How to accelerate the collection of debts on debts in a construction company?

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How to accelerate the collection of debts on debts in a construction company?

Recurring debts are normal for any company and all areas of the market. At the same time, in the construction business, due to the peculiarities of the economic activities of enterprises, debts can arise more often than in other areas. What can you do if you want to collect a debt from a counterparty, where do you go to receive your funds, and what do you do to ensure that the collection goes quickly and smoothly? Let's figure with Commercial Collections in this article.

Features of debt collection in the construction business
Why is the construction business different from other spheres in terms of arising and collecting debts? First of all, the reason is that most transactions require a long time from the contractor (it takes much longer to build a building than to produce and deliver a consignment of goods or provide some other service), which means that money turnover is slower. This also leads to a conflict between the customer and the contractor: the customer wants to pay for the work performed, and the contractor requires advance payments, and the refusal to pay them is regarded as a debt on the part of the customer.

Another reason is the instability of the construction services market. Prices for construction materials, equipment, tools are constantly changing, and demand from real estate buyers fluctuates greatly and depends on the general state of the market, global and local trends, and the general trend (for example, the global crisis collapsed the construction market for several years). All this means that construction companies cannot accurately plan their income and expenses even for the near future, and, as a result, debts appear that are difficult to recover.

Finally, the reason is also that the market for construction services is considered to be highly marginal, and companies for which this activity is not core business began to enter here, and their task is to earn as much money as possible in a short time. If the idea is not implemented, and it is not possible to earn a lot, such companies simply go bankrupt, and it becomes extremely difficult for creditors to collect their funds in the form of debts - often, we are talking about one-day companies that have practically no assets.

All this means that debts in the construction business can arise suddenly, and it can be very difficult to collect them. Therefore, if you are faced with a similar situation, you need to act carefully and competently in order to achieve your goal.

What steps should be taken to collect debt?
If you are planning to collect a debt, the first step should be to send a formal claim to the debtor. The request to return the money is made in writing and contains the amount of the debt, evidence of its existence and the circumstances in which the debt arose. It is also necessary to indicate in the demand that if the debt is not repaid within the established time frame, you reserve the right to go to court.

If the debtor did not react or refused to return the debts, you should go to court. Such claims are within the competence of arbitration courts; therefore, it is worth sending a statement of claim to such a court at the place of registration of the debtor. The claim states that all pre-trial methods of debt collection have been exhausted and have not brought the desired result. Please note that even if evidence of the debt exists, the process can be lengthy, and you need to be prepared that you may be denied in the first instance. In such cases, an appeal is prepared, and so on until the desired result is achieved, or you do not reach the Supreme Court.

How to get the debtor to pay the money
Even if you have a court decision on your hands, this does not always mean that the debtor will immediately begin to execute it. It is quite likely that a company that has lost the process will refuse to pay off the debt, citing the lack of available funds and other assets. In this case, you must contact the Bailiffs Service and give them a writ of execution in your case. Then they initiate enforcement proceedings and carry out actions that will help to fulfill the court's decision (for example, search and seizure of the debtor's assets, sale and through auctions, etc.)

If you know in which bank the settlement accounts of the company that owe you money are located, you can go the simpler way and transfer the writ of execution directly to the financial institution. According to the law, the bank is obliged to comply with the court's decision, and if there are enough funds on the accounts to pay off the debt, the money will be transferred to the creditor's accounts.

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