UncategorizedDebt collection and process improvement

August 4, 2021

A Client providing services in the construction industry came to us with two unpaid invoices for hundreds of thousands of zlotys. The amount significantly affected its financial liquidity. The contract and the evidence of the conclusion and performance of the services relating to these invoices were deficient and improperly structured.
A standard legal service is quick collection of receivables and their possible securing. The problem is that even the best legal service in this case will not provide real value to our Client’s business. In these circumstances, due to the spiral of debts on the side of the debtor and the lack of real collaterals, success should be defined as the enforcement of 60% of receivables within the next two years. Considering the costs of legal and enforcement actions, including the Law Firm’s remuneration, two years of waiting and finally obtaining only 60% of the Client’s remuneration from the amount due, it should be stated that we are not dealing with a situation that will build and cement relations between the Law Firm and our Client. It is also difficult to say that we provide real value to his business.
Our approach, however, meant that, apart from debt collection activities, we devoted a lot of attention and time to understand with the Client that two unpaid invoices are only the result of very serious problems. These problems were the lack of a systemic solution that would document the content of legal relations and the course of execution of our Client’s orders, and the lack of risk diversification. In this way, we defined the scope of a very simple and effective project, the subject of which was: implementation of a generally available cloud solution for all Client’s employees who dealt with contact with contractors and formalities in the implementation of orders, creating processes ensuring the flow of information and documents regarding the conclusion and performance of Client’s contracts .
At the same time, we collected receivables insurance offers from the market and negotiated the best policy conditions. Finally, we adjusted the processes of information and document flow regarding contracts concluded by the Client with the formal requirements for the payment of compensation set by the insurer. In this way, we dealt with the real problems of our Client’s business. It turned out that the problems that we managed to solve together had many negative effects. Their removal allowed for the dynamic development of our Client’s business.

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