Posrednikov Mikhail Head of the Accounts Receivable and Financial Flows Project at Kontakt East Holding
More recently, managers have used any means in the struggle to increase sales. In a crisis, you have to take more care of the security of the enterprise, its solvency, and maintaining current liquidity.
In such a situation, the collection of receivables, on which VAT and income tax have already been paid, becomes a priority. Accountants, financial and executive employees of the enterprise need to learn how to manage the debts of debtors in order not to lose the profits received and reduce the risk of financial losses.
Accounts receivable is always a problem for a company. But in the realities of today, there are often cases when even old and reliable partners cannot (or do not want to) pay bills.
In order to minimize the risks associated with receivables, the company needs to constantly keep it under control. But preventive measures (assessment of counterparties, work with advances, debt insurance, etc.) do not always allow you to protect yourself from "hanging" receivables.
The secret of efficiency here lies in an integrated approach. Thus, timely control and analysis will allow timely identification of overdue debts and promptly take measures to collect them. The impact on the debtor can be hard or soft: you can immediately sue, or you can support the counterparty by offering him more affordable methods of repaying obligations, such as barter or deferred payment.
Dealing with receivables requires planning and a well-established process for managing the risk of non-payment. It begins with the organization of correct and timely document flow within the company and with contractors. The circle of employees who are responsible for working with debtors is determined. A regular analysis of receivables is carried out, the right to change the terms of delivery, regulatory documents are drawn up describing the procedure for repaying debts. It is imperative to consider measures to encourage and motivate employees to achieve the minimum established indicators of debt.
The initial construction of a receivables management system implies a series of sequential actions aimed at the earliest possible identification and elimination of possible risks of non-repayment of debts, within which the relevant internal services of the creditor (legal, financial, security service) work with debtors. Such a system is built depending on the content and structure of debts, which determines the circle of its participants, the possibility of attracting administrative resources, conducting PR campaigns, etc.
The construction of the system consists of the following steps.
1. Analysis of the structure of DZ (receivables)
At this stage, the focus is on general approaches to the analysis of the organization's remote sensing, the general division of remote sensing by structure in order to understand the "state" of remote sensing and make a decision on further work.
Basic data for analysis:
A) General analysis of the "value" of the DZ: the total amount of debt, the number of clients
B) The share of DZ in the financial portfolio of the organization
C) Segmentation of DZ by terms: “fresh” DZ, “working” DZ, overdue DZ
D) Segmentation of remote sensing by size: small, medium, large
The work of managing the debt portfolio within the company includes the calculation of the maximum amount of receivables - critical and working (permissible). These indicators are indicators that signal the need to strengthen (or, conversely, weaken) work with debtors.
The emergence of significant receivables is usually associated with the provision of customers with a deferred payment for delivered goods, that is, suppliers credit their customers. The supplier enterprise must objectively assess its capabilities and lend to customers in such amounts that will not lead to a chronic lack of funds for their own needs. It is necessary to develop a sound policy for the provision of trade credit and collection of debts for various types of products and groups of buyers.
In addition, it is necessary to rank buyers depending on the volume of purchases, the history of credit relations and the proposed payment terms, and subsequently revise them in a timely manner, taking into account the monitoring of product demand.
You can manage receivables by encouraging customers to pay bills early. Usually, discounts are provided for this from the sale price or the cost of delivery if the payment is made before the contractual date. The advantage of the supplier is that, having received the proceeds before the agreed time and using it in cash, he reimburses the discount provided.
When determining the sales policy, a preliminary calculation and comparison of additional costs from sales on credit and costs associated with the risk of non-payment within the period established by the contract or the receivables becoming uncollectible is necessary.
With the established frequency, the company's specialists must analyze receivables according to the personal list of counterparties, terms of formation and size; control settlements on deferred or overdue debts, assess the reality of the presence of receivables; determine techniques and ways to accelerate the collection of debts and reduce bad debts.
The analysis may include an assessment of the absolute and relative indicators of the state, structure and movement of receivables. To do this, the shares of specific debtors are determined, as well as each type of receivables (short-term, long-term, overdue for more than three months) in the total set of debts, the dynamics of changes in each component, the growth rate of the balance, etc. are considered.
An increase in the share of long-term receivables in dynamics can lead to a decrease in the level of solvency of the organization, a decrease in the liquidity of assets.
The excess of the growth rate of accounts receivable over the rate of increase in sales proceeds indicates a decrease in the level of management of accounts receivable, a “freeze” of part of the proceeds necessary to finance current activities.
Credit policy is inherently one of the elements of commercial policy, therefore, in order to work more efficiently with receivables and establish adequate credit limits for customers, it is first necessary to assess the situation on the market by monitoring primary demand in the segment where the company operates.
If analytical data show that final consumer demand in a crisis is reduced by 30-40 percent, then it can hardly be considered rational to maintain credit limits at the same, pre-crisis level. Therefore, before assigning a new credit limit to the client for the next year, a number of practical steps must be taken.
If the client is located in a small region where the bulk of the population works at several city-forming enterprises, then it must be clearly understood: if they begin (or have already begun) staff reductions or wage cuts, this will immediately affect purchasing activity. Therefore, it is worth considering very seriously whether to provide this counterparty with a commodity loan, since the risk of its non-repayment is very high.
For a clearer and really real understanding of the client’s state of affairs, one should now assess the situation on the spot, “in the fields”, and not be content with desk research and accounting data, which already represent a “posthumous photograph”.
You need to get answers to the following questions:
1. Buying activity. If retail, then the traffic in stores, the amount of the sales receipt (how much it decreased compared to the previous period). Are the shelves filled, are there any empty seats. If it is a wholesale company, then is there activity in the office, what is the mood of the staff, are there any facts of layoffs of employees or their transfer to a part-time work week.
2. It will be very useful to have an honest conversation with the owners or top officials of the company: how they see the development of their business, how realistic it is and whether there is an understanding of how the company will achieve strategic plans.
