What is a debt?

If a customer does not pay his debt on time (upon receipt of the purchase order, the invoice or the goods according to the conditions provided for at the commercial relationship start), the latter then becomes a payment delay or a debt.

The customer is then considered as a debtor, and the company waiting to be paid is the creditor. This is where the debt collection process comes in.

We speak of a civil claim if the company’s client is an individual (also called B2C debt), and a trade claim if the company’s client is another company (or B2B debt).

What is debt collection?

Debt collection is a regulated activity that involves getting a debtor to pay off the money that he owes to his creditor. Debt collection can be obtained either out of court, we call it amicable recovery, or through legal proceedings, we speak in this case of judicial recovery or litigation.

How does a debt collection work?

You must first verify that your claim is justified: your claim must be certain, liquid (that is to say defined in its amount) and payable (due date is reached or passed).

Amicable debt recovery

Amicable debt collection can be provided either by the creditor company directly or by a third party such as a debt collection firm. The 1st step is to send a reminder to your client (debtor in this case).

Interventions with your client are then carried out by phone, by e-mail or by home or site visit from case to case. For an effective debt collection process, actions must be planned, consistent, punctuated and monitored over time.

This is not necessarily easy for a company where it is not the core business. To deal with this situation, you may decide to outsource this procedure through a debt collection firm.

Judicial recovery

Judicial recovery or litigation consists of entering the competent court to obtain the payment of your debt when all the amicable reminders and attempts at negotiations have failed.

In order to be able to continue the enforcement of your debt, you must obtain an enforceable title against your debtor. The order for payment, the summons to the fund, the interim relief, are all judicial recovery procedures for unpaid debts. Each has its own characteristics, and each is activated according to the nature of your outstanding payment.

When a court decision is rendered and it is not contested, the file is entrusted to a bailiff. The latter then sets up execution procedures (allocation entry, sale entry, etc.). These procedures costs are the responsibility of your debtor unless he is insolvent.

What can you do if your debt is bad?

If your debt is bad, your unpaid invoice is requalified by "loss". In this case, to recover the VAT from the tax services, you will need a certificate that proves that the debt is unrecoverable.

Only a recognized professional, a debt collection company like ours for instance, or a legal agent will be able to provide proof of the irrecoverable nature of your debt.

How do you know if a claim is time-barred?

The limitation period for a debt is 2 years if the debtor is an individual (B2C). It is 5 years if the debtor client is a professional (B2B).

However, these deadlines may be shorter depending on the creditor's industry. In the naval sector for the acquisition of materials supplies, constructions, equipment for refueling a ship for example, this period is reduced to 1 year from the invoice payment date.

Debt collection in 4 stages

4 possible key stages, within a maximum of 30 days:

  • The file is analyzed and the first recovery actions are undertaken amicably;
  • The unpaid debt is settled (around 85% of cases, depending on the nature age and amount of the debt);
  • The debt is unrecoverable, we then provide our client with a certificate of unrecoverability;
  • The debt requires legal action, the client then takes this decision based on our advice and quote.

What to do in the event of an unpaid debt abroad?

When a customer domiciled abroad owes you money, the debt collection process can be longer and more complex.

Each country has its own specificities: legislation, economic context, local practices, language, culture ... These many variables influence the path to take for appropriate and efficient international debt collection.

While European procedures such as the European Enforcement Order, the European Order for Payment and the procedure for settling disputes under € 2,000 have been created to facilitate the recovery of unpaid debts within the European Union, the procedures can be very long, costly, even subject to the judgment of judges in other countries.

It is better to contact an international debt collection company who will be able to advise you on the best strategy to get you paid.

As you can see, to quickly recover your money and make the process easier, the collection company help will be invaluable to you because the law in force in matters of collection can be difficult to understand if you are not subject matter expert.

How to choose a debt collection company?

If you decide to entrust your debts to a debt collection company, you must choose one that acts in your interests both financially and economically over time. Be sure to choose a debt collection firm that will be committed to helping you increase your cash flow, reduce your customer credit risk while ensuring that you maintain your business relationships.

If the pricing policy is an important component in the assessment of the provider to whom you will entrust your unpaid bills, it should not be your only choice. The professional competence of the lawyers responsible for debt collection, their mastery of and compliance with the legislation, their knowledge of the IT tools that they put at the service of their performance, their responsiveness, the quality processes, the transparency and the simplicity with which they act are so many criteria to evaluate when you choose to mandate the collection company to recover your unpaid bills.

How can GESTION CREDIT EXPERT help you?

With more than 50 years of expertise, GESTION CREDIT EXPERT is the 4th debt collection firm that is still 100% independent and French. Present in 7 French cities, we have in-depth knowledge of the debt collection processes, trough amicable or legal routes, and whether we’re handling B2B or B2C debtors.

For the international debt collection activity, our teams manage our 300 local correspondents’ network around the world (lawyers, bailiffs, other debt collection firms, investigation offices etc.), all selected for their proven skills and their values ​​common to ours.

Contact our sales department on +33 (0)1 83 64 45 09 or fill out our contact form.