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Author: TNTP LAW

How businesses can avoid bad debt in the future

Although businesses have different goals and industries, their common purpose is to seek profits and generate income. One of the main reasons that can lead to cash flow deficits and reduced profits is the occurrence of difficult-to-collect bad debts. In this article, TNTP lawyers will provide advice on how businesses can prevent the occurrence of debts in the future.

1. Classifying and managing potential debts

One of the first things that businesses need to pay attention to avoid future debt is to assess, classify, and manage potential debts that have already occurred or may occur from partners. Classification can be based on various criteria, but the most fundamental ones are the Time of Debt Occurrence and the Value of the Debt.

The time of debt occurrence greatly affects the success of the debt recovery process because debtors tend to evade debts that have been outstanding for a long time without being reminded by the creditor. The longer the debt has been outstanding, the more difficult it becomes to recover, partly because debtors prioritize payments to creditors who exert the most pressure on them.

Regarding the value of the debt, businesses should prioritize the recovery of larger debts because the time required to recover the full amount of these debts will be prolonged, and to avoid situations where debtors become unable to pay, resulting in larger financial losses for the business. For smaller debts, businesses can consider sending reminders and notices before taking recovery measures to exert pressure.

Once a necessary list of debtors and their priority levels is established, businesses can easily make decisions regarding the debt recovery process and prevent any omissions or miscalculations of debts before proceeding with the necessary legal measures. The classification and management of potential debts are crucial stages for businesses to limit the occurrence of debts in the future and to prepare for the debt recovery process for inevitable debts.

2. Conduct regular payment requests and debt reconciliation

Before a regular debt turns into a bad debt, businesses need to regularly remind debtors to make payments. Regular contact and reminders will help businesses closely monitor the payment process of debtors. In case debtors encounter issues or difficulties in making payments, the business can be aware and prepare appropriate debt recovery measures.

In addition to urging and reminding, if possible, businesses can request debtors to sign a confirmation on the debt reconciliation statement. This will help the business closely monitor the payment process and the value of the debt. Furthermore, the debt reconciliation statement holds significant value in proving the business’s claims if the business decides to take legal action against the debtor at the authorized dispute resolution agency. With clear and authentic evidence from the debtor, the dispute resolution agencies will have sufficient grounds to consider accepting the business’s lawsuit request.

3. Utilize professional consulting services

Many businesses believe that professional debt recovery companies such as law firms only have experience in dispute resolution and debt collection. However, in reality, law firms also provide regular legal advisory services to help businesses mitigate risks during their operations, including providing advice on preventing bad debt risks.

The preventive advisory services for bad debt risks are carried out by experienced lawyers and legal experts who can identify potential risks and bad debts in business activities. This service is often conducted through financial assessments of businesses, examining financial records to identify priority debts for recovery, and reviewing important documents to ensure preventive measures are in place and prepared for debt recovery if necessary.

Law firms with years of debt recovery experience can provide a more professional evaluation than the internal staff of businesses that may lack experience in debt collection operations. Therefore, they can enhance the ability to prevent the occurrence of bad debts in business activities.

The above is an article by TNTP Law Firm on the topic: “How businesses can avoid bad debt in the future” It is hoped that this article will provide useful knowledge for businesses in your operations.

Best Regard,

 

Causes of bad debt arising

In today’s business operations, one of the main causes that lead to difficulties in cash flow control and affect profitability is the emergence of debt. So what are the common causes of bad debt? In this article, TNTP’s lawyer will provide insights into the causes of bad debt to give readers a better understanding of this issue.

1. Ineffective financial control

One of the most important causes of bad debt is ineffective financial control by businesses. Ineffective control is manifested by the absence of control procedures or unclear, specific, and transparent financial control processes, resulting in the wastage of the company’s financial resources. If the ineffective financial control persists, it will lead to a lack of capital for business development, reduce competitiveness, and even cause cash flow deficits, directly affecting the company’s operations.

Furthermore, ineffective financial control has a significant impact on the emergence of debt because the company cannot control or prevent potential debts with partners. This becomes a burden for the business over time because when the company lacks control and limits on debt, the amount of debt will increase over time, accompanied by capital deficits due to ineffective financial control within the company. This situation can push the company into a state of financial inability, and even lead to the cessation of operations.