3. Assessment of the financial condition of the client. It is necessary to make it clear to your partners that the current crisis situation requires maximum openness from all participants. If your company goes to provide a customer with a commodity loan, then in return you should get as much information and data as possible.
Additional information will be given by the ranking of receivables by the timing of their occurrence, for example, with a 30-day interval, and an analysis of their changes. To do this, you need to highlight the share of doubtful debts and consider its dynamics. The growth indicates an increase in the risk of non-repayment of receivables and the possibility of overdue debts. Therefore, the company should strive to minimize this indicator.
An analysis of the dynamics of overdue receivables from trading operations allows you to identify unreliable counterparties, reduce their volume of credit shipments, or work with them on a full prepayment or commercial loan basis.
Up-to-date information on current debt is important, including the period of arrears, the history of relations with the client, the volume and regularity of purchases made by him, his share in the structure of income and gross profit, the number of violations of payment terms in past periods.
And, finally, real receivables are calculated taking into account inflation and depreciation rates during the delay in payment, the collection period, and losses from non-collection and write-off are calculated.
The results of the analysis of receivables should be taken into account when planning the future activities of the enterprise.
For example, here are several types of malicious debtors:
The first is that the counterparty specifically “pulls” the debt and waits until the statute of limitations expires.
And finally, the third - he ignores your attempts to "get through" to him.
Another common type of debt situation worth paying attention to is the default of a debt by an organization in which the founder and CEO are nominal, that is, they do not really perform their functions. With "nominal values" organizations are created even in the absence of the purpose of fraud. This is a kind of example of the post-Soviet business model, when in complex and changing conditions, all possible methods are used to ensure security. Penalties in such a situation are often based on the fact that reputational and criminal law methods make it possible to motivate the real leader to fulfill obligations.
2. Selection of responsible persons (department) for work with remote sensing within the company
At this stage, the main attention is paid to the issues of choosing an organizational structure in an organization for working with remote sensing:
A) Describes the "+" and "-" work of various responsible persons.
- Accounting
- legal service
- Employees (line managers, sales managers, project managers, implementation specialists, consultants, etc.)
- Collection group
B) The question of motivation for action is considered.
C) The issue of a “single” control center for working with remote sensing
Currently, the most common option for the development of events is to entrust this work to your employee, and in case of large amounts of collection, to an entire service (usually legal, financial or security service).
Of course, the first thing such services face is the need for their special positioning in the enterprise organization system. Practice shows that the scatter of functions over individual divisions of one organization is fraught with the fact that most of the time is spent on sorting out relations between departments and the division of competence, due to the banal desire not to perform thankless work while maintaining the previous fixed salary, which was paid for performing much more “comfortable” tasks. functions.
The organization of a special service for working with receivables may be associated for a business entity with problems in determining the names of the positions of employees in this department - the directory of positions and employees does not contain a position whose name would fully reflect the scope of the employees. Of course, this is not the biggest problem in organizing such a service, however, it does exist.
Nevertheless, the creation of a separate structural unit in this case will eliminate possible conflicts between individual services and ensure more coordinated work in the field of work with streaming receivables.
3. Building work with remote sensing within the company
At this stage, the main attention is paid to the issues of transition from the issues of making a decision about who works with remote sensing to how work will take place at the organization level, mechanisms, rules of interaction, methods of regulation and control:
A) Designing the organizational structure of the department
B) Creation of business processes, policies and procedures for managing remote sensing
C) Formation of a system of balanced performance indicators of the unit (KPI)
D) Development of motivation schemes based on KPI, creation of job descriptions, training of employees responsible for working with remote sensing
E) Creation of a system of control and internal management reporting in CRM to analyze the financial situation and evaluate the effectiveness of the work of specialists:
1) Selection of performance indicators for the analysis of work with remote sensing of responsible employees:
- call performance
Number of calls, meetings, letters written, bills paid,
Offsetting advances and DZ clients,
- "decommissioned" DZ
2) Control of the size and structure of remote sensing for the period:
Growth of DZ in amounts and number of clients
3) Fulfillment of performance indicators of work with remote sensing
The ideal option is a situation where monitoring of the work of collector employees and indicators of remote sensing can be carried out automatically using reports in CRM systems.
4. Methods of working with remote sensing
This stage is the main one, since there is a direct creation of applied methods of working with remote sensing, namely, actions that lead to the return of debt, which is the main goal:
A) Calls to clients (preparation for a call to a client, timing of a call)
B) Writing letters:
List of documents for the client,
To confirm the DZ,
Liaising with the company's accounting department to prepare documents for the client
B) meeting with clients
D) Conducting negotiations:
General rules,
Determination of the responsible person at the client for the payment of the debt,
Variants of agreements with the client in case of impossibility of immediate payment on his part,
Options for actions when the client refuses to pay or rudeness on the part of the client when communicating,
Determining the frequency of calls
E) Fixing information about working with remote sensing (CRM / automation of the process of collecting and fixing information)
If the debt is not repaid on time, there are only two ways to return it: agree with the debtor on a voluntary return or collect it by force.
The advantages of pre-trial debt settlement are the absence of additional costs associated with going to court and the mutually beneficial resolution of a potentially conflict situation without damage to the business reputation and relationships of partners.
Debtors should be kept in constant contact with:
Send reminders of the approaching debt repayment dates (by regular or e-mail),
Conduct telephone conversations
Personal meetings with the management of the debtor,
Make a complaint.
The financial methods of influencing debtors who have made a delay in payment include:
Application of penalties
Proposals for mutual settlements,
debt restructuring,
Sale of debt,
Initiation of bankruptcy proceedings, etc.
The choice of one or the other method depends on:
Features of the debtor
Amounts owed,
Number of days overdue
Readiness of the debtor to repay the debt and other factors.
