Debt recovery is always an important issue for businesses to ensure financial stability. However, to improve the ability to collect debt, businesses need to have knowledge to know which debts are easy and difficult to have appropriate recovery plans. In the article below, TNTP’s lawyers will give opinions to advise businesses on how to identify easily recoverable debts in the construction sector.
1. Debts with Cooperative Debtors
The willingness of a debtor to cooperate and make payments is crucial for successful debt recovery. Identifying a cooperative debtor is relatively straightforward, as it often involves prompt payment when due. A debtor with a cooperative attitude will promptly initiate debt repayment. If immediate payment is not feasible, they will commit to a clear repayment plan.
However, it’s essential to note that debtors who willingly cooperate and pay promptly are relatively rare. This level of cooperation is typically achievable when the debtor possesses stable financial capabilities, ensuring quick debt settlement. Therefore, when identifying debts where the debtor is cooperative, businesses should focus on requesting payment as early as possible.
This article, by TNTP’s lawyer, provides insights into recognizing debts that are easy to recover in the construction industry. It aims to offer guidance to businesses in enhancing their debt recovery capabilities.
2. Stable Business Operations of the Debtor
A prerequisite for a debtor to have the ability to make prompt debt payments is to have good financial capabilities. In this regard, businesses need to determine the financial capacity of the debtor and concentrate on requesting payment. Typically, a debtor with stable business operations exhibits the following characteristics:
• The debtor enjoys a steady stream of income and regularly promotes business development.
• The debtor’s headquarters and factories operate stably, with a consistent number of employees.
• Few disputes related to debts arise in connection with the debtor.
In cases where it is confirmed that the debtor maintains stable business operations, businesses should proactively request payment. When the debtor continues to operate steadily, even if they are not cooperative in making payments, businesses can still initiate legal proceedings to compel the debtor to pay. With the debtor’s stable operations, relevant government agencies will easily carry out enforcement measures to recover the debt.
3. Debts That Have Been Reconciled
Reconciliation of debts is a document confirming and listing the debts between parties to determine the final amount that the debtor is obligated to pay, with confirmation from the debtor. This is an important document for debt recovery, as once a business has compelled the debtor to confirm, the debt recovery process becomes much smoother.
Debts that the debtor has confirmed in the reconciliation document are more likely to be recoverable. When the debtor acknowledges the value of the debt in the reconciliation document, the business has sufficient grounds to request payment based on the figures in the reconciliation document. Confirmation in the reconciliation document is evidenced by the signatures of the representatives of the parties and is stamped, making it clear proof of the debtor’s obligation to pay.
4. Newly Arising Debts
The period from 01 to 03 months from the time a debt is incurred is a golden opportunity for debt recovery. During this time, the process of taking debt recovery measures is simplified because the debtor usually hasn’t encountered issues in their business operations yet. Additionally, determining the value of the debt and collecting documents and evidence will be much easier compared to dealing with long-standing debts. Moreover, since newly incurred debts involve reconciling and confirming debts among parties, it is simpler because the accounting records have not been stagnant for too long, making it difficult to track and verify the debt. Therefore, newly arising debts are more favorable for the preparation and execution of debt recovery measures. Hence, businesses should prioritize the recovery of these new debts as early as possible to mitigate future risks.
This is the contribution of TNTP lawyers on the topic: ” What debts are easily recoverable in the field of construction?” We hope this article provides value to our readers.