Entrepreneurs face daily administrative burdens,
impairment, frozen assets, loss of profits, and slowdown of company growth due
to the poor debt management.
We offer solutions to prevent such situations.
First of all, it is important to check the information
on the co-operation partner prior to the transaction - solvency, financial
standing and payment culture as a whole, including negative information such as
debt or risky counter parties. Information is obtained from various credit
information databases. When assessing the client's cooperation partner, the
guidelines and recommendations of the State Revenue Service regarding the assessment
of the counterpart's reliability are taken into account.
Secondly, it is advisable to develop credit risk
management procedure. It establishes procedures for communicating within the
company, reports of late payments, and a specific way for client's debtors to
be informed about the existence of a debt, demand to pay the late payment willingly
and the consequences of non-payment.
Thirdly, it is necessary to take timely action to
prevent payment delays. Contracts must clearly and unambiguously specify payment
procedures and deadlines. The warning stamp on the invoice will discipline and
inform about the adverse consequences that may occur if the invoice is not paid
in a timely manner. Adverse events may include the insertion of information on
late payments in the credit information companies’ databases.
Fourthly, legally correct and forward-looking
documentation is important. Company documents are often not prepared for later
evaluation, for example, for litigation (court). In this case, due to legal
obstacles and incorrect documentation, the company loses the case or consumes a
lot of time to eliminate such errors, giving to the debtor opportunity to avoid
fulfilling of their obligations.
Fifth, there are no miracles. If the counterpart is
delaying fulfillment of obligations, do not wait more than 30 days. Shorter debt
period means better chances to recover the debt and lower maintenance costs.