The debt settlement and cash flow is a hot topic. Customers are slow to pay their invoices payment times are getting longer. Visit debt collection is often difficult. Some companies even go out of business. According to Observatoire BPCE, 75,000 businesses close every year on average: 60,000 VSEs and 15,000 SMEs disappear in France. Today, collecting customer receivables is a priority, which is why it is essential to choose the right collection software.

The question of reducing payment times andprotecting against non-payment is therefore more topical than ever. Anxious managers, with their eyes riveted on their company’s bank account, nevertheless have solutions at their disposal to anticipate the risk of non-payment and improve their cash flow.

Debt settlement: what you need to know

The DGCCRF (Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes) defines debt collection as follows: The collection of customer debts is a regulated activity which consists of using dialogue to obtain payment from a debtor.

Once this notion of dialogue has been introduced, the regulations authorize the creditor to follow various procedures in order to recover the money his customer owes him. Let’s take a look at them.

Customer collection procedures

Forced collection or judicial collection

The company chooses to take legal action to recover the debt from the customer. The court then orders payment of the debt to the non-paying customer via a forced collection procedure, also known as judicial collection.

• An injunction to pay is a legal procedure that can be handled by a bailiff.
• A court-ordered summons to pay is another procedure that takes longer and costs more than an injunction to pay, but is still recommended when the debtor contests the demand for payment.
• Attachment is another procedure designed to prevent debtors from organizing their insolvency.

The claim must be lodged with the appropriate court , either the commercial court clerk’s office or the district court, before the end of the applicable limitation period. This is required, for example, when the sums owed arise from a promissory bill, or a contract for the provision of services.

Amicable collection

The amicable collection procedure involves the company opting for dialogue with its customer.

This approach offers the following advantages:

• maintaining business relations,
• saving a lengthy legal procedure,
• faster payment (in theory).

The procedure for the amicable collection of debts on behalf of third parties is different. In this case, the company calls on the services of a debt collection expert, who assumes responsibility for the debt.

The activities of companies specializing in the amicable collection of debts are regulated. Companies must use the services of an authorized collection agency, a bailiff or an authorized collection agent.

If the customer is experiencing temporary difficulties, it is advisable, for example, to offer to collect an initial down-payment linked to a due date, and then spread out subsequent payments over time.

Conditions for amicable collection

A company wishing to initiate an amicable collection approach with its customer must send a formal demand letter to the debtor.

To be admissible, this letter must contain the following information:

• name and contact details of the company issuing the letter (the creditor), the company with debts (the debtor) and the amicable debt collection company,
• detailed reminder of the nature of the services provided,
• amount due including interest,
• procedure for settling the claim,
• a statement that the creditor will bear the costs of collection (with the exception of NSF cheques, decided by law).

If the customer agrees to pay, the collection company will issue a receipt for payment.

Using a bailiff

In the first instance, bailiffs apply and carry out acts defined by court decisions, such as enforced debt collection or judicial debt recovery.

A company can also call on a bailiff to start an amicable debt collection procedureon behalf of third parties.

Advantages of using a bailiff :

• most debtors never contradict a ministerial officer, which often speeds up settlements,
• the bailiff is not bound by the terms of the letter of formal notice,
• the bailiff can issue a writ of execution for debts not exceeding €4,000: this solution simplifies the payment procedure for all parties.

What happens when a customer fails to pay his debts even though he has accepted the terms of the writ of execution? In this case, the creditor can ask another bailiff to automatically initiate a forced collection procedure: no judge’s decision is required!

Does the debtor have to pay collection costs?

The law on collection is strict on this point: the creditor and/or the agent are strictly forbidden to charge collection fees to the debtor for late payment or non-payment. This is by no means a right!

Charging collection costs to a debtor is punishable by 2 years’ imprisonment and a €300,000 fine. The only exceptions authorizing the debtor alone (never the agent) to bill collection costs to the debtor are those defined by court decisions.

Some examples – For a deed ordering payment:

• insurance premium, rental,
• following a proven finding of bad faith on the part of the debtor,
• payment following an NSF cheque,
• a claim for which both parties are professionals, with a fixed indemnity of €40.

For these reasons, we recommend that you include interest on arrears in your contract, calculated at the current legal interest rate.

Debt collection platforms

If good accounts make good friends, they also forge lasting and prosperous bonds, don’t they? Here, we present some of the most reputable secure online collection platforms on the market, enabling you to maintain these ties.

Aston AI Cash Collection

is asoftware as a service ( SaaS) credit management and collection solution. The software is used internally, in SMEs, ETIs, major accounts and multinationals by account manager(s), accountant(s) and/or credit manager(s). ASTON AI is a Fintech capitalizing on Cloud, Big Data and AI technologies.

The platform’s aim is to enable users to get rid of time-consuming administrative tasks that add no value, so that they can concentrate on handling disputes and difficult customers or those with payment difficulties.

By automating 80% of tasks, the credit manager can reduce overdue receivables by 50%, speed up the collection of trade receivables, and reduce costs.accelerate collection of trade receivables, reduce financial risk, and preserve and maximize the company’s cash flow.

The platform offers many other advantages for reducing DSO(days sales outstanding ) to optimize WCR (working capital requirement):

• intelligent automation of collection actions,
• dashboards with customized indicators simplifyanalysis of collectionperformance , and help identify receivables that need to be prioritized,
• behavioral scoring based on customers’ payment habits is analyzed in real time, enablingrisk anticipation

Good to know:

• immediately available online, 1-month free trial at no cost or obligation.
• This collection software offers perfect interoperability with accounting systems (SAP, Sage, Cegid, etc.). It is also available as a simple excel file.
• No more it integration, no more set-up delays!

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