While faced with the problem of non-timely making of payments, pragmatic entrepreneurs order debt collection. The popularity of this solution results from its effectiveness and costs. The majority of the debt collection company charge the success fee that is due solely on the recovered amounts. Another obvious advantage are the possibilities of the debt collection companies that allow for realisation of actions on every stage.
This is what the ideal scenario looks like. According to a bit worse but more popular one, the entrepreneur demonstrates indulgence for long time, leading to the situation, in which the payment term expired long time ago and the money was not received. What is worse, such situation relates not to one but to several unreliable customers that are in default with payment of significant amounts.
When non-timely payment of receivables by our business partners cause such conditions of the company finance that we cannot wait any longer for the money, the best solution in financial terms will be debt collection with advance option. This solution combines all benefits resulting from debt collection and at the same time ensures fast inflow of cash, like in the case of sale of the debt.
When accepting the debt collection order, the debt collection company pays to us an advance in the determined amount for the future repayments of the debtor. Thus, we obtain cash – it may be even 70% of the nominal value of the debt and the debt collection company commences the actions aimed at recovery of the debt. The client transferring the debt to debt collection process may be from now on sure that the company will take the actions according to the scenario agreed before, aimed at conclusion of an arrangement and amicable recovery of the money. In case of a failure of the negotiations, on the basis of the already possessed documentation and performed inquiry, it will conduct court proceedings as well as will determine the property of the debtor and will participate actively in bailiff enforcement proceedings. Negotiations are pending on all stages. After recovery of the receivables, the remaining part of the collected debt will be transferred to the account of the client.
As it may be seen, the receivables trade market offers a lot of possibilities to obtain cash in exchange of payable receivables.
Nevertheless, independently from the current financial situation, we should remember that financial discipline consisting in ongoing monitoring of receivables is very important. When the customer starts to defer payments or stops making them, only fast response will protect us against financial jam as well as will facilitate fast and effective debt collection.
Published on: 9 November 2016