2. Insufficient profits compared to expenses

The main objective in business operations for companies is profit. However, due to various reasons, ineffective business activities can result in low profits. Specifically, here are some reasons:

a) High input costs

Businesses incur input costs to provide services or products. However, depending on different periods and suppliers, as well as market demands, input costs can vary. In cases where the input costs exceed the profits generated, it will not be enough to compensate for the invested capital. This situation can lead to the emergence of debt if the source of the input costs is borrowed money.

b) Inadequate quality of output products/services to meet market demand:

In business operations, there is always continuous and harsh competition over time. If a business cannot provide products/services that meet the quality requirements of the market, it will gradually lose customers. Additionally, misidentifying customer segments, the quantity of customers, as well as the business’s ability to meet demand, can also lead to the inability to supply suitable products/services. If a business continuously fails to meet market demand, the emergence of debt will only be a matter of time because when it cannot meet market demand, profits will decrease over time. Eventually, the business will be unable to continue operating because the profits cannot compensate for the invested capital.

3. Inability to effectively recover the debt

One of the crucial reasons leading to the emergence of debt for businesses is the inability to offset expenses incurred in business operations with profits. In addition to ineffective business operations and inefficient capital management, the inability to effectively recover debt from unpaid partners is also a leading cause of bad debt for businesses.

There are several reasons why businesses may not have the ability to effectively recover debt, specifically:

a) Ineffective debt recovery team

To achieve effective debt recovery, the employees responsible for debt collection in the business need to be equipped with the necessary knowledge and experience to handle outstanding debts. In cases where these employees lack the required expertise in efficient debt recovery, it becomes difficult to recover the debts. Moreover, if the debt recovery personnel have an insufficient understanding of legal regulations, they may engage in unlawful debt recovery activities that seriously impact the business’s interests or even constitute criminal offenses as defined by the Penal Code.

b) Prolonged existence of debts

The longer a debt exists, the more challenging it becomes to recover. In such cases, the debtors tend to avoid payment to retain the capital for as long as possible. Allowing debts to linger for an extended period also poses risks to the business. Once the debtor accumulates a significant amount of debt, they may become unable to make payments. When the debtor loses the ability to pay, the chances of debt recovery become extremely difficult, often incurring additional costs without guaranteeing the full recovery of the debt.

The above is an article on the topic ” Causes of bad debt arising” based on the working experiences of TNTP’s lawyers. We hope that this article will bring benefits to the operations of your businesses.

Best Regard,

Copyright Disputes Resolution Services

Many actions of violating copyright and associated rights have occurred in the age of technological growth, causing harm to the rights and interests of writers, copyright owners, performers, organizations producing audio recordings and video recordings, and organizations making broadcasts. TNTP is a unit with extensive experience in the field of copyright, committed to accompanying and supporting customers in negotiating and resolving copyright disputes to ensure maximum legal rights and interests for customers.

1 . What disputes often arise in the field of copyright?

Disputes in the field of copyright disputes and conflicts of rights and interests of subjects in legal relations related to objects protected by copyright and related rights. Some typical disputes are as follows:
• Disputes between individuals and organizations to identify authors, co-authors, and owners of works;
• Disputes over copyright inheritance;
• Disputes arising from contracts for the use of works; disputes over contracts for the transfer or transfer of copyright rights;
• Disputes between authors, owners of original works, and authors, owners of derivative works (translations, adaptations, adaptations, compilations,…)
• Disputes between authors, co-authors, and related persons who are not authors, including collectors of materials for the author, financial providers, and other material means; and
• Disputes over related rights for organizations/individuals using works performing performances, recordings, video recordings, broadcasts, etc.

2. What do customers need to prepare before working with TNTP?

For disputes in the field of copyright, customers need to prepare information and documents to prove their rights to infringed works:
• Certificate of copyright and related rights issued by the Copyright Office under the Ministry of Culture and Information. Copyright certificates and related rights certificates are documents to prove that the person named in this Certificate is the author or owner of the work.

In the situation the Customer does not register the copyright at the Copyright Office, if he wants to prove that he is the author, the Customer needs to provide TNTP with documents that must prove that he created the work and that creation has been fixed in a material form.

• Literary, artistic, and scientific works expressed in the form of articles, books, magazines, tapes, audio discs, tapes, video discs … with infringing content;
• Creative leases; labor contract and work assignment documents in case the Customer (individual, organization) is the owner of the work;
• Legal wills, judgments, and decisions of the Court on the division of the inheritance in case of settlement of disputes arising from the inheritance of copyright;
• Copyright service contract in case of settlement of  copyright disputes service contracts;
• Invoices for payment of remuneration and royalties in case of settlement of disputes related to the right to enjoy these amounts;
• Contact information of the Disputing Party;
• Other relevant documents (if any).

