Company Debt collection is an activity that requires coordination and connection between different departments and divisions of the company to achieve the highest efficiency. Accordingly, the Debt Collection Department (“or In-house Lawyer”) often have a very important role in debt collection activities because of their understanding of the law and the ability to take appropriate legal measures to resolve debts. In the following article, TNTP’s lawyers will provide an analysis of the role of the In-house Lawyer in controlling and collecting Company Debt.
1. Overview of the In-house Lawyer Department
The In-house Lawyer department is a unit with expertise in the field of law within businesses. It plays an advisory role for business leaders and other departments to ensure business activities comply with legal provisions. Additionally, the In-house Lawyer undertakes tasks such as reviewing contracts and internal documents to protect business interests and ensure legal compliance, and participates in dealings with competent state agencies or in litigation related to the interests of the enterprise.
One of the most important tasks of the In-house Lawyer is to collect debts arising from business operations. Utilizing the necessary skills and understanding of laws and regulations, the business takes measures ranging from negotiation, demanding payment, to filing lawsuits at competent dispute resolution bodies to recover debts.
2. The Role of the In-house Lawyer in Controlling and Collecting Company Debt
a) Participate in the Debt Management Process
The corporate In-house Lawyer uses legal knowledge and skills to advise on debt settlement plans and participates in the enterprise’s debt management process. Debt management includes specific tasks such as:
• Developing processes for customer management, prevention, and preparing plans to address cases where customers may become potential debtors.
• Requiring customers with debts to confirm the debt and sign necessary documents to prepare for bad debt.
• Advising other departments on establishing criteria to monitor debt, classify debtors, and determine appropriate debt collection measures when necessary.
Debt management through legal means aims to minimize potential debts and prepare for debt collection if such debts impact the business’s financial flows.
b) Conduct Debt Collection Work
When debt collection activities become necessary, the In-house Lawyer is usually the direct executor of the necessary debt collection work. Debt collection tasks include:
• Negotiation: The In-house Lawyer uses professional skills to negotiate with debtors to persuade them to pay. Successful negotiations require patience, reasonable arguments, and a balancing of interests to encourage voluntary payment by the debtor. This often represents the first stage of debt collection performed by the In-house Lawyer.
• Payment Request: If negotiations fail, the In-house Lawyer may demand payment. This step involves a shift from gentle persuasion to a firm request for the debtor to settle the debt within a specified timeframe and to propose a feasible payment schedule. Along with these demands, there may be pressure to initiate legal action or other measures to compel payment. Payment requests can be made via email, mail, or direct meetings and discussions with the debtor.
• Initiating a Debt Recovery Lawsuit: This is a legal action to compel the debtor to pay the debt according to legal proceedings. The In-house Lawyer prepares the necessary documentation to file along with the petition and participates directly in the legal proceedings to urge the competent dispute resolution body to favor the business’s claim. This phase concludes once the competent authority issues a valid judgment or decision for enforcement.
To ensure an effective debt collection process, the In-house Lawyer must understand and comply with the law, take necessary measures at the right times, follow proper procedures, and safeguard the business’s interests.
This article by TNTP’s lawyers discusses The role of the In-house Lawyer in controlling and recovering a company’s debts. We hope it provides valuable insights for our readers.
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