Nowadays in business, it is common for enterprises to meet with debt problems. However, many enterprises do not know how to evaluate and collect debts, they let the debt prolong, or even lose that debt. Not all debts are bad debts, but enterprises still fail to collect debts. So what are the reasons for this problem? This article will answer the above question.
1. Enterprises do not keep contact and related information with the debtor frequently
In a cooperative relationship, even familiar customers and partners are at risk of incurring debt. Enterprises do not frequently keep in contact with the debtor, even forget the debt for a few years, which has created conditions for the debtor to avoid payment obligation, has let the debt last for many years. Until enterprises “collect” the debt, the debtor has no longer operated at the initial address, they even changed phone number, legal representative, etc., which makes debt collection unsuccessful.
The solution for this problem is that in the process of cooperation, whether they are new or familiar customers, partners, enterprises also need to frequently keep in touch and update the latest information about the address, business situation, phone number, legal representative of customers, partners. When debt arises, enterprises must frequently contact the debtor to remind them to pay so that they do not forget their debt payment obligations and have no chance to evade them.
2. Enterprises apply illegal debt collection measures
One of the things enterprises need to avoid when they have bad debts is illegal debt collection. To understand clearly what acts are considered illegal debt collection, readers can refer to the article “06 things you can not do when collecting overdue debts“. The consequence of illegal debt collection is that the debtor can rely on these things to denounce the violation of enterprises to the competent authority. At that time, enterprises not only failed to collect the debt but also were sanctioned for administrative violations.
The solution for this problem is that enterprises need to understand and only perform debt collection measures that are not contrary to the laws.
3. Enterprises do not have appropriate measures for each debtor
When collecting debt, enterprises need to understand that debtors are not the same. There are debtors having goodwill and debtors are having no goodwill to pay the debt. Depending on the debtor, enterprises will classify and have appropriate measures. In fact, there are many situations that the debtor has goodwill to pay the debt but enterprises use tough measures and make them uncomfortable and do not want to continue cooperating, for the debtor has no goodwill to pay the debt, enterprises loose and the debtor takes advantage of that to avoid the debt.
To solve this problem, enterprises need to pay attention to apply appropriate measures and attitudes to each debtor. For debtors with goodwill to pay the debt, enterprises should politely remind, and for debtors with no goodwill to pay the debt, enterprises should take tougher and stronger measures such as suing at the competent authority, denounce illegal acts of the debtor to put pressure and force the debtor to pay the debt.
4. Enterprises hesitate at lawsuits
In many cases, if the debtor finds any way to avoid payment obligation, the most possible way to collect the debt is to initiate a lawsuit. However, many enterprises still hesitate about going to court because of the long litigation time, high costs, having to prepare many documents and files, fear of losing reputation with customers and partners.
The solution to this problem is that enterprises should consider initiating a lawsuit if the value of the debt is large enough to spend time, effort, and money on litigation. In case, enterprises do not want to lose reputation with customers and partners, enterprises can reach an agreement with the debtor right from the moment of signing the contract about the competent agency to settle the dispute is Commercial Arbitration Center because, under the Principle of dispute settlement by Arbitration in the Law on Commercial Arbitration 2010, the dispute settled by arbitration shall be conducted in a non-public manner, unless otherwise agreed by the parties.
Above are the causes leading to unsuccessful debt collection, TNTP has shown ways to overcome for enterprises. TNTP hopes this article will be useful to you.
Best regards.
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TNTP and Associates International Law Company Limited
Lawyer Nguyen Thanh Ha
Email: ha.nguyen@tntplaw.com