3. TNTP process of implementing dispute settlement work

Step 1: TNTP customer contact, initial consultation, and quotation agreement

• Based on the information and documents provided by the Client, TNTP’s experts and lawyers will study the dossier, evaluate the feasibility of the case and give some initial advice.
• TNTP will send a Quote with a specific implementation plan to the Customer for the Customer to consider entering into a Service Contract with TNTP;
• In case the Customer agrees to the Quotation, TNTP will send the Service Contract to the Customer. The Parties will enter into the Contract and the Customer will pay the service fee to TNTP (if any).

Step 2: Implement dispute resolution

• Phase 1: Support customers to negotiate with the disputed party in the field of copyright:
• Phase 2: Support and represent the Customer to bring the case to handle according to the procedures for handling administrative violations and/or initiate lawsuits at the competent dispute settlement agency.
• Phase 3: Support the Customer in the process of enforcing the effective arbitration decision/judgment/award of the competent dispute settlement agency.

In case the Court or the Vietnam Arbitration Center issues an effective judgment/decision/award but the disputing party does not voluntarily enforce the judgment, TNTP will immediately assist the Customer in carrying out the procedure for requesting the execution of the judgment at the competent enforcement agency to force the disputing party to implement the legally effective arbitral judgment/decision/award.

Here is to share the dispute resolution process in the field of the copyright at TNTP. With the mindset of always protecting the legitimate rights and interests of customers, we are and will try to bring customers’ trust and peace of mind when using TNTP’s legal services.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Legal provisions on transfer of debt collection rights

With the strong development of the international integration market economy in Vietnam today, the trend of using debt collection rights in business and commercial transactions is increasing. The right to collect debts is increasingly valued due to its popularity and to meet the needs of convenient circulation in civil transactions, commercial business… In the following article, TNTP’s lawyers will clarify questions on debt collection rights and transfer of debt collection rights.

1. What is the right of debt collection?

According to the law, the right to collect debt is a property right. As a property right, debt collection right is used to secure the performance of a civil obligation. Property right is one of four types of property under current regulations (Article 105 of the Civil Code 2015), specifically: Property includes Material, money, valuable papers and property rights.

Debt collection right is a civil right recognized and protected by law, enabling the obligee to request the obligor to perform a property obligation towards him/her. A right of debt collection is used to require an obligor to pay the property arising from a contract or legal event or as required by law. The subject of debt collection right is an amount of debt, whereby it allows the holder of debt collection right to require the obligor to perform a financial obligation towards the obligee. In a broad sense, the debt collection right is understood as the right to demand the obligor to pay a sum of money or things, including receivables, the right to demand payment and other claims arising from a contract or legal event. or as required by law.

In terms of property law, debt collection right is a relative property right, which is only binding on the obligee. In other words, the holder of debt collection right can only satisfy his/her rights through the performance of the obligation of others (the obligee is always specified).

2. Legal provisions on transfer of debt collection rights

Not all individuals and organizations own real estate and tangible assets to carry out civil and commercial transactions. Now they can learn to use the right to collect debt. (a form of the intangible asset) to perform transactions such as purchase, sale, mortgage, transfer and other transactions for debt collection rights. On the other hand, contrary to the previous concept of always attaching importance to real estate and tangible assets and disregarding the role of movable property, intangible movables such as the right to collect debts now are being increasingly respected, and even occupying most of the assets of individuals and organizations.

According to the provisions of law, the right of debt collection is a property right, whereby the right holder can demand the debtor to pay the debt or have the right to request a competent State agency to force the debtor to make the payment, this is a legal claim.

The debt collection right is a claim, hence, it is transferable under the provisions of the claims transfer, then the assignee will be the party to have the right to claim the debt. Since the debt collection right is a type of property, its holder has the right to dispose of the debt collection right to others in different manners and through different forms of transactions such as buying, selling, giving, exchanging, inheritance, mortgage, etc. The transfer of debt collection right is closely related to the transfer of claim right in the civil obligation relationship. Accordingly, the party having the right to demand the performance of a civil obligation transfers that right to subrogation of the obligee as agreed. The transfer of debt collection rights is also different from that of other assets. In case of tangible assets, upon the transfer, existing assets must be handed over to the transferee. In case of debt collection rights, the transferor can only hand over documents to the transferee to prove ownership of such debt collection rights, which are already signed documents, papers and contracts.

