In business operations, one of the common issues that enterprises often encounter is resolving disputes and debt recovery. Both of these are related to the process of addressing financial issues and maintaining the cash flow of the enterprise, but they have different natures. In this article, TNTP will explain the difference between resolving disputes and debt recovery for enterprises.
1. Resolving disputes in business operations
Disputes in business operations can arise in every aspect of the enterprise’s operations. It can be a dispute regarding the exercise of rights and obligations of the parties in the contract execution process, such as disputes over non-delivery, non-payment, etc. Disputes related to the relationship between the enterprise and the employee, such as wage reduction, compensation, change of position, and dismissal, can also occur.
If the enterprise’s operations process is like navigating a ship in the sea, resolving disputes is similar to operating the ship in the right direction and avoiding sinking. If disputes arise but are not resolved in a timely manner, it can seriously affect the enterprise’s operations process, or even lead the enterprise to the situation of insolvency and inability to operate. Not to mention the legal implications that could result in fines or other legal actions against the enterprise.
Therefore, resolving disputes in the enterprise’s operations is equally important as operating the enterprise itself.
2. Debt collection for businesses
Debt collection is the process in which businesses take measures to force debtors or partners to pay their overdue debts. The purpose of debt collection is to ensure the liquidity of the business and minimize overdue debts to limit the credit risk of the business.
Debt collection methods may include negotiation, mediation, litigation, or the use of debt collection services from law firms. Depending on the amount of debt to be collected and the importance of the debt, businesses will apply appropriate measures.
If a business does not have effective and skilled debt collection methods, it can lead to many risks in the business operation such as losing customers or partners, losing control of cash flow, and facing difficulties in operation.
Furthermore, debt collection requires skills and contingency planning because businesses will also have to spend money and manpower, as well as time to carry out debt collection. This is not to mention that the debt collection process may be prolonged or even ineffective. Therefore, businesses need to invest in the legal department or use debt collection services to ensure the effectiveness of debt collection and save costs and time in the debt collection process.
3. The relationship between dispute resolution and debt collection
Although disputes and debts are two different issues in business operations, they are closely related to each other. When a business has overdue debts, it can lead to disputes arising. Conversely, when disputes arise, they can lead to difficulties in debt collection. Therefore, resolving disputes and debt collection are two issues that cannot be separated in business operations. Combining dispute resolution and debt collection will help businesses optimize their business operations, minimize risks, and ensure the liquidity of the business.