Separate a debit instruction from a change to the wage loan
Distinguish operational debit changes from an agreed variation to an expensive wage-funding loan.
Corporate Recovery Partners
01 / 06
Changing the collection method is only one issue
Daily repayments on an emergency wage loan are draining the account. Someone suggests changing the bank instruction and dealing with the lender later. Before acting, obtain advice about the agreement and discuss the underlying payment problem. A bank-processing change and a lender's agreement to vary repayments are separate matters; do not represent one as confirmation of the other.
Imagine a cleaning company that borrowed to cover payroll and now wants weekly repayments. Gather the loan agreement, payment authority and recent lender communications. Identify which payment schedule is actually agreed. If staff have discussed a change by phone, record who spoke and what was said. A request noted by a customer-service employee may still be awaiting a decision.
business.gov.au recommends clear contracts and recording agreed variations. Ask the lender to explain any proposed repayment change, its effective date and the remaining terms. Have the appropriate adviser review the response. Do not update the company's obligations in the forecast solely because someone has changed a bank instruction or submitted a form requesting a different collection frequency.
If a variation is accepted, confirm how it will be implemented through the authorised payment process. In the cleaning example, the lender's approval and the debit system may need to be aligned so an unexpected collection does not occur. Retain the confirmation and ask who should be contacted about a mismatch. Avoid making unilateral assumptions about how a pending debit will be treated.
Show any amount still due under the actual arrangement while the proposed change is being considered. Ask the adviser about consequences and available options if the business cannot pay. Do not describe a stopped collection as a cancelled debt or promise the lender funds that are not available. The financial problem needs an assessed response even if the payment mechanism is altered.
Check subsequent transactions against the documented arrangement and raise discrepancies promptly through verified contacts. Keep the old and new schedules with the approval record. A clear distinction between bank instructions and agreed loan terms helps management understand what changed, what remains due and whether the emergency borrowing still fits the business's financial position.