In this sense, I would like to immediately make a reservation that collection activities do not imply the performance of an unambiguously negative function in relation to the debtor. At the initial stage of indebtedness, attempts are made to restructure it and create real conditions for the proper fulfillment of obligations - drawing up special debt repayment schedules in the event of a sharp deterioration in the financial condition of a bona fide debtor, etc. In some cases, it is rather even “anti-collection” activity in its classical sense, since such actions are aimed at eliminating the last judicial stage of collecting receivables.
Any organization that needs to collect a large amount of receivables will sooner or later face a choice of which way to go in order to return the invested funds.
Despite the difference in types of debt situations, we can distinguish common features:
Ensuring a balance between the assembly line of collection and the development of unique action programs for complex cases;
Use of innovative collection methods;
Efficient use of criminal prosecution of debtors, including on rare offenses (Articles 177, 315 of the Criminal Code of the Russian Federation, etc.), through information and scientific and consulting support.
Ensuring a balance between the assembly line of collection and the development of unique action programs for complex cases is especially important when collecting a large amount of debt (more than 300-500 monthly).
At the same time, it is important that there is a centralization of debt collection activities, that is, a general management, and employees would be engaged only in debt collection, and not combine this work with the performance of other tasks, since otherwise they will always have the opportunity to justify the low efficiency of their work by the need to do something other.
Increasing the efficiency of debt collection is possible by introducing into this division of labor an element responsible for preparing materials for PR support of collection: draft notifications, appeals, press releases and articles. Experience shows that for many large buyers (debtors) it is the PR support of the recovery that is the decisive factor in making a decision to repay the debt. Reputational impact can be prepared on the basis of the interaction of ordinary collection departments with the PR department, whose responsibilities are expanding, or the skills of organizing PR.
Accounts receivable are sold when there is an urgent need for cash. It is bought by enterprises that are debtors of the debtor. By purchasing accounts receivable at a discount, they present it to the debtor for repayment at full cost. A company that belongs to the same financial group as the debtor and is interested in buying up all the debts of the holding organizations can also buy the debt. In addition, a debt can be resold to a person interested in owning the rights of claim against this particular debtor. For example, this happens when a debtor is at the stage of bankruptcy (or is being “brought” to bankruptcy) and there is a struggle among creditors for the maximum number of votes at a meeting of creditors.
If all reasonable measures have been exhausted, the creditor may recover the debt through the courts. Usually, going to court leads to a break in partnerships, but it can also serve as the beginning of a constructive dialogue with the debtor. In the future, new debtors, knowing that the supplier always resolves debt disputes through the courts, try to prevent delays in repaying the debt.
Go to court in the following situations:
The debtor does not recognize the debt or has counterclaims against the creditor;
The debtor recognizes the debt, has no claims against the creditor, has assets sufficient to repay the obligation, but is unwilling to pay or requires preferential delivery terms from the creditor;
The debtor is in a pre-bankrupt state.
In the latter case, the presence of a writ of execution allows, in the event of bankruptcy, to fall into the second line of claims, which, as a rule, significantly increases the creditor's chances of repaying the debt.
Before going to court, it is important for a creditor to assess:
The legitimacy of their claims
The reliability of the evidence base,
The presence of the debtor's property or funds, which will provide a real opportunity to enforce a positive judgment for the creditor.
Methodology of work with debtors - legal entities:
Collector- employee of the company responsible for debt collection.
Sources of information on the company, employees, owners:
1. Internal resources of the system:
Database of previously checked objects, the results of their verification and further interaction;
Database of objects for which there is information about the inappropriateness of establishing business relations with them (stop list), etc.;
2. arrays of reference information
phone books,
Address directories, etc.;
3. databases with online access (resources of government agencies):
Pension Fund of the Russian Federation,
Federal Tax Service,
Federal Migration Service,
arbitration courts,
Search engines (Google, Yandex, Yahoo, etc.)
Job search sites (HH.ru, Job.ru, Superjob.ru, job.mail.ru, etc.)
- messengers (icq, quip, skype, sipnet, etc.)
Technical means of contact with the debtor:
1. Phone calls (manually: landline, mobile, robot reminder)
6. Messages on the Internet (websites, forums, chats, social networks, skype, icq)
1. It is necessary to find out how expedient it is to carry out search activities, since it can take from several days to several weeks to search for a debtor, and as a result it turns out that the debtor is insolvent.
2. When carrying out "PR" activities, it is necessary to collect and evaluate feedback: the reactions of opponents, the public, law enforcement agencies. When disseminating information that is true, the legal risks are minimal, as are the risks of a symmetrical PR response.
3. There are not so many effective methods of repaying a debt in a pre-trial order that do not run counter to the current legislation, and they all boil down to a single principle: creating the most unfavorable conditions for a client who has become a debtor for his further prosperous living. Of course, all actions are carried out only within the framework of the law. This:
1. importunity,
2. persuasion,
3. pressure
4. cunning.
4. In no case should you forget about the debtor. The impact must be permanent. Starting from the moment the contract falls into arrears, a clear total control over the debtor should be established up to the repayment of the debt. Otherwise, an absurd situation may arise: the debtor is "charged" to pay and is waiting for money, but if you do not remind him of the debt, then he, having received the long-awaited amount, will spend the money for his own needs instead of payment. To avoid this situation, the collector is obliged to systematically remind the debtor of his unresolved problem and push him to pay.
5. The task is to dispel the myth of impunity for non-payment. With his intervention, peace in the life of the debtor must end. A client who has become a debtor must clearly understand that he has not been forgotten and will not be forgotten. And they will continue to worry until the problem is solved.
6. The leverage on the debtor can be one of three components:
Interest: the collector creates conditions under which the client is directly interested in the speedy payment of his debt. When the collector offers the debtor to pay an amount below the specified amount, removing fines. The debtor perceives this as a financially advantageous offer and pays off his debt.
