Many entrepreneurs struggle with the problem of late payment by their contractors. Especially when working with multiple partners, it is unpredictable which one will not fulfill its obligations. When debts arise, the solution will be debt collection, which can be either compulsory (court-enforcement) or amicable.
Debt collection, or how to collect your money
Sometimes it happens that unpaid invoices and debts are the result of human error: due to lack of time or mere omission. So they are not always the result of the bad will of the other party. So before the case is dealt with by a law firm and then a court, it is worth first reaching for amicable solutions (called “soft” debt collection). These are actions that aim to discipline the debtor, and thus – to persuade him to pay the debt as soon as possible. This first step of recovery can last from the moment the debt arises up to:
– payment of debt,
– debt transfer to another entity,
– refer the case to court.
Importantly, the creditor can carry out amicable debt collection, but can also use the help of a debt collection company.
Amicable debt collection activities
“Soft” debt collection may include:
– sending payment requests,
– e-mail and telephone contact with the debtor
– personal visits,
– proposals for settlement (including debt split into installments),
– informing the debtor about what further action can be taken by the creditor in the event of avoidance of repayment (this may be, for example, placing the debtor’s data in the BIG Info Monitor register, National Debt Register or ERIF Economic Information Bureau).
The amicable debt collection, as you can see, aims to show the debtor what kind of negative consequences it may have if it continues to avoid paying its liabilities. It should also be noted that finally the case can go to court and later even to a bailiff.
Final step – forced recovery
Amicable debt collection is in most cases more favorable – for both parties. It saves time, nerves and money. However, when the debtor does not comply with the settlement agreement or stubbornly avoids contact with the creditor, the only solution remains a court-enforcement procedure. The creditor can take care of it, but a proper office will be a better solution. Debt-enforcement debt collection is a longer and more expensive process, but it is really effective.