Currently, business debt collection has always been the top concern of business owners. To collect business debts effectively, the debt collector must have in-depth legal knowledge, analytical skills, and methods to solve debt settlement problems. The following article will analyze the basic steps of debt collection for companies.
Step 1: Verifying dossiers, requests for business debt collection
This is the first step that companies need to do for each business debt and debtor before engaging in debt collection. The verification, examination, and analysis of dossiers will provide us with a more general view of each debt case in order to analyze the options of settlement approach, the amount to be collected and the expected steps in the debt collection process. Specific steps include:
- Verifying the legality of dossiers and requests for debt collection: reviewing and evaluating the company’s dossiers and requests, comparing dossiers, vouchers and documents related to the company’s debt collection request.
- Have a preliminary verification of the payment subject and payment ability of the obligor
Step 2: Negotiating for collect business debt
This is the most important step in the debt collection process, requiring companies to have both debt collection-related knowledge and skills, and to be skillful and flexible to obtain the highest efficiency. During the process of meeting and negotiating with the party that is obligated to pay the business debt, if this party has goodwill in debt payment, debt payment via negotiation will be most optimal option. There will be many negotiating methods, but the ones to be applied in reality will be as follows:
- Accepting late payment in installments, divided into small terms and deciding on the final payment deadline
- Partially reducing or exempting from debt, interest or expense based on each company’s policy and point of time
- Flexible approval for payment in cash, goods, securities or debts clearing, obligations ..
- Other flexible options in negotiation suitable with the company’s policies and capabilities, and also ensuring the solvency and efficiency of debt collection
Step 3: Initiating a civil lawsuit in collect business debt
This is a solution putting a lot of pressure on the debtors, however, it is rarely taken into account by companies. For uncooperative, evading debtors, or for large debts, this solution is suitable and effective in business debt handling and collection. Of course, it should be considered the final solution because it is very costly in terms of cost, manpower and time. In addition, it is only effective when there is the support of a law firm, a professional lawyer, to protect the company’s legal rights and interests maximally.
The tasks that the Law Firm/Lawyer will support you are as below:
- Drafting a lawsuit petition, lawsuit dossier and initiating a lawsuit at a competent People’s Court or a commercial arbitration center
- Representing the client or appointing a lawyer to protect the client
- Consulting, drafting documents requesting the judgment enforcement
The above are the most basic steps to support companies in effective debt collection. In fact, some extremely complicated and difficult situations may arise, however, the appropriate application of professional legal knowledge and techniques as well as the flexibility in debt collection will bring about favourable results.