The transfer of the right to collect debts will comply with the following provisions:

• Regarding the transfer:

Article 365 “Civil Code 2015” provides for the transfer of the right to demand:
“A party having the right to demand the performance of a civil obligation may transfer such right to demand to a subrogated of the obligee as agreed… here a person having a right to demand transfers such right to a subrogatee, the subrogatee of the obligee shall become the person having the right to demand…”

• The following requested rights are not transferable:

+ The right to demand alimony, claim compensation for damage caused by infringing upon life, health, honor, dignity and reputation;
+ The obligee and the obligor have an agreement that such rights are not transferable;
+ Other cases prescribed by law.

The transfer of the right to claim does not require the consent of the obligor. However, the assignor of the right to claim must notify the obligor in writing of the assignment of the right to claim, unless otherwise agreed.

• The obligor has the right to refuse to perform:

Article 369 of the Civil Code stipulates: The obligor’s right to refuse:

“Where the obligor is not notified of the transfer of the right to demand or where the subrogatee of the obligee does not prove the authenticity of the transfer of the right to demand, the obligor has the right to refuse to perform the obligation with respect to the subrogatee of the obligee.

Where the obligor is not notified of the transfer of the right to demand and has already fulfilled the obligation with respect to the person having transferred the right to demand, the subrogatee of the obligee may not demand the obligor to perform the obligation with respect to that subrogate.”

Understanding the right to collect debt plays a very important role in the establishment and execution of transactions related to debt collection. Hopefully, with the above sharing of TNTP lawyers, readers can get an overview of the concept of debt collection rights and legal provisions for the transfer of debt collection rights.

Best regards,

Legal Newsletter of April 2023

Dear valued Customers and Partners,

We are pleased to introduce to you our Legal Newsletter, which summarizes the key legal documents of April 2023, including:

  • Changes in bond issuance and trading under Government Decree No. 08/2023/NĐ-CP
  • New points of Circular No. 01/2023/TT-BLĐTBXH
  • Changes in VAT and tax management under Circular No. 13/2023/TT-BTC
  • The application of ChatGPT in legal practice
Download Legal Newsletter

We hope that these Legal Newsletters will provide useful value and ensure that readers stay up-to-date with relevant legal documents in their profession and daily life.

Sincerely,

 

 

How does the longer the debt period affect the debt collection

One of the important factors determining the success of debt collection is the time of the debt’s occurrence. If a debt has a short occurrence time, it will have a higher chance of being collected than a debt that has been outstanding for a long time. In this article, TNTP’s lawyer will analyze how the longer the time of the debt’s occurrence, the more it will affect the debt recovery.

1. A debt is considered to have occurred for a long time

In the debt collection process, the “golden” time for businesses to collect debts is from the time the debt arises, which is from 1 to 3 months. At that time, the debt collection process will be simplified because the debtor usually has not encountered any issues in their business operations, or any issues that have arisen can be easily detected to take necessary measures. Moreover, since the debt is still new, the reconciliation and confirmation of debts between parties will be straightforward because the accounting records have not been stagnant for too long, leading to difficulty in tracking and verifying the debt.

On the other hand, the period for a debt to be considered long is usually 12 months or more from the time of occurrence. The reason is that when the business has “forgotten” about the debtor during this period, it will not be able to determine its ability to operate, its ability to repay the debt, and even whether the debtor is still operating or not. During this period, the business also usually carries out annual tax reporting and then imports documents related to the debt. Therefore, verifying the debt takes a lot of time and is difficult to track.

2. The effects of allowing debt to accrue for too long

a) The debtor may no longer have the ability to pay

As mentioned above, a debt that has been outstanding for too long will make it difficult to recover the debt. A period of 12 months or more creates conditions for the debtor to avoid payment because they were not regularly reminded by the creditor beforehand. While debtors typically want to use the capital for as long as possible to create a business advantage and protect their cash flow.

In addition, allowing debt to accrue for too long can lead to the discovery that the debtor no longer can pay. Debtors who accrue many large debts at once but are unable to pay will often try to extend the debt or even “run away”. At that point, the creditor will no longer be able to recover the debt or will need to spend a lot of time, effort, or cost to recover it.

b) Difficulties in the process of litigation

In addition, in cases where the enterprise considers suing the debtor for a debt that has been outstanding for too long, the time limit for filing a lawsuit according to the provisions of the Civil Procedure Code may have expired. In that case, the enterprise’s rights will not be guaranteed, and even if there is a court decision, the enforcement phase may be very difficult and lengthy.

c) Checking and reviewing old documents takes a lot of time and leads to incomplete and inaccurate identification of the debt

Important documents when the enterprise is collecting debts include Contracts, Delivery Receipts, Invoices, and most importantly, a Confirmation of Accounts Receivable reconciliation signed by both parties. These documents are the clearest legal basis for proving the obligation to pay and accurately determining the amount the debtor must pay.

