Debt collection without myths
Author: Marcin Pietraszek - Empemedia.pl
The crisis caused that not only large companies, but also small and micro-companies started to be interested in debt collection services. At the same time, they are afraid of costs and spoiling relations with contractors.
According to the report of the National Debt Register BIG, 31.8 percent are currently interested in the offer of debt collection companies. medium-sized companies and 38.5 percent. large enterprises. Interestingly, the owners of micro-enterprises show a lot of interest - as much as 41.5 percent. of the surveyed micro-entrepreneurs consider taking advantage of the offer in the field of debt recovery.
However, the road may be long from the declaration to the purchase. Many entrepreneurs are afraid, inter alia, of deterioration of relations with important customers and high costs. Is it right?
Myth one: debt collection destroys relationships
- J.is a myth that has nothing to do with reality, with the proviso that the debt collection process will be carried out professionally - says Piotr Ludwicki, general director of the debt collection company PROBUS Rajchel & Ludwicki Spółka Jawna. - Over time, the relationship between customers and their contractors continues to improve. This is due to the fact that their contacts are limited to sales issues, and uncomfortable elements, such as late payments, disputes, etc., are delegated to non-emotional professionals who act as mediators, negotiators. - says.
Jacek Bajerski, member of the management board of EBS Sp. z o.o., to which the VERIF.PL website belongs, adds that debt collection should be a last resort. Before starting cooperation with a given contractor, the entrepreneur should verify his payment credibility. This will avoid any unpleasant surprises in the future.
- Preventive tools include, for example, seals warning that the lack of timely payment may result in an entry in an economic information bureau, for example, ERIF BIG S.A. Debtors Register, or issuing receivables for sale on the VERIF.PL Debt Exchange. - adds Bajerski.
And if there is indeed a deterioration of the relationship with an unreliable payer, should this be regretted?
- Some dishonest entrepreneurs regularly do not pay their liabilities on time, thus receiving, against the will of the creditor, a "loan" on very favorable terms - says Paweł Buszkiewicz from ANCORA-FINANSE. - If the contractor is so unreliable that he does not pay his obligations on time, he or she may even risk bankruptcy of the other party. Therefore, first of all, you need to look at the interests of your own company and take measures to ensure that it is properly protected - underlines.
Myth two: debt collection is expensive
Some entrepreneurs avoid cooperation with debt collection companies, fearing high costs. They act as if waiting to be paid didn't cost them anything. And this is not true. Lack of funds for current operations not only hinders functioning, but also forces them to reach for expensive loans or blocks investments, inhibiting the company's development.
- NSlosses incurred by owners of small businesses as a result of unreliable contractors are much greater than the possible costs that they would have to incur using professional assistance in the field of debt collection - says Piotr Ludwicki.
Jacek Bajerski explains that the total costs of using the services of debt collection companies should be divided into fixed costs and variable costs. Fixed costs are those that constitute a fee for activities undertaken by the debt management company in the process of debt collection.
- These are all summons, reminders, letters and, of course, court fees, if the case goes to court. In turn, variable costs are defined as a commission on the amount recovered in the recovery process. The amount of the commission usually depends on the assessment of the difficulty of the case - adds the representative of EBS.
The general director of PROBUS estimates that most debt collection companies operating in Poland currently settle services in the success fee mode, i.e. the client pays the commission only when the company recovers the debt. This form of settlement does not carry any risk for the entrepreneur, and the debt collection entity motivates to action.
Paweł Buszkiewicz points out that the current legal provisions in the case of commercial transactions between business entities allow not only to demand reimbursement of the costs of court proceedings from an unreliable contractor, but also the costs of debt collection.
– Small business owners can gain a double benefit, because the costs of debt collection will have to be covered by the debtor, and the entrepreneur himself will not incur the costs of independent debt recovery, for example related to the preparation of demands for payment by his employees - explains the representative of ANCORA-FINANSE.
The third myth - there is still time for vindication
It happens that entrepreneurs delay the moment of establishing cooperation with a debt collection company. They hope that their contractor will still pay. They wait, sometimes act on their own, and report to debt collection specialists only when all attempts to recover debts fail. This is a mistake.
- These steps should be taken as soon as possible to avoid the risk of the counterparty's insolvency - emphasizes Paweł Buszkiewicz. - J.If there is no contact with the debtor and he does not respond to our requests for payment, the case must be brought to court without undue delay. Therefore, it is worth considering establishing cooperation with a debt collection company that will monitor our debt portfolio on an ongoing basis and take appropriate action without undue delay.
As noted by Piotr Ludwicki, in Poland you can very often observe a pattern in which the largest customer generates 80% or more of the small entrepreneur's income. Especially in such a situation, cooperation with a professional entity dealing with debt collection may protect it against bankruptcy.
- A debt collection company is able to assess the current credibility and financial liquidity of such a partner, significantly improve its payment discipline using its tools and knowledge, and implement appropriate contract security procedures, without diminishing the personal relationships that usually connect both entities - emphasizes the representative of the PROBUS company.
Although it may seem that debt collection services were conceived as a proposition for large companies, it is for these small companies that debt collection may be "be or not be".
- Cooperation with a debt management company, especially for a small enterprise, may be the only way to recover money. Imbalance in financial liquidity in a small company can lead to serious problems and, in the worst case, contribute to bankruptcy - warns Jacek Bajerski.
The specialists we interviewed agree that the smallest companies can and should use debt collection services. Thanks to this, the entrepreneur can save time devoted to unreliable payers, as well as money,
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Online advice for businesseswhich he would have lost if he had not recovered his debts. As a result, the entrepreneur can focus on the essence of his business, relieving himself and his employees from time-consuming and stressful activities. Recovery of payments from issued invoices can be successfully transferred to professionals.