Weddin Shire Council is looking to reduce its level of unpaid rates and annual charges after figures for June showed arrears sitting above the NSW Office of Local Government benchmark.

During discussion of the June rates and annual charges collection report, Mayor Paul Best said Council was aware its arrears figure had risen to around 12 per cent which is above the state's benchmark target of less than 10 per cent.

He noted part of the increase was due to the timing of when rates are due and when reporting periods are finalised, creating what he described as an accounting discrepancy between May and June.

Despite the increase, Mayor Best said Council would be working closely with staff to bring the figure down.

"We're aware of the issue and staff are going to work towards bringing that back down again," he told councillors.

The Mayor said discussions at local government forums had highlighted the importance of keeping outstanding rates low, with some councils achieving arrears rates of less than one per cent.

"Blayney was literally one per cent. That's how low they got theirs down to, which is outstanding work," he said.

However, he stressed that debt recovery efforts needed to be balanced with compassion for residents experiencing financial hardship.

"It's hard, but we also have to be very cautious of putting people in hardship as well."

Councillor Jeanne Montgomery asked whether cost-of-living pressures were contributing to the situation.

Mayor Best said there were likely many reasons why ratepayers fell behind but emphasised that Council's hardship policy was available to help residents experiencing genuine financial difficulties.

"We've made it pretty clear to everybody, if they have any issues, come and see us," he said.

"The simplest way is to come and see us as quick as you can so we can get payment plans and things set up."

Council's Director of Corporate Services said staff were currently reviewing debt recovery procedures and hardship provisions as part of an updated policy framework.

Residents facing financial stress would be able to apply for hardship assistance, with each case assessed individually.

"There are a number of ratepayers who are in the area of hardship," the director said.

"That'll be part of the process that we go through in contacting them, trying to come to arrangements for payment and then assessing their situation to see whether they may qualify for hardship."

The director said Council would focus first on several large outstanding accounts, noting that a small number of ratepayers could have a significant impact on the overall arrears percentage.

Regular reports would return to Council as staff worked toward reducing the figure below the 10 per cent benchmark.

Mayor Best also addressed one of the strongest debt recovery measures available to councils: the sale of land for long-term unpaid debts.

"Sale of land is not something we want to enter into lightly," he said.

"It's a big thing to do and it comes at a fair cost to Council as well."

He noted that in the past some properties had been sold after long periods of unpaid rates and water charges, often in conjunction with Central Tablelands Water.

"That's the last thing we want to get to," Mayor Best said.

"We hope to get the situation sorted before we get to that level. But sometimes that's necessary and that's happened."

Council has confirmed a further report on rates and annual charges collections will be presented at a future meeting as efforts continue to improve collections while supporting residents facing financial hardship.