Addiction: the collector finds the client's pain point and methodically presses on it. If the debt is repaid, this dependence will disappear. Therefore, the payment arrives at the time specified by the collector.
Compromising materials: in the course of its work, the collector reveals information that may compromise the debtor or threatens to publish it.
Actions for debtors:
1. Threat to use agency links to initiate service checks:
tax,
antimonopoly,
Controlling legal software
Labor,
Migration, etc.
Informing the relevant public, self-regulatory organizations about the actions taken
2. The threat of revealing the property status of the debtor, revealing the rights to:
Real estate objects
vehicles,
Personal accounts or accounts of relatives in commercial banks, etc.
Taking preventive measures to prevent the debtor from transferring his property to other persons.
In accordance with Art. 58 of the Federal Law “On Enforcement Proceedings”, if the debtor-organization does not have sufficient funds to pay off the debt, foreclosure is levied on other property owned by him on the right of ownership, the right of economic management or the right of operational management (with the exception of property withdrawn from circulation or limited in circulation), regardless of where and in whose actual use it is located.
3. The threat of influence within the framework of criminal prosecution, including applying to law enforcement agencies in order to check the actions of the debtor for fraud and the application of the Criminal Code of the Russian Federation (Article 177 "Malicious evasion of repayment of accounts payable").
Using legal methods to ensure debt collection,
Control over the course of enforcement proceedings,
Involvement of bailiffs and OBEP,
Statements of a civil lawsuit in a criminal process, due to which the debt of the organization can turn into a personal debt of the head
Using the enforcement procedure
Information coverage of the legal process: posting news about the actions taken in the media, informing the public about the position of interested parties.
To seize the property belonging to the defendant and being with him or other persons, the seizure of funds on current accounts
4. Creating a threat to reputation:
1. threats to disseminate information about the current situation in the media that is relevant to reality by sending articles and comments
2. the threat of being blacklisted on the Internet, containing information about non-payers with the names of the heads of such companies,
3. writing appeals, press releases and articles about the debtor on websites, blogs, forums, social networks.
Partners
Competitors
to government agencies,
Clients, including potential
Partners
Competitors
Suppliers
Owners,
to government agencies,
Potential buyers of the organization and its property.
In today's economic situation, with today's level of competition, it is very difficult to get through to the consumer without giving him a deferred payment (commercial credit). But you need to work with it carefully and consistently.
When salespeople toss the word "accounts receivable" around and write about it in contract documents, they forget that it's an internal accounting term of the organization. Such words, written in correspondence or contracts, can lead to irreparable results. But "accounts receivable" within the organization both existed and will continue to exist. A "fight" with receivables must begin at the first stage, even at the conclusion of the contract.
Introduction
The term "accounts receivable" is purely an accounting term that refers to the debts of third parties in your organization.
But the management of receivables is a whole process that implies a certain number of stages, and it begins even before the signing of the contract.
In the introduction to the article, I wrote that the words "accounts receivable" indicated in correspondence or contracts can lead to irreparable results. Let's look at why...
According to the Civil Code of the Russian Federation, there are two parties in debt relations - the Debtor (Debtor) and the Creditor. But here's the paradox, in accordance with by-laws (letters, clarifications, regulations and instructions of the competent authorities), for the creditor in these respects, the debt is called "receivable", and for the debtor "accountable".
Here is how, for example, how the Ministry of Justice of the Russian Federation interprets accounts receivable: “the rights (claims) belonging to the organization .... as a creditor for unfulfilled monetary obligations of third parties to pay for goods actually delivered, work performed or services rendered (hereinafter referred to as accounts receivable).
On the other hand, according to the accounting regulations of the Ministry of Finance of the Russian Federation, accounts receivable also include advances issued to suppliers.
According to the civil code, receivables arise as a result of the provision of a "commercial loan". Article 823 states: “Contracts, the execution of which is associated with the transfer of money or other things defined by generic characteristics to the ownership of the other party, may provide for the provision of a loan, including in the form of an advance payment, advance payment, deferral and installment payment for goods, work or services (commercial credit), unless otherwise provided by law.
This is also confirmed by Article 488 of the Civil Code of the Russian Federation: “1. In the case when the contract of sale provides for payment for the goods after a certain time after its transfer to the buyer (sale of goods on credit), the buyer must make payment within the time period stipulated by the contract, ... ".
The provisions of Article 489 of the Civil Code of the Russian Federation (Payment for goods in installments) apply only to relations arising on the basis of Article 488 of the Civil Code of the Russian Federation, which is clearly indicated in paragraph 1 of the article on installment payment.
It must be remembered that this agreement may be paid and may provide for the payment of interest on the amount of goods from the date of its transfer, or it may be free of charge and not provide for interest until the day of payment. Compensation or gratuitousness is desirable to be directly indicated in the text of the contract.
Therefore, the indication in the letters “return your receivables to us” is at least unreasonable, and at most illegal. Why on earth should your counterparty give you what he is owed? This is not covered by your contract.
If you demand “the return of the counterparty's receivables”, the court may decide that you returned the funds transferred in excess by your counterparty, and now you understand that these were not the excessively transferred funds. But the transfer of money to the counterparty must be supported by written evidence.
But the most serious consequences await you if you conclude an additional agreement on the transfer of debt from contract to contract. In this case, if the counterparty asks to carry forward the receivable, you must carry forward the accounts payable (i.e. your debt to the counterparty).
In order to avoid confusion in correspondence and contracts with counterparty companies, avoid the words "accounts receivable" and "accounts payable". Put simply, your company's debt to ours, or a commercial loan issued to your company in the form of a deferred payment. Moreover, who should clearly tell whom.
However, within your firm, the words "accounts receivable" are quite acceptable and logical. Who, if not you, is directly responsible for the non-return of "receivables" by your customers ...
When a manager comes to work, he signs a job description, in which a separate item is designated "monitoring the fulfillment of contractual obligations by clients." This paragraph means that until a decision is made that has legal consequences, he is responsible for the correct operation of clients. And the correct work of clients includes not only everything that is described in the contract. Because what is not spelled out in the contract is regulated by civil law.
