Do you have some customers who are not proceeding with payment in spite of all precautions, calls and reminder letters? Going to the court for judicial debt collection is expensive and time-consuming. Additionally, it would be the final blow to an already tense customer relation. How about trying the extrajudicial process first. A neutral third party often achieves good results, allowing you to receive your money while retaining your customer.
Please note! Different rules and customs apply to extrajudicial debt collection for B2B (between companies) or B2C (between a business and a consumer). A private individual has more extensive legal protection against claimants.
This page relates only to extrajudicial debt collection in a B2B issue.
Have you not succeeded in ensuring the customer’s payment of its unpaid invoices by its due date? Do you lack the time, staff or expertise to continually remind the customer of its payment obligation? Then call in a neutral third party. A receivables manager or debt collection agency will attempt to collect payment for your outstanding invoices without recourse to the court. You fully outsource collection of the invoice payment. The debt collector is fully authorised to make the necessary steps on your behalf.
In fact, the debt collection agency has the same options as you do in collecting the payment outstanding. However, having the time and expertise to stay on the ball, it has a higher probability of succeeding in collecting the amount payable.
If you decide on Graydon Incasso, you have two extra benefits:
There is a difference with a judicial or legal debt collection process as completed by a bailiff. The bailiff acts based on a court order or executable deed. The bailiff has more instruments, for example sequestration of the customer’s possessions. Please consider that the procedure will be longer, more expensive and will fully disrupt the relationship with your customer.
You do not need to proceed with extrajudicial debt collection immediately on the due date. Complete the following steps:
Whatever you do, do not let unpaid invoices lie if you have completed the reminder process.
In principle, all invoices for goods, expenses and fees are eligible after the due date. You may also mark up the invoices with interest for payment past due and the mark-up clause as set out in your General Terms and Conditions. Please consider the following issues:
In the case of a company that is not able to pay, you are unlikely to achieve short-term success. Threatening with legal steps is probably not effective as the customer is likely to be juggling various claimants. In such a case, judicial debt collection will mainly be focusing on concluding a payment plan. The debt collection agency will closely monitor this payment plan.
In most cases, however, companies are not willing to pay. The company has funds, but not enough to pay all suppliers on the due date. The main suppliers will be prioritised. Pointing out to such a company that late payment will have consequences to their credit rating in the Graydon database (with all ensuing implications) is often very effective. Continuing to urge the customer and staying on the ball will ensure that at the very least, your invoice is not at the bottom of the pile.
If you decide on involving a debt collection agency, then at least provide the following details:
The debt collection agency will then follow up payment through repeated reminders by letter, email and telephone.
The claimant incurs a financial cost for extrajudicial debt collection for B2B claims:
Timing is crucial. The longer an invoice is overdue, the more efforts it will cost and the more difficult it becomes to recover the amount due. The diagram below provides an impression of success in collection as the invoice is aging.