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RECOVERY

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Prevent overdue payments

Often overlooked by companies, this is an essential step in the collection process. Prevention is the best way to guard against non-payment, or at least to limit the impact of non-payment on the company.

Taking out credit insurance

For many companies, dealing with unpaid invoices creates significant financial difficulties. One of the solutions to avoid these difficulties is to take out credit insurance, in order to obtain reimbursement of part of the debt, generally up to 60-90%. The insurance company can also assist the company in the event of a dispute, by paying the costs of proceedings, or by intervening directly with the debtor to carry out the collection procedure itself.

Limit the risk of non-payment and protect yourself

Prevention also involves getting to know your co-contractor. In this respect, it is important to find out about the customer’s level of solvency before entering into a commercial relationship.

This information can be obtained from banks, but also through an insurance company, when taking out credit insurance.

There are also platforms that provide access to credit report for a subscription fee.

The advantage of these tools is that you will be immediately informed of any deterioration in the financial situation of one of your co-contractorsThis enables you to anticipate any payment difficulties, and to implement your internal payment risk procedure.

It is also essential to communicate regularly with your customerAn unpaid invoice may be a simple oversight on their part. Regular communication will also keep you informed of any difficulties encountered by your co-contractor.

When issuing invoices, it is essential to draw up written invoicesThe same applies to any reminders. The same applies to any reminders.

Contractualizing the relationship

In addition, several clauses can be included in a contract to protect against non-payment to protect against non-payment:

1- Reservation of ownership clause: this clause enables the seller to retain ownership of the item sold until full payment of the price by the buyer. In the event of non-payment, the seller may request the return of the goods.

2- Penalty clause: this clause anticipates poor or faulty performance of the contract, and provides for the payment of damages, the amount of which is fixed when the contract is concluded. This clause has the advantage of being valid even in the absence of any prejudice. On the other hand, the judge always has the option of modifying the amount if it is manifestly excessive or derisory.

3- Resolutory clause: this automatically terminates the contract if one of the parties fails to fulfill a contractual obligation. It is therefore possible to provide for termination of the contract in the event of non-payment.

4- Exception of non-performance: the creditor may refuse to perform until payment has been made. This is a legal exception, applicable even if the contract does not refer to it.

5- Flat-rate collection indemnity: this indemnity must be mentioned in the general sales conditions (GSC) and on the invoice. It requires any debtor company that pays an overdue invoice to pay its creditor a flat-rate indemnity of €40 to compensate for collection costs. This indemnity is only applicable between professionals.

Finally, a creditor always has the option of using sureties, i.e. mechanisms that guarantee the creditor the recovery of his debt, either by granting him a right over the debtor’s property (this is known as a real surety), or by creating a bond between the debtor and the creditor (this is known as a personal surety).

Examples of sureties include guarantees, pledges, hypothecs, etc.