Many managers say that in addition to them there is financial control and accounting. What will they do then?
I will answer this question. The duties of the financial controller include keeping track of "accounts receivable", but for security reasons, he cannot communicate with clients and does not have the right. It has purely technical functions of operational accounting. Otherwise, he risks being influenced by the client.
Responsibilities of the accounting department include accounting and tax accounting. The chief accountant has the right not to take into account incorrectly executed documents. Thus, you can lead your firm to huge tax fines.
And since you are engaged in “monitoring the fulfillment of contractual obligations by the client” and you did not control this process, you may be fired under the article or there may be a criminal case against you for causing harm on a large scale through negligence.
Personally, I tend to perceive receivables as a credit product. You invest money in a client and thereby make a profit.
And in accordance with this, it is necessary, if not to avoid, then to reduce the possible number of risks from investing money.
Risk - (English risk, French risque from It. risico - goes back to the Greek. rixikon - cliff: the original "risk" - maneuver between the rocks) - 1) the likelihood of events with negative consequences; 2) the risk of unforeseen losses, losses, shortfall in income, profit compared to the planned option.
The organization faces the following types of risks:
Credit risk (including repayment risk).
Market risk.
Risk of loss of liquidity.
operational risk.
legal risk.
Credit risk is the risk that a counterparty participant will not perform its obligations in full either on a required date or at any time after that date. When managing credit risk, the company pre-determines the acceptable amount of losses that it can afford (loss limit). In the event that a particular transaction is characterized by the risk of losses, the amount of which exceeds the established limit, it is rejected. Thus, the company regulates the level of risk on ongoing transactions.
Market risk - the risk of losses recorded on balance sheet and off-balance sheet positions due to changes in market prices; it is the risk of changes in the values of market parameters, such as interest rates, exchange rates, stock or commodity prices, the correlation between various market parameters and the variability (volatility) of these parameters. Market risks, like credit risks, are managed using a system of limits. In other words, when selling products, forming a foreign exchange or investment portfolio, the probable maximum losses should not exceed the established limits.
Liquidity risk is the risk that a firm will not be able to repay its obligations with available capital at a particular moment. The basis of liquidity risk management is the analysis of the company's planned cash flows. Data on the timing and amounts of receipts and payments in the preparation of the cash flow budget are adjusted taking into account the identified risks.
Operational risk refers to the risk associated with deficiencies in systems and procedures for management, support and control. Operational risks are inextricably linked with the activities of the enterprise, and they are usually managed by the heads of structural divisions.
Legal risk is the risk that, in accordance with the current legislation, the partner is not obliged to fulfill its obligations under the transaction. Legal risk management is based on the formalization of the process of legal registration and support of the company's activities. In order to minimize legal risks, any business processes of the company that are subject to these risks (for example, the conclusion of a supply contract, the execution of invoices or acts of work performed (services rendered)), must undergo mandatory legal and accounting verification.
To minimize legal risks when carrying out a large number of identical transactions, it is advisable to use standard forms of documents developed by the legal department and the procedure for processing documents developed by the accounting department.
That is why the sales manager must record any possibility of these risks occurring. Help clients avoid risks to your company. Inform management in a timely manner of the possibility of risks.
In modern conditions, in practice, there are mainly four types of commercial credit:
1. a loan with a fixed repayment period;
2. a loan with a return only after the actual sale by the borrower of the goods delivered in installments;
3. lending on an open account, when the delivery of the next batch of goods on the terms of a commercial loan is carried out until the moment of repayment of the debt on the previous delivery;
4. Lending under the credit limit, when the delivery of the next batch of goods is carried out, after depositing money to the personal account, based on the amount paid, with the possibility of further gradual closing of the credit limit.
Of course, it is necessary to motivate employees to avoid overdue receivables. Such motivation will give employees the goal of avoiding such debt. In some firms, they are also motivated to sign an agreement without deferred payment.
The main thing in the management of receivables is the creation of clear and understandable rules. And getting to know them customers and employees.
What needs to be done to ensure that the non-return of accounts receivable does not happen? What are the methods of dealing with receivables?
We will answer this question in this article.
Stages of work with "accounts receivable".
Work with receivables can be divided into several stages. Each stage is part of the work with receivables. In general, a business process consisting of these stages allows minimizing the risks associated with issuing commercial loans.
1. The stage of concluding an agreement - during this stage, you need to check the company-buyer, correctly draw up an agreement, take into account the possible motivation of the client for the timely return of funds, prescribe in the agreement the possibility of further deferred payment with written approval (commercial loan agreement), set penalties for late payment for products, insure the risk of non-payment by the counterparty, check the signing of documents by the counterparty and the number of documents.
2. The stage of work with the counterparty - during this stage, it is necessary to classify the client according to the degree of risk, sign an additional agreement on a commercial loan, set a credit limit, monitor the correctness of filling in the primary documents, track the facts of payment and, if necessary, remind the firm-buyer of the time of payment, charge penalties for late payments, track the current solvency of the client company and new purchases of the management and founders of the company.
3. The stage of formation of overdue debts - during this stage it is necessary to understand what is the fact of delay in receivables by delay or final non-return, get all the documents in hand and, if necessary, bring them to the established form, obtain reliable information about the solvency of the debtor, negotiate the return debt. If the debtor returns the debt, then continue working with the debtor, reducing the credit limit and setting a different degree of risk for him. Otherwise, make a decision that has legal consequences.
4. Making a decision that has legal consequences - at this stage, it is decided how to recover the debt: in court, in insurance, in the order of assignment of the right to claim (cession), in the order of transfer of debt, in the manner of an agreement-order for the recovery of debts. After the decision is made, actions are taken that have legal consequences.
Now let's look at each of these stages step by step, since the sequence of steps is not random.
