Key facts
- You can chase your own customers yourself. A business collecting debts owed to it directly may not need a licence, unless it is a regulated business such as a bank.
- Anyone you hire to collect for you must hold a Police licence. Check the company UEN at go.gov.sg/verifyme.
- The Small Claims Tribunals hear claims up to $20,000, or $30,000 with both parties' consent, filed within 2 years.
- IRAS treats reminders, calls and a formal demand as reasonable recovery steps for GST bad debt relief, so keep a record of each one.
Check your own side first
Before you chase, make sure the invoice is right. Many late payments turn out to be paperwork problems, and a customer who has a reason to query the invoice will use it.
- The invoice is addressed to the right legal entity, with the right UEN.
- The amount matches the quote, purchase order or contract.
- You have proof of delivery or completion, signed if possible.
- The payment terms and due date are on the invoice.
- It went to the person or inbox that processes payments.
Step by step from the day it is overdue
You can do all of this yourself. The Police say a business collecting debts owed to it directly from its own customers may not need a debt collection licence, unless it is a regulated business such as a bank or moneylender.
- Send a polite reminderEmail a short note the day after the due date with the invoice attached. Assume it was missed, not refused.
- Call the person who paysSpeak to whoever approves payment, not only your usual contact. Ask directly whether there is a problem with the invoice. You need to know if this is a dispute or a cash flow problem.
- Send a statement of accountList every open invoice, its date and the total owed. It often surfaces invoices the customer says they never received.
- Pause further supplyCheck your contract first, then hold new orders or extra credit until the account is brought up to date. Tell the customer why, in writing.
- Get the amount confirmed in writingAsk the customer to confirm the amount owed by email or signed letter. It removes arguments later about whether the debt is real.
- Offer a payment planIf they cannot pay in one go, agree instalments in writing, with dates and what happens if a payment is missed.
- Send a letter of demandA final written demand stating the amount, a deadline, and what you will do next. See our guide to the letter of demand.
- Hand over, or file a claimIf the deadline passes, pass it to a licensed collector or start a claim at the tribunal or court.
Keep a dated record of every step: emails, call notes, the statement and the letter. If the debt is never paid, IRAS gives reminders, calls and a formal demand notice as examples of the reasonable steps it looks for before GST bad debt relief. Our guide to writing off a bad debt covers that claim.
When to hand over to a collector
Doing it yourself makes sense while the customer is talking to you. Consider handing over when:
- The customer has stopped replying to emails and calls.
- Promises to pay by a date have been broken more than once.
- Your staff are spending more time chasing than the invoice is worth.
- You hear the business is closing, moving or changing its name.
- You want to keep your own relationship clear of the chasing.
Anyone you engage to collect for you must hold a Police licence. Ask for the company UEN and check it at go.gov.sg/verifyme. Our debt recovery service picks up from your letter of demand on a success based commission: no recovery, no fee. Speedy Debt Collection Pte. Ltd. has UEN 201610411E.
Taking it to the tribunal or court
The Small Claims Tribunals hear claims for the sale of goods and the provision of services with a total value up to $20,000. The limit can rise to $30,000 if both parties sign a Memorandum of Consent. Claims must be filed within 2 years of the event that gives rise to the claim, and you cannot split one claim into several to stay under the limit.
Claims are filed through the Community Justice and Tribunals System. Lawyers cannot represent either side. You may first try eNegotiation or eMediation online, then attend a consultation with a registrar, and finally a hearing if the matter is still not settled. Our Small Claims Tribunals guide explains the process in more detail. Larger claims go to court, where you will usually want a lawyer.
How to prevent it next time
| Measure | How it helps |
|---|---|
| Written terms of trade | Set the payment period, the due date and what happens when payment is late. Have the customer accept them before the first job. |
| Late payment interest clause | Gives you a contractual right to charge interest on overdue amounts. See our guide to late payment interest. |
| Deposits | Take part of the price before you start, especially for new customers or custom work. |
| Progress billing | On longer jobs, bill at stages so you are never owed for the whole project at once. |
| Credit checks on ACRA Bizfile | An entity search shows whether the business is live and its registered address. A Business Profile shows when it was registered, its officers and its paid up capital. |
| Credit limits | Cap what each customer can owe at any one time, and review it when they pay late. |
ACRA also sells a People Profile, which shows a person's other business appointments, and a Corporate Compliance and Financial Profile with up to three years of financial figures. For a large first order, these are worth checking before you extend credit.