If they want 24 months, ask for real security first
Treat long terms as credit risk
A 24-month payment plan can look like progress, but for a creditor it is still a long extension of credit. If the debtor has already missed deadlines, you are not settling the risk, you are carrying it. Business.gov.au notes loans can be secured or unsecured, and asks borrowers to think about collateral and who will guarantee the debt. ([business.gov.au](https://business.gov.au/finance/funding/apply-for-a-business-loan?utm_source=openai))
Treat the offer like a loan, not a favour. ASIC says a bank, trade creditor or other financier may ask for a personal guarantee or security over a house or personal assets to secure the company’s performance. If the debtor wants long terms, ask what they will sign, not what they will promise. ([asic.gov.au](https://asic.gov.au/for-business/small-business/starting-a-small-business-company/small-business-company-directors/company-director-liabilities-when-things-go-wrong/?utm_source=openai))
Start with a personal guarantee
Start with a director's personal guarantee. It gives you a claim against the person who controls the company if the instalments collapse. ASIC also warns creditors to check the company and the people behind it, because a company is a separate entity but guarantees can still expose individuals. ([asic.gov.au](https://asic.gov.au/for-business/small-business/starting-a-small-business-company/small-business-company-directors/company-director-liabilities-when-things-go-wrong/?utm_source=openai))
Make the guarantee match the debt you are actually carrying. It should cover the full balance, any agreed interest, and reasonable enforcement costs if recovery becomes necessary. Get the names right, check the signatory against the ASIC record, and keep the document with the payment plan so there is no doubt later. ([asic.gov.au](https://asic.gov.au/for-business/small-business/starting-a-small-business-company/small-business-company-directors/company-director-liabilities-when-things-go-wrong/?utm_source=openai))
Source: Official guidance
Ask for security you can enforce
If there is property or equipment to secure, ask for registered security or a mortgage where that makes commercial sense. The Personal Property Securities Act says a security interest is an interest in personal property that secures payment or performance of an obligation, and ASIC says secured creditors may hold a mortgage or other security interest over company assets. ([legislation.gov.au](https://www.legislation.gov.au/C2009A00130/2023-10-20/2023-10-20/text/original/epub/OEBPS/document_1/document_1.html?utm_source=openai))
Registration matters because a paper promise is weaker than a registered security position. ASIC explains that unsecured creditors sit behind secured creditors if the company fails, while a PPSR search can reveal existing security interests. If the debtor owns land, a mortgage may be more suitable. If it does not, ask your adviser what can be registered. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/?utm_source=openai))
Make default expensive and clear
Build a default trigger into the agreement. The practical point is simple: if one instalment is missed, the whole balance becomes due and you can stop relying on the same broken timetable. That clause should also let you pause further supply and enforce any security if the plan fails. ([business.gov.au](https://business.gov.au/finance/funding/apply-for-a-business-loan?utm_source=openai))
Ask for a clause that accelerates the full balance on default, plus clear dates, amounts and a short grace period only if it still leaves you in control. The aim is not punishment. It is to make delay expensive enough that the debtor has a reason to stay current and a reason to speak early. ([business.gov.au](https://business.gov.au/finance/funding/apply-for-a-business-loan?utm_source=openai))
Take cash upfront and document everything
Do not accept a token deposit and call it protection. Ask for a meaningful first payment upfront so you get immediate cash and reduce the amount exposed if the second or third instalment is missed. If they cannot manage the first payment, the plan may already be too soft for the risk you carry. ([business.gov.au](https://business.gov.au/finance/funding/apply-for-a-business-loan?utm_source=openai))
Before you sign, put the guarantee, security, default terms and payment dates into one written agreement and check every name, amount and date. Then send the file, the debtor's latest proposal and your records to an adviser who understands recovery. CRP coordinates independent qualified professionals and can help you assess the next step. Call CRP today about debt recovery. This is general information only and is not legal advice. ([asic.gov.au](https://asic.gov.au/for-business/small-business/starting-a-small-business-company/small-business-company-directors/company-director-liabilities-when-things-go-wrong/?utm_source=openai))