During 12 months or more, after completing the annual tax report, the enterprise tends to store these documents in the enterprise’s data warehouse. In case they need to be used for debt collection, reviewing these old documents will take a lot of time and affect the debt recovery process. If the enterprise does not store these documents completely, the important documents will be lost, making it very difficult to recover the debt when there is insufficient evidence to request payment from the debtor or accurately determine the amount the debtor owes.

Moreover, if the enterprise proceeds to sue the debtor in foreign courts, it will be more difficult to access the original documents and evidence, making it more difficult to win the case.

It can be seen that allowing debts to remain outstanding for too long will have a negative impact on the debt recovery process of businesses. Therefore, to ensure effective debt recovery, businesses need to take necessary debt recovery measures as early as possible when debts are incurred. The above is an article on ” How does the longer the debt period affect the debt collection?” by TNTP lawyer. We hope this article is helpful in the operation of businesses.

Best Regard,

Difference between corporate debt collection and personal debt collection

The debts of a business can arise from various entities in their business activities. However, the two main entities that may give rise to debts are individuals and legal entities. Distinguishing the characteristics of these two entities will help businesses come up with an appropriate debt collection plan. In this article, TNTP’s lawyer will present the differences between debt collection from businesses and debt collection from individuals.

1. Scale of debt

Business activities between companies often require larger capital and scale to meet the needs of business operations. Depending on each business field, contracts between businesses can range in value from a few hundred million to tens of billions of Vietnamese dong. Therefore, debts arising from contracts between businesses will also have a very large scale.

In contrast, transactions between individuals and businesses are usually related to equity participation or small retail sales, so the amount of capital contributed compared to businesses will be much smaller. Therefore, debts between businesses and individuals can range from several tens of millions to a few hundred million Vietnamese dongs.

2. The object of debt creation

For business debts, the object will be businesses that have business activities and are established under the provisions of the law. These businesses may be domestic or foreign with different scales. These businesses often have a clear operating address, operate as legal entities, act on behalf of themselves to conduct business activities, and are responsible for their assets. Debt collection with business entities is usually easier because creditors can easily look up information about the debtor business to carry out necessary activities.

For personal debts, individuals can be Vietnamese or foreign, living in Vietnam or abroad. Because the creditors are individuals, determining their personal information or address is often very difficult to access because such information is not publicly available and is strictly controlled by the police, leading to difficulties in carrying out debt collection measures.

3. Legal measures that can be applied

For debts owed by businesses, arising from contractual agreements within the civil sector, the business can negotiate payment through email, phone, or sending a request for payment letter. If the debtor does not cooperate, the creditor can file a civil lawsuit with the competent dispute resolution authorities to demand payment. Once a verdict, decision, or judgment has been issued by the dispute resolution authorities, the creditor can file a request for enforcement to the competent civil enforcement agency to take necessary measures to force the debtor to pay.

For individual debtors, the creditor can still perform all debt collection and civil lawsuit filing procedures as with debt collection from businesses. However, if it is determined that the debtor has committed fraudulent acts in the transaction, meeting the criminal offense conditions of asset misappropriation fraud or fraudulent acts, the creditor can send a complaint letter to the competent police investigation agency to initiate an investigation process. If there is enough evidence to verify the criminal behavior of the subject, the competent police investigation agency will initiate criminal proceedings, pursue, prosecute, and impose sanctions on the individual debtor according to the provisions of the law and compensate the business for damages.

Above is an article on the ” Difference between corporate debt collection and personal debt collection” by TNTP lawyer. Hopefully, this article is useful in the business operation process.

Best regards,

TNTP & ASSOCIATES INTERNATIONAL LAW FIRM

  • Office in Ho Chi Minh City:
    Room no. 1901, 19 th Floor Saigon Trade Center Tower, No. 37 Ton Duc Thang Street, Ben Nghe Ward, District 1, Ho Chi Minh City
  • Office in Hanoi City:
    No. 2, Alley 308 Tay Son str, Thinh Quang Ward, Dong Da Dist, Hanoi City
  • Email: ha.nguyen@tntplaw.com


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