The electronic calculator is a simple tool for calculation of the costs of recovery of the debt.
Pragma Inkaso educates the market in the field of management of liquidity and financial risk. Within this mission, the Company has made available a free electronic calculator of the costs of debt collection. The tool, being easy in operation, allows for fast calculation of the cost of debt collection actions conducted independently. The authors of the software suggest also how to minimise the incurred costs
Check how much does it really cost.
At the moment of occurrence of the jams, the entrepreneurs take a number of actions in order to recover their money. The majority of them starts with telephones with a reminder, sometimes visits at the premises of the debtor. A popular practice is sending of the calls for payment. Finally, a lot of cases end with submission of a petition to court. Each of these activities, even performed on an ad-hoc basis, is connected with costs. Nevertheless, the entrepreneurs base on the assumption that even if they are not successful in independent debt collection, at least it does not cost them anything.
– We wanted to show that this conviction is far from the truth. The majority of companies ordering debt collection for a lot of weeks or even months have previously ineffectively tried to recover the receivable through their own resources and incurred the costs connected therewith – convinces Danuta Czapeczko Sales & Marketing Director of Pragma Inkaso SA
The calculator allows for estimation of the basic administration, employee and technical costs of debt service. According to various estimations of experts, losses resulting from non-timely payment of receivables by business partners amount almost to 8% of all costs of conducting of activity. It is worth knowing that if the entrepreneur decides to order debt collection to a professional company, it will be possible to charge the debtor with the costs thereof.
How does it work?
By entering the data on the amount of the debt, on the number of made phone calls, on the number of trips and on the number of reminders sent to the debtor as well as on the number of legal consultations, we obtain the approximate cost of the service of debt on the amicable and court stage. In case of court debt collection, the calculator allows for precise calculation of the costs by totalling of the amount of the court entry fee and legal representation costs, determined accurately in the Regulation of the Minister of Justice, depending on the value of the subject of the dispute. For example, from the calculation performed by means of the tool made available by Pragma Inkaso for the debt in the amount of PLN 60 thousand (assuming that the employee delegated to debt collection, obtaining remuneration in the amount of PLN 3 thousand, makes 7 phone calls to the debtor, sends 2 calls for payments and pays 3 visits in the premises of the debtor located 60 km away from the company as well as uses two consultations with the lawyer) it results that the company incurred the cost of PLN 682.00 and the aforementioned activities lasted at least 12 working hours and 34 minutes. In case when amicable actions fail to be effective and the entrepreneur files an application to court for issuance of the order for payment – and we know that it is like that in the majority of cases – the time of the debt collection extends by at least one hour and the costs will increase already to PLN 7,301.00. It is also worth emphasising that these debt collection costs relate solely to one debtor.
The calculator is optimistic
However, the authors of the software stress the fact that the calculator takes into account solely the basic costs. These values should be increased by the majority of the entrepreneurs by the cost of exclusion of significant sums from the transactions, which instead of working, credit the activity of the debtor. The entrepreneur that ineffectively awaits payment of receivables often incurs the costs of incurring of a working capital credit. Margin, percent, interest – they are significant amounts that constitute an additional cost of the failure of the amicable debt collection. The same applies to time. The data resulting from the calculator relate solely to active working hours. We should also add the time needed for conducting of all procedures. In results from the practice of Pragma Inkaso legal office that the time of court pursuing of claims in our country amounts on average to two years.
How to save on debt collection?
The calculator calculates the costs of debt collection, which are incurred by the entrepreneurs regardless of the effect. Debt collection companies charge the success fee, so the entrepreneurs incur it solely in case when the cash is actually recovered successfully. The authors of the software emphasise the fact that the most common mistake made by the creditors is lingering with the enforcement of the receivables. The greatest chances for recovery of the debt occur in case of receivables with a minor degree of ageing, below 3 months. Moreover, recovery of the debt on the amicable stage means saving of time and money.
– In case of high values of debt, the court costs may be in fact a great encumbrance. We should remember that the court entry fee and the legal representation costs must be usually incurred by the entrepreneurs when they already have financial problems caused by ineffective waiting for payment by the customers. The debt collection company may propose crediting of these costs or debt collection with advance financing of the future payments from the debtor. The majority of them will also accept the task of recovery of the costs of their own commission from the debtor, since such possibility exists – adds Danuta Czapeczko
The calculator is available at the address: www.oszczedzajnawindykacji.pl
Published on: 11 February 2016