The year-end is one of the most hectic seasons for businesses. They would have to deal with the demands of hitting revenue targets, meeting financial reporting deadlines, and finalising tax obligations. All of this can deprioritise debt recovery, in a time when cash is needed the most. 

Year-end obligations mean needing liquidity to fund superannuation, supplier settlements, tax lodgements, and insurance renewals. However, with cash locked up in receivables, payment delays can escalate to cash flow stress. Add that to the holidays, which cuts down the time and staff availability to complete collections; what would normally be a manageable sum of unpaid invoices can turn into outstanding debts that roll into the new year with lower chances of recoverability.

Fortunately, businesses can plan their collection strategy in advance and prevent cash flow disruptions during this demanding period of the year. Clear timelines, proactive communication, and structured escalation processes preserve cash flow and reduce the likelihood of late invoices carrying over into the new year.

What Businesses Must Account for When Recovering Debts at Year-End

Law Prohibits Debt Collection on any Public Holidays

The Australian Competition & Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC)’s joint debt collection guidelines prohibit direct debt collection activities on public holidays. This includes New Year’s Day, Australia Day, Good Friday, Easter Sunday, Easter Monday, Anzac Day, Christmas Day, and Boxing Day. Any form of direct debt collection during these days may be considered harassment and can expose businesses to regulatory penalties under the Australian Consumer Law (ACL), the Competition and Consumer Act 2010 (CCA), and fair trading laws within states and territories. 

For example, in Sydney, debt collection telephone or personal calls during any state or national holiday are specifically restricted. Businesses found in breach may face fines or formal complaints.

Operational Constraints During Public Holidays

Debt recovery efforts may also be impeded by the reduced operational capacity during the holidays. Businesses operate with limited staff or are closed entirely between Christmas and New Year’s Day, with some closures starting from December 24 to January 3. 

During this period, some of the organisation’s finance, accounts receivable, and collections staff may be unavailable, so they cannot make calls, send letters, or follow up on overdue invoices. 

Banking and automated payment systems can also cause a delay since payment approvals may not be executed until after the holiday. 

Customer Cash Flow Trend

In some sectors, one-third of businesses commonly experience payment delays of 10 to 30 days. Seasonal slowdowns during Christmas and New Year further exacerbate this. Many postpone their payment plan in December to prioritise year-end obligations and personal spending. In consequence, debtors may defer settling outstanding invoices until the new year. 

Once they slide into January payment cycles, receivables age rapidly as payment priority shifts to new operating expenses and fresh invoices. A simple 30-day account in December can effectively become a 60- or 90-day receivable if left unchecked. As invoices age, follow-ups require more effort, and escalation becomes more complex and expensive.

Irrecoverable Debts Can Be Used as Tax Deductions

Before year-end, businesses must assess which of their receivables are deemed irrecoverable if they want to realise them as a tax deduction. Although collection is the ultimate goal, it is practical to anticipate bad debts. This is important because if the assumption that a receivable is still recoverable is wrong, the business risks overstating income and planning the budget around cash that will never arrive. Furthermore, if a debt is truly irrecoverable but not written off before year-end, the company misses the opportunity to claim it as a tax deduction.  

For tax purposes, writing off irrecoverable debt must be supported by evidence. To be valid, the business must prove that it is unrecoverable through documented recovery attempts. For example, the organisation must have a paper trail to show follow-ups, negotiations, or engagement of professional debt collectors. 

Best Practices for Debt Recovery During the Holidays

• Plan Ahead

The holidays compress the timelines at the year’s end. Because of the activities in December, there are fewer opportunities to secure approvals, chase responses, or push accounts through payment runs. It is important to map out public holidays and internal office closures against collection schedules to identify the days when debt recovery would not be possible. Then, adjust debt recovery initiatives to account for these constraints. 

Collection activity needs to be pulled forward, not stretched out. If an invoice is still unresolved when operations slow, it is unlikely to improve after the holidays. 

• Pre-emptive Reminders

Pre-emptive reminders help secure a spot in the debtor’s final payment run for the year. By December, most accounts payable teams are already working to internal cut-offs. If an invoice is not approved or flagged before those cut-offs, it is typically pushed into January regardless of its status. Pre-emptive reminders, therefore, push the invoice into the debtor’s payment queue before approval bottlenecks form.

Internal approval cut-offs often fall between the first and second week of December. In practice, the most effective window is 10 to 15 business days before the debtor’s final December internal approval cut-off. This gives their payables team enough time to validate the invoice and resolve queries while critical personnel are still available.

• Prioritise High-Risk Accounts

High-risk accounts are those showing behavioural red flags, such as customers with slower responses or repeatedly requesting payment deferment. Prioritising these accounts is critical because they are the most difficult to recover when pushed until the next year. Focusing collection efforts on high-risk receivables means front-loading collection efforts: chasing early invoice approval, escalating disputes, and scheduling follow-ups way before their cut-offs.

A useful tactic to determine high-risk accounts is implementing a risk matrix. Consider each debtor’s payment history, debtor size, invoice ageing, and recent communication patterns. Accounts that score high should get direct attention from senior collection staff. If possible, engage in professional debt recovery agencies before the holiday slowdown begins. 

• Escalate Outstanding Payment

Escalation marks the transition from standard follow-up to formal recovery action. However, this process happens in a much shorter period at year’s end than in other months. Moreover, if the company is also looking to identify potential default accounts for tax deduction purposes, escalation becomes even more time-sensitive.  

For this reason, referral to professional debt collectors Sydney NSW should be considered earlier than usual. Set clear recovery instructions by specifying payment expectations, deadlines, and escalation thresholds to ensure a smooth process. Document all actions to support year-end reporting or tax deduction claims. 

Partner with Expert Debt Recovery Agents to Protect Your Year-End Liquidity

Managing year-end debt recovery is all about timing. With the right planning and professional support, businesses can maintain control over their liquidity and prevent receivables from ageing unchecked amid holiday slowdowns. 

If you need an external team of recovery agents before the holiday season starts, Bluechip Collections can tailor a collections strategy to suit the year-end challenges you may be facing. Contact us on 1300 462 114 or by completing our online contact form.