Before they start co-operation with a debt collection agency, companies often take certain steps on their own. At best, they are only inefficient, due to lack of properly trained staff or resources. At worst, they may even make it more difficult to recover the money as a result of rash decisions.
What is the most common way of acting? Companies usually send the debtor a written warning or two by e-mail. Sometimes they talk to the debtors on the phone. The conversation consists of requests and threats – such as entering the company in the National Register of Debtors. Many companies decide to turn this threat into action, because, as opposed to obtaining a court payment order, an entry in the register does not cost much.
Is it a reasonable step? It depends on the amount and on the debtor. In some cases, the entry in the register may even be counterproductive and the company who otherwise would be more than willing to solve the problem amicably may make our lives even more difficult. An entry in the register may lead to several problems:
- If our debtor is a company listed on the stock exchange, then such entry may expose it to serious problems. This is why such companies are usually reliable and care about their transparency. However, this does not mean that they always pay in time, because unpredictable events may occur at any time.
- Companies are not notified about the entry in the register automatically. They may learn about it when the bank refuses to grant them an operating loan, which may make the repayment of debts even more difficult.
If the debtor is cut off from external financing sources, or if they have difficulties obtaining new contracts, they will actually become less capable of settling their liabilities. Even if the debt is finally repaid, this may eradicate any possibility of future relationship with such company.
Entering the debtor in the Register may be effective, but it should be reserved only for dishonest debtors. However, in practice, such debtors are the minority. As we have already pointed out, most of payment delays result from difficult situations of companies that are waiting for payments from their debtors. This is why it is a better solution to entrust the case quickly to e debt collector who will attempt to settle it in an amicable way.
Published on: 9 November 2016