Stage one: Conclusion of the contract.
At this stage, it is necessary to insure against all known ways of deception by the counterparty of your company. Anticipate all risks as far as possible. And decide whether it is worth working with the buyer on deferred payment.
A. Checking the counterparty
During the verification of the counterparty, all possible sources are used, both open and closed.
Topics to check can be:
Checking for family and friendly ties with employees of the enterprise
Checking the company's founding time
Checking the founders of the company for involvement in lawsuits
Checking the constituent documents of the company
Checking the authority of officials to sign documents
Checking the submission of reports and balance sheet indicators of the company
Other required checks
According to these parameters, the decency of the firm-buyer is assessed.
Thus, the company is insured against collusion of employees with other persons, from one-day firms, from persons involved in forging documents, from signing documents by unauthorized persons. If the contract is signed by an unauthorized person, then this person, in accordance with the Civil Code, acted in his own interests. This means that when signing an agreement and other documents by persons who do not have the right to act without a power of attorney, you must require a power of attorney from such persons. Otherwise, you will have to sue the citizen. The financial indicators of the solvency of the company are also clarified.
In addition, it is necessary to evaluate the financial performance of the company by employees of the financial monitoring bureau. When deciding on the advisability of analyzing the financial condition and reliability of the customer, certain employees receive the necessary data (financial reports, bank and audit certificates, reviews of other customer suppliers, credit ratings of specialized news agencies, data from informal sources, etc.). After that, an analysis of the economic activity of the counterparty is carried out. When analyzing, you need to understand that:
the amount of reserves and VAT on acquired assets does not exceed the total amount of own and long-term borrowed funds (absolute or normal stability);
the total amount of cash, short-term financial investments, receivables and other current assets - not less than the total amount of accounts payable, other short-term liabilities and loans not repaid on time (current stability), or not less than the previous value increased by the amount of short-term loans and loans (short-term sustainability), or at least the previous value increased by the amount of long-term loans and borrowings (long-term sustainability);
the value of the ratio of borrowed and own funds (long-term solvency ratio) is not more than 1.0;
the value of the coefficient of autonomy is not less than 0.5 *;
the value of the current liquidity ratio is not less than 2.0;
the value of the coefficient of provision with own working capital is not less than 0.1**;
total liquidity ratio of the balance sheet is not less than 1.0;
absolute liquidity ratio within 0.2-0.7;
quick liquidity ratio of at least 1.0.
Formulas for calculating odds
(as a table)
B. Proper drafting of the contract.
According to many economists, the correct drafting of the contract helps to avoid legal risks in the activities of the organization.
When drawing up an agreement and further work under the agreement, you should immediately prepare for a possible appeal to the arbitration court. That is why you must remember that the documents submitted to the arbitration court and confirming the commission of legally significant actions (contracts, invoices, powers of attorney, applications, etc.) must comply with the requirements established for this type of documents. And the organization must keep the original documents and not one document should be lost. Since the Arbitration Court cannot consider proven a fact, confirmed only by a copy of a document or other written evidence, if the original document is lost or not submitted to the court, and the copies of this document presented by the persons participating in the case are not identical with each other.
In accordance with the Civil Code, a transaction must be concluded in writing, if this is required by law. Contracts provided for by law in writing, you can see in the civil code.
The contract must also be signed by an authorized person, so always ask for documents confirming the authority.
The last thing I want to say is that the contract is considered concluded if an agreement is reached on the essential terms of the contract. Otherwise, the contract is considered not concluded, i.e. insignificant. Which doesn't give you the right to invoke it in court. However, if the rest of the documents (meaning primary) are filled out in the prescribed form, these documents may be evidence.
At the end of the agreement, the phrase is desirable: This agreement is signed voluntarily. This will insure you against the invalidity of the contract under another article of the Civil Code.
Otherwise, the drafting and terms of the contract are governed by the Civil Code of the Russian Federation.
An illiterately drafted contract can serve as a reason for non-payment of the debt by the buyer.
C. Motivation of clients for the timely return of funds.
The contract or additional agreement may provide for bonuses for timely payment based on the results of the month. This is a purely psychological technique, which is calculated on the desire of the client to pay money for an additional reward.
D. Signing in the agreement of the possibility of further deferred payment with written approval (commercial loan agreement).
In accordance with the Civil Code of the Russian Federation, any deferral and installment payment for products, work performed and services rendered is treated as a “commercial loan agreement” and, if not signed in writing, is invalid. As well as advances or prepayments given to you by a client. But if in the first case, the client owes you, then in the second case, you owe the client. In the contract, you can prescribe that you are not responsible for the advances issued by the client and their use. Otherwise, you will have to pay interest for using someone else's money.
The Civil Code states that a commercial loan agreement can be concluded as a condition of the main agreement, but in any case must be concluded in writing.
As a rule, the competitive environment dictates the desire for a deferred payment by the buyer. Therefore, you can agree on a condition for a further deferment of payment as agreed by the parties, and not signing an additional agreement on a commercial loan by your management will be a good excuse for the client.
And never confuse commercial credit with trade credit. In the case of a commercial loan, goods are given and money is received. In the case of a commodity credit, a commodity is given and a commodity is received.
D. Establishment of fines for late payment for products.
If you establish penalties in the contract for late payment for products in an amount greater than that provided for in the civil code, this will not be a violation. But the buyer will be interested in paying for the products earlier. But it is better to establish a threat, namely to write: “The seller (another party to the contract) has the right to set or not set a penalty in the amount of ...% for each day of delay in payment.” This is done so that you are not required to charge a penalty, in accordance with the legislation of the Russian Federation, in each case of late payments.
E. Insurance of the risk of non-payment by the counterparty
If you decide to insure the risk of non-fulfillment by the counterparty of its obligations, then this must be done at this stage, since shipments made before the receipt of the insurance policy will not be an insured event. You need to contact the insurance company, conclude a contract, pay money, get an insurance policy. When insuring risks, you must immediately take into account the procedure for announcing an insured event and what constitutes an insured event. As a rule, in different insurance companies, different terms of the contract.
