Do your clients struggle with obtaining payments from their customers every now and then? Exporting can be risky business, but fortunately, this is where we can make a difference.

If your clients take out an insurance policy with Credendo, we can help them collect the money owed by their debtors. Our focus is always on preserving a good relationship.

In case one of their debtors fails to pay their invoices, your clients who are insured with Credendo can request our intervention to collect payments. This procedure contains several possible steps. For each step of the way, we will work in close consultation with the insured – your client. Before involving us, they have usually undertaken their own internal collection efforts.

This flow chart gives a summarised overview of the steps we can take as soon as we are asked to step in. There are some exceptions and differences among our entities, so keep reading to learn more.

Before anything else, we will conduct an investigation to learn as much as possible about the debtor, and subsequently try to get in touch with them through a dunning letter and calls. Our main aim here is to understand what is causing the non-payment. The possibilities are numerous, and a different reason might call for a different approach.

We try to understand the reason why the debtor did not pay to determine the best way forward.
 
> Is the debtor facing financial difficulties?
> Does the debtor’s country currently experience any turmoil or currency shortages?
> Is there any legal impediment to settle the debt?
> Is the debtor subject to specific sector-related restrictions?

Debt rescheduling

In many cases, the debtor is facing financial difficulties, so a very common collection method is that we negotiate a payment plan or debt rescheduling. In some cases, this allows for further deliveries, while at least partially settling older receivables.

This approach benefits all parties involved:

One exception exists at Credendo – Short-Term EU Risks Poland. If the debtor in question is also based in Poland, the internal collection step is ruled out and the case will immediately be assigned to an external debt collector. 

Collection agency

In case the debtor remains passive or no agreement on debt rescheduling could be reached, Credendo will appoint a collection agency to chase the debtor. Thanks to our experience, we have developed an international network of collection agencies. 

This also has several advantages:
>  Local agencies speak the same language as the debtor, which makes for smoother communication.
>  Local agencies can physically visit the debtor on a regular basis, which helps to keep a closer eye on how the debtor is doing.
>  The agencies work on a ‘no cure, no pay’ basis. This means they get paid a percentage of the collected amount, and therefore they do not get paid if they don’t succeed in recovering the debt.
>  As we usually work with the same debt collection partners, in some cases we even have access to their systems. This means we can look up any developments, notes, scheduled visits or phone calls in real time.

Legal proceedings

If the collection agency also didn’t succeed in recovering the amount owed, we will assess together with the insured whether legal proceedings should be started. If we agree on taking legal actions, we will also cover part of the costs for this.

Since legal proceedings are lengthy and costly, and don’t have a certain outcome, we will always try to avoid them where possible.

Recovery costs

In the course of the recovery process, several costs will likely be incurred. The general rule is that Credendo indemnifies the recovery costs, meaning that we cover the portion of the costs that is defined in the policy. This includes costs of investigations, success fees of collection agencies, lawyer fees, etc. as long as everything is discussed and agreed on or approved beforehand. 

If for any reason we decide against legal proceedings, the insured is still free to pursue legal action without our backing, so without those costs being indemnified.

For more detailed or specific information, please contact your Credendo Account Manager.