How to Deal with Clients Holding Delinquent Accounts
Contributed by Sandy Cui, SunFaith China Limited
A Sunfaith representative attended the event of 2007 Credit Risk Management organized by the European Union Chamber on 12, April. Sunfaith had a discussion with Mr. Jean-Michel Lafage, the executive director of Coface Group, China Office about the possible credit risk in collection and developing new customers, and respective management measures.
The Coface Group, based in France, boasts more than fifty years' experience in credit insurance and credit management services for local and international companies. It gave a questionnaire survey on possible credit risk that companies may meet in the Chinese market among many state-owned enterprises and foreign-funded enterprises in China, covering IP, Chemical and Pharmaceutical Industries. Based on the analysis of feedback from the interviews, the biggest risk facing companies is the overdue receivables. In addition, the contradiction between payment collection and good relationships is even more obvious, especially with the Chinese enterprises, who want to keep good relations with customers, always have to postpone collection. As a result, the risk of shortage in cash flow is even higher in the commercial operation.
Based on the famous Murphy’s Law, if there are two or more ways to do something, and one of those ways can result in a catastrophe, then someone will do it. Therefore, Sunfaith suggests clients make investigation about the enterprise’ credit and payment situation before signing a contract or providing credits for the purpose of lowering the potential risk as much as possible, Based on the official information and industrial situation, the third-party can always make objective and fair comments, which help companies know their customers’ paying ability and reputation.
Referring to the outstanding payment despite pushing for many times, the combination between the third-party investigation company and legal aid is more useful than consigned Collections Company or pursuing a lawsuit directly. The following is the advantages and disadvantages of the above methods:
Above all, there is no perfect way, but through a third-party investigation company and legal aid, the actual paying ability and arrearage reason are available. Referring to the deliberate arrearage that clients have the ability to repay, the company can remind them through letters, then apply for freezing capital during the period of lawsuit to avoid possession transfer. And to those short of fund temporary, one can apply kind abandonment method and adjust the credit line at the same time to gain the ends of gathering without damaging business relations.
Depending on the strong investigation network and investigation ability, SunFaith Risk has been helping clients to solve collection problems in the past 12 years. For more details about related service, please contact us. We will provide standard and customized investigative programs to solve practical problems.
Contributing Company:
SunFaith China Limited www.sunfaith.com
Contact: Sandy Cui Sandy_cui@sunfaith.com
10G, Alison Int'l Tower, 8 Fuyou Rd, The Bund (South) Shanghai, PRC, 200010
Tel: 86-21-6330 ext 1025 | Fax: 86-21-63343066
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