G. Checking the signing of documents by the counterparty and the number of documents.
Before you start working, you must remember that in addition to the documents brought to you, there may be other documents signed by an authorized person that you do not know about. Therefore, you must receive a letter of guarantee from the counterparty with a list of signed documents for a specific day. The authority of a person must also be confirmed by a power of attorney for one day - the day the documents are signed. Otherwise, you may face fines from the counterparty or other discriminatory documents. And losses under such documents can amount to tens of millions of dollars.
Second stage: Work with the counterparty.
This is the stage at which "accounts receivable" appears and is tracked, and steps are taken to reduce it. Work at this stage should be built on the level of daily work with debt.
A. Classification of clients according to the degree of risk.
The client's risk class determines the potential risk of the client's failure to make timely payments for the shipped products and the occurrence of doubtful debts.
The client's risk class is determined based on the following factors:
duration of the client's work with the company
observance by the client of payment discipline
potential solvency of the client based on the analysis of the current financial statements of the client
All clients must be classified according to the degree of risk according to the following scale:
1. Very high.
2. High.
3. Average.
4. Low.
At the initial stage, a low degree of risk is assigned. This means that in the case of constant and timely payment by the buyer of products, he can be allocated a commercial loan. The assignment of a risk degree should be regulated by your internal documents.
ABC - analysis of the client base for receivables allows you to change the credit policy and pricing policy of the enterprise in a timely manner. As well as credit conditions of specific counterparties.
B. Signing an additional agreement on a commercial loan.
In accordance with the civil code, a commercial loan agreement is signed, the mandatory conditions of which must be the amount of the commercial loan limit and the number of days of deferred payment. The details of the parties, the persons authorized to sign the documents and the grounds for authority (documents certifying the authority must be attached), the place of signing, the date of signing, the number and date of the main document, the signatures of the parties (must correspond to the power of attorney) must also be specified in the additional agreement. As well as the consequences of late payment. Also, an additional agreement on the provision of a commercial loan is regulated by the Civil Code of the Russian Federation.
B. Establishing a credit limit.
The credit limit, as a limitation, is set programmatically. The credit limit is calculated using the following formula.
Credit limit = amount of shipments of the previous month / 30 days * number of days of deferred payment.
In case of late payment, the client is assigned the next risk level on the scale, and the credit limit is reduced by 25%.
Maybe a more detailed scale of risk. This is usually left to the discretion of the CFO.
You can determine the possible amount of money invested in accounts receivable (IDZ) using the following formula:
IDZ \u003d ORK x KSTs x (PPK + PR),
where ORC - the planned volume of sales of products on credit;
KCC - the ratio of the cost and price of products;
APC - the average period of the loan to buyers (in days);
PR - the average period of delay in payments on the granted loan (in days).
From the point of view of investment analysis, investments in receivables are no different from investments in production facilities. Therefore, all the main indicators used to assess the effectiveness of investments are quite applicable to receivables: net present value (NPV), internal rate of return (IRR) and profitability index (PI). However, the following problem prevents the wide application of this approach. The fact is that it is rather difficult to accurately estimate the additional cash flows that will be generated as a result of providing buyers with a deferred payment. The most reliable assessment of this kind of change is possible by calculating the value of the average daily marginal profit indicator. Marginal profit for the purposes of this article refers to the trading margin, excluding variable costs.
Average daily contribution margin (Pn) is calculated using the following formula:
Pn=P:dn,
where P - marginal profit received for the period of receivables turnover;
dn - receivables turnover period (in working days3).
With these formulas at hand, you can always evaluate the possibility of your business providing commercial credit to your client.
Authorization of credit limits is carried out by an authorized body or person. The persons responsible for providing a commercial loan must be specified in the credit policy of the enterprise.
Exceptions for shipments over the credit limit are only possible if they are approved in writing by the relevant authorized persons
D. Tracking the correctness of filling in primary documents.
Tracking the correctness of filling out shipment documents is an important part of working with receivables. Since it is the primary documents that are the basis for the counterparty to have obligations, and in the future they can serve as written evidence in court.
Usually, the documents are tracked by the accounting department. But the re-signing of documents usually falls on sales managers.
What should be checked in this case?
1. Signatures on invoices and powers of attorney (the signature of the authorized person must match).
2. Deciphering the signature on invoices.
3. The signatures of the chief accountant and the general director must match the signatures on the contract.
4. Documents must be completed in the form prescribed by law and by-laws.
The same should be with acts of work performed and services rendered.
When signing a new contract or additional agreements, remember who can act on behalf of the counterparty without a power of attorney, and require a power of attorney to sign from the rest.
Reconciliation acts, according to the legislation, are not primary documents and can be filled out in any form. In court, they can only be considered in conjunction with primary documents. However, there are requirements for this type of documents.
1. As on any document, the date and place of signing must be on the reconciliation act.
2. The period of the reconciliation act must be determined.
3. For the period of the reconciliation act, all documents with numbers and amounts, on the basis of which the obligations of the counterparty arose and on the basis of which the obligations were repaid, must be indicated. As well as opening and closing balances. And the debt of your counterparty to you should be written out in a separate line.
4. The reconciliation act must be signed by the general director and the chief accountant, or the signatures of persons authorized by them.
5. In addition, the Reconciliation Report must be drawn up for each contract separately, and not for all obligations as a whole. As well as accounting for different contracts should be kept separately.
If the documents are signed and made incorrectly, then they cannot be accepted by the court as evidence of the debt of the counterparty. Thus, you also monitor the fulfillment of obligations under the contract.
D. Daily monitoring of the facts of payment and, if necessary, a reminder to the firm-buyer about the time of the next payment.
When the goods are delivered to the buyer, shipping documents are signed, it is desirable that they indicate the time of receipt of the goods.
