How to proceed with a collection?

Maintaining a good level of cash flow is a major challenge for business leaders and CFOs. However, even the best-run businesses sometimes find themselves faced with debtors who are slow to meet their payment obligations. Debt collection then acts as an almost vital means because it helps to preserve the financial stability of a company.

Debt collection is the process by which a creditor takes action to obtain payment of a debt owed by a debtor. This involves putting procedures in place, ranging from friendly reminders to legal measures.

Effective collection helps increase available cash , reduce credit risks and consolidate growth opportunities. This results in a direct impact on the company’s reputation, its relationship with its customers and partners, as well as its ability to invest in new opportunities.

Drawing on our expertise and our commitment to our clients, GESTION CREDIT EXPERT offers tailor-made solutions to help businesses manage their unpaid debts. Thanks to a professional approach and a good understanding of financial issues, GESTION CREDIT EXPERT establishes itself as a partner guaranteeing good commercial relations between creditors and their clients.

The debt recovery process in 5 steps

As explained previously, debt collection is a process aimed at recovering the amount owed by your debtor customer. The recovery manager follows a process which is broken down into 5 key steps:

1/ Confirm that the debt is real

Before initiating any procedure, it is necessary to ensure that the claim is legitimate and well-founded. You must then check documents, contracts or unpaid invoices to confirm the existence of a debt to you or your company.

2/ Limitation period: has it passed?

Prescription is the legal period beyond which a debt becomes inadmissible in court. It is important to know the debt limitation rules to maintain fair business relationships, avoid unnecessary lawsuits and preserve the credibility of the company.

Legal deadline for claiming payment of a debt

Each claim may have a different limitation period . For example, commercial debts have different deadlines from debts between consumers. Typically, payment terms vary from 1 to 5 years.

How long can a creditor claim this unpaid debt?

According to article L218-2 of the Consumer Code , a professional has a payment period of 2 years to claim a debt from an individual. If the debt concerns two traders, then the period is 5 years according to article L110-4 of the Commercial Code .

Can we claim payment of a debt 10 years later?

According to article L.111-2 of the Code of Civil Enforcement Procedures , it is possible to claim payment of an invoice 10 years later, only by forced recovery. The applicant must be provided with an enforceable title. This title allows you to recover a debt by carrying out an immediate and forced seizure against the debtor.

3/ Amicable debt recovery: a simple and respectful approach

If the debt is legitimate, it is still preferable to try to recover this debt amicably . This may involve negotiations with the debtor to establish a payment plan or find a compromise that suits both parties.

4/ Formal notice: a decisive phase

If amicable attempts fail, formal notice becomes a decisive step. A formal notice is a formal notification to the debtor, informing him of his debt and granting him a period of time to resolve the situation. This step shows your seriousness and your determination to collect your debt.

5/ If the previous steps fail: move on to the legal proceedings step

If all previous attempts fail, then it becomes necessary to initiate legal proceedings for recovery . This step consists of going to the competent court (Commercial Court or High Court for individuals) to obtain an enforceable title and thus proceed to an immediate and forced seizure of your debt.

Tools for effective recovery

Debt collection is an essential pillar of financial management. To carry out this delicate procedure, the use of tools and strategies can greatly facilitate the process and maximize the chances of success:

Receivables management software: Receivables management software is a valuable ally. They provide a clear and organized overview of all outstanding receivables, upcoming due dates, and actions taken. These software, like Clearnox or B2Brouter , automate payment reminders and facilitate communication with debtors.

Collection letter templates: Collection letter templates ensure a uniform approach in communicating with debtors. To write an effective follow-up letter, it is important to use a courteous and factual tone. Clearly indicating the debt in question, the possible payment methods, the deadlines and the consequences in the event of non-payment will encourage your debtor client to respond to you quickly.

Use of a collection company : when internal recovery attempts are unsuccessful, it is strongly recommended to use a specialized collection firm . A 100% French and independent group, GESTION CREDIT EXPERT offers solid expertise to support companies in their challenges relating to debt recovery. With more than 50 years of experience, we have developed a network of more than 300 partners, which allows us to also operate abroad.

How do debt collection companies handle disputes with debtors?

Debt collection is a discipline that requires both rigor and finesse to maintain financial balance while preserving professional relationships. Here are 3 practices that collection agencies frequently adopt to carry out this procedure:

Communication with the debtor customer : when a customer is late with payment, the collection company favors open and constructive communication. She adopts a courteous and non-aggressive tone, seeking to understand the cause of the late payment. Indeed, the reasons for unpaid debt sometimes result from a misunderstanding between the creditor and his customer, a hiccup in the process of monitoring supplier invoices, etc. Thus, the debt collector will be keen to preserve commercial relations when he will take the necessary steps to recover the creditor’s unpaid debts.

Negotiation and payment plan : after evaluating the debt and contacting the debtor, the collection company can negotiate with the debtor a payment plan adapted to his financial situation if the context is favorable.

Time management : The collection company builds an adapted and systematic recovery plan for each debtor profile. Indeed, the best way to resolve unpaid debts quickly is to have a paced approach. The more unpaid debts are managed as soon as they occur, the greater the chances of recovery. Entrusting recovery early to an expert in the field will allow the creditor:

To relieve yourself of a time-consuming task
To quickly unblock the situation simply because the collection agency has intervened
To prepare your file in anticipation of a possible litigation phase.

At GESTION CREDIT EXPERT , we are convinced that effective recovery can be carried out in a respectful and positive manner, to preserve long-term business relationships. Beyond our expertise, we highlight our CSR approach and our commitment to Quality, thus guaranteeing ethical and sustainable practices in our recovery actions.

Trust us to maintain strong and responsible financial health for your business.