Commercial Debt Collection and Business Bankruptcy

avoid empty pockets

Commercial Debt Collection and business bankruptcy are sometimes linked. When a file arrives in a debt collection office, when the amount of the debt recovery is high and the debtor’s situation is fragile the debt collection actions sometimes lead to the bankruptcy of the debtor company. One can therefore ask the question of the relevance of the action of the debt collection company. In reality it is not the recovery actions that led to the bankruptcy of the company it was certainly already in a state of cessation of payment. The recovery procedures are only the drops of water that broke the camel’s back. The bankruptcy procedures are mostly long and dead-end, the creditor said unsecured (the one who has no security) having very little chance of recovering what is due to him. Should we in these cases renounce recovery actions? the answer is clearly no because only the one who acts keeps a chance to get his bills paid. One of the most common prevention tips was to tell suppliers to learn about the creditworthiness of their customers and keep their credit limit under supervision. This common-sense rule now faces new difficulties. Indeed, the secret of business in a world in full transparency becomes more and more opaque. In France, for example, it is now possible for small and medium-sized businesses to make their balance sheets confidential, whereas a few years ago this was considered a crime that could be prosecuted by the public prosecutor’s office. It is no longer uncommon to see companies that are well-rated by intelligence companies suddenly go bankrupt. One of the remedies to business bankruptcy losses is to adjust the credit limit to the size of the client. It is common to see the debt collection of important files that concern very small businesses. When a company is in trouble it will rush into the arms of a supplier ready to give it credit. The salesperson will be enthusiastic about developing his turnover and everyone will fall into the trap of supplier credit. It is the exporting companies that are setting up in a new country that are most likely to fall into this kind of trap. The losses and debt collection difficulties are in fact linked to the short-term profit policy which penalizes the exporters who have not planned a moderate development and supported by a substantial budget.