Typically, employees of financial services take into account shipment data based on invoices, but this is not entirely true. An invoice is not a two-sided document that is evidence of a transaction. An invoice is a one-sided document confirming the occurrence of tax liabilities. This is evidenced by the absence of the counterparty's signature in the invoice form. Therefore, the requirements for a refund on the basis of an invoice are meaningless.
Tracking is based on a plan - factor analysis of cash receipts. Money to be received and money actually received on the date of planned receipt.
Usually, in the programs for filling out primary documentation, there is a function to track the time of payment by the counterparty for the delivered goods. The day before payment, call and remind the counterparty of payment. This will not be perceived by the counterparty as pressure. A counterparty may have many suppliers, and such a reminder is a standard procedure. In the end, the human factor can play. A customer with a large number of suppliers may forget. In addition, you can understand whether the buyer intends to pay his debt on time or not. You will have to demand from him an additional letter of guarantee, which will indicate the amount of payment and the due date. In case of refusal to provide a letter of guarantee, this will be a clear reason for refusing shipments until the debt is paid off. It is desirable that such letters reach you in the original.
Some programs provide for sending emails with a reminder of upcoming payments, but as a rule, these are improvements for a specific company.
Moreover, reminders should be sent to those persons who are responsible for payments in specific organizations.
E. Accrual of penalties for late payments.
If the contract does not provide for the right to accrue, but the very accrual of fines, your company is obliged to accrue them. The accrual of fines is made according to the terms of the contract. In the absence of an appropriate rate in the contract, penalties can be calculated using the refinancing rate in accordance with the provisions of the Civil Code of the Russian Federation
Rate x Debt x Days of Prosr.
360
Otherwise, they will be charged by the tax inspectorate during the next audit.
G. Tracking the current solvency of the counterparty company and new purchases of the management and founders of the company.
Until now, debtors believe that they "take someone else's for a while, but give their own forever." Of course, this statement is not devoid of a certain logic, but for you, the disposal of your money is their misuse. In addition, the decline in the competitiveness of the company - the debtor, may serve as a signal of non-return of receivables. That is why you should keep track of the facts:
1. Commencement of legal proceedings involving the debtor as a defendant.
2. A sharp drop in commodity balances in the debtor's warehouse.
3. Financially intensive purchases of the debtor or management and founders.
4. Bad habits of employees and founders of the debtor.
5. Any problems that may affect the default of receivables.
6. Other current customer issues.
In addition, it is necessary to monitor other factors that contribute to the increase in debt.
Thus, you will be able to catch the non-return of receivables at the first stage and take all measures to return them.
Stage three: the formation of arrears.
What to do when overdue receivables have already formed? Young managers in this case, usually start to panic. However, it is too early to do so. Because panic can lead to wrong actions on your part, which will lead to a final break in the relationship between you and the client.
A. It is necessary to understand what the fact of the delay in receivables is, deferred payment or final default.
In this case, the delay may be:
1. Postponement of payment for a short period with subsequent payment.
2. Delay in payment for a long time with subsequent payment.
3. The final non-return of receivables.
A delay in payment for a short period of time with subsequent payment may be caused by a short-term breach of contractual obligations by the debtor's clients. Usually, this issue is resolved within two to three days.
A delay in payment for a long period with subsequent payment may be caused by a complete violation of the contractual obligations of the debtor's customers, the peculiarities of the debtor's credit obligations, as well as litigation or large purchases for production needs.
The final non-return of receivables may be caused by the reasons specified in paragraph G of the previous stage of work. Litigation in this case comes with a large amount of claims.
The decision must be hidden from the debtor.
B. Receipt of all primary documents and, if necessary, bringing them to the established form.
This is the last attempt to bring documents to the established form. Otherwise, you will not be able to litigate.
You get all the documents in your hands, evaluate them, if necessary, bring them to the established form.
That is why the decision about what an overdue receivable is should be hidden from the debtor.
C. Obtaining reliable information about the solvency of the debtor.
Such work is usually carried out by specialized agencies. The cost of such services is negligible, but this will give you additional arguments for using them in a negotiation. And later in court.
D. Negotiating the return of debt.
In large companies, negotiations are usually divided into several stages:
1. Negotiations with the manager
2. Negotiations with the head of the department
3. Negotiations with the security service.
Negotiations with the manager are usually held in order to finally understand what the delay in payment is and to confirm or refute the assumptions.
Negotiations with the head of the sales department are usually held in order to work out a scheme for repayment of the debt or to obtain a final refusal of payment.
Negotiations with the security service are held to put pressure on the debtor and make a decision that has legal consequences.
The first and second stages are usually held from a win-win position. During the third stage, the technique of pressure (stress negotiations) and the “win-lose” position are used.
Let's dwell on the second stage, namely the development of a return scheme, in more detail.
At the moment, there are many schemes for repayment of debt. However, there is only one effective one: the gradual reduction of the credit limit in accordance with the signed repayment schedule.
This scheme is applicable because it allows you not to lose a client and allows the client to earn on your products to pay off debt obligations.
The Civil Code of the Russian Federation provides for the following ways of termination of obligations by the debtor:
1. Termination of an obligation by performance
2. Termination of obligations by compensation (transfer of money, property, etc.)
3. Termination of obligation by offset.
4. Termination of an obligation by novation (i.e. the provision of services or sales by the debtor)
5. Creditor Forgiveness
6. Termination of an obligation by the impossibility of performance (by circumstances beyond the control of the parties).
7. Termination of an obligation on the basis of an act of a state body
8. Termination of the obligation by liquidation of the legal entity - the debtor.
At the stage of formation of overdue receivables, it must be remembered that: “If the failure to perform or improper performance of the obligation occurred through the fault of both parties, the court accordingly reduces the amount of the debtor's liability. The court also has the right to reduce the amount of the debtor's liability if the creditor intentