Payment indiscipline can affect your business in Europe and is a common problem amongst companies. In time of extraordinary events, like coronavirus outbreak, payments are often overdue or do not occur at all. Because of this, debt collection is one of the possible ways to secure your company’s liquidity in this time.
Data d.o.o. has been supporting entrepreneurs with business in Slovenia for 30 years. In addition to company registration services, we also offer professional accounting services. Data d.o.o. has its own legal department that can help you understand how to deal with debt collection and also understand your legal grounds for it.
Debt collection – who in your company is suitable for this task?
Debt collection has to be carefully handled. This means that you have to entrust this task to a qualified employee in your company. With inefficient debt collection you can expect additional expenses – the less debt that the company collects, the less income it receives. This means that it has fewer operative funds available for conducting the business activities within the company. During extraordinary circumstances, when payment discipline is lower, debt collection plays an important part in your company’s liquidity. While the government made available financial measures to support the economy in this time, you can also look within your company and see where you can increase your liquidity.
Debt collection – liquidity and insolvency
The consequences of unpaid bills can cause liquidity issued and possibly insolvency. They also affect the lower profit of the company. Statistics show, that every 5th invoice in Slovenia is paid late. Statistically, the average deadline for payment is 39 days, while the payers are late an additional 30 days. This goes to show that companies can wait for payment up to 69 days since issuing the invoice.
When the invoice deadline passes, sometimes sending written reminders and telephonic debt collection do not suffice. But should you use those measures for debt collection, the legal advisors at DATA suggest to linear increase the cost of the cost of the notices. This usually helps to spark a faster reaction in debtor and possibly also prevents that the receivables lapse. When everything else fails, you can also turn for debt collection to the responsible authorities. Those are courts or debt collection agencies.
To avoid late payments and subsequent debt collection it is important to know the character of your clients when determining the terms of the deal. You can do so by checking their credit rating to see their payment discipline. It will also show how successfully they have run the business in the past and whether they are capable of paying their dues. Naturally, it is not a guarantee that you would not have to face debt collection with these clients in the future.
Do not hesitate and turn to DATA for support for your business in Slovenia. For more information, you can write to our email [email protected] You can also contact us over the phone 00386 1 6006 270 or 00386 40 530 718 (Viber, WhatsApp). Additionally, follow us on Facebook.