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Financial Solutions
31 Oct 2018

What do you do when your customers don’t pay up?

Everything you need to know about debt collection and overdue receivables

A missed payment doesn’t necessarily mean a bad customer, however it’s important for you as company owner to know how to get unpaid invoices paid without jeopardising your relationship with your customer. It’s also important to understand what all the different terms mean so that you don’t get lost when you come across terms like payment orders, debtors and limitation.

With over 40 years of debt collection experience, we know what works and how to proceed in the fairly rigid debt collection process where all legal requirements must be followed in the right order and at the right time.

Our experience is that flexibility and communication are the two deciding factors when it comes to getting paid, and that’s why we do everything we can to contact your customers personally to find out more about their situation and to establish a payment plan so that they can pay their debts. That way, you can be sure to get paid swiftly, without jeopardising your relationship with your customer. They have chosen your company before and they will choose your company again – if they are treated fairly.

But what if they still don’t pay up, despite the debt collection demand and personal contact? Unpaid invoices are then approached in a different way, and are usually called insecure receivables or overdue receivables. When you’re doing all this yourself, you have to bear the costs and also the risk of never getting paid.

So, who should take care of the collection process: you yourself (known as self-service collection) or a debt collection agency? And what are the benefits of allowing a professional partner to help you with your collection cases?

Here, we list six clear benefits of outsourcing debt collection:
1. It allows you to focus on your business and your paying customers.
2. You save time. Reminding and monitoring non-paying customers is extremely time-consuming.
3. What is the right time, right approach and right payment method? You don’t have to keep a watch over your customers: when they wish to be contacted, when they are most likely to be able to pay, and their preferred payment method.
4. Put your trust in legal experts who follow debt collection laws and understand the procedures taken by Kronofogden, and know what to do if the debtor moves abroad or applies for a debt relief order, for example.
5. Your cash flow improves and you reduce your credit losses.
6. You protect your brand by allowing a neutral third party to take care of the difficult part of the payment process.

Once you’ve decided that these benefits clearly indicate that outsourcing debt collection is the best option for you, there are three approaches to consider:
1. Third party debt collection: you still own the claim, but the debt collection agency does the processing for you.
2. Ongoing purchase: you choose when in the process you want to sell your receivables and if you want to pass on all of them or only selected ones.
3. Portfolio purchase: you sell selected receivables at a time that suits you.

If you would like to discuss the right solution for you and your company, please contact us on +46 (0)20 667 667 or sales.se@arvato.com. We look forward to hearing from you. We are experts in debt collection and we’d like to work with you by taking care of your customers in the best possible way so that they not only pay up but also return to you.

– Peter Birk, Debt Collection Manager Arvato Sweden
You can reach me at: peter.birk@arvato.com

To read more about debt collection and what services we offer at Arvato Sweden, please click here

7 terms you should know about:
1. Debtor: your customer who has not paid.
2. Creditor: you/your company that holds a claim.
3. Debt collection demand: the start of the collection process.
4. Kronofogden: the authority that determines the claim case and distributes the money to the creditor.
5. Payment order: determination of the claim carried out by Kronofogden.
6. Enforcement order: decision/judgement required in order to request the seizure of assets via Kronofogden.
7. Non-payment record: when Kronofogden determines a debt case against a private person or when a payment order is filed against a company.

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