Debt Collection

A client often shows typical behavior that indicates the probability of this client becoming a debtor. When you know how to identify these red flags in behavior, you can act in a specific manner to increase the possibility of the client paying your invoices before becoming a debtor. It might seem tricky that a debt collection agency is giving recommendations about how to reduce the probabilities of a client becoming a debtor – but we believe in justice and your rights as a company of getting your invoices paid. After all, it is only fair to be paid on time for a delivered product or service. We do believe that after a certain point, the best solution is to hand over the case to a specialist in debt management to ensure the full collection of the debt. In this blog, you will learn all about the four common red flags in behavior of customers who could become debtors, and our recommendations for how you can act accordingly.

In October 2019, an Atradius investigation, in cooperation with 2.770 Western European companies, found that 60.4% of B2B sales are concluded on credit. Of that total, an average of 28.9% was flagged as past due invoices.

A sharp rise of 69% of uncollectable receivables was registered in 2019 (from 1.3% to 2.2%). Due to the uncertainty caused by the elections in the U.S. and its trade war with China, another growth of insolvencies was expected for this year, 2020. On top of that, the Covid-19 situation and the crisis that this implies is already showing some effects on overdue receivables. Sidetrade has developed a software based on artificial intelligence in which you can see the effects of Covid-19 in unpaid invoices. This software is currently analyzing six countries: France, UK, Spain, Italy, Belgium and the Netherlands. A strong increase of 22.8% in the average percentage of unpaid invoices (10+ days after their due date) can be seen in these countries since the start of the pandemic (results as of July 11, 2020). If we take into account the increase in these six countries and infer that the increase in the rest of the Western European countries will be similar, this can be translated into approximately 35.48% of credit sales resulting in past due invoices. It is not yet possible to have a clear idea of the effect of the Covid-19 situation on uncollectable receivables, but it will undoubtedly be greater than predicted due to, for example, the rise of companies going bankrupt or the rise of unemployment. All this presenting a great challenge regarding debt collection.

Debt Collection is not a subject you can take in school – we have to rely on the experience of generations of debt collectors to guide us through the challenges of Debt Collection and teach us all there is to know. Among all of the challenges that are faced in this discipline, one of the most difficult ones is probably the communication towards the debtor. This communication needs to be as fluid, clear and effective as possible. In an increasingly globalized economy, the communication challenge becomes even more difficult: how to bridge cultural and language differences in Debt Collection? In this blog, we will discuss the importance of having native speakers that can communicate with the debtor in their native language.

The pandemic is teaching us many things, one of them being the importance of an adequate accounts receivable management. Almost every company is dealing with customers who pay late. From experience during the past few months we noticed that the number of customers paying late is increasing. Some companies have difficulties managing the home office situation, others currently do not have enough revenue to pay their invoices on time, and some even deal with insolvency. So what can you do to improve your credit management? In this blog, we give you our top 5 tips!