating leverage and legal support of a collector — for a flat monthly fee from $29.95 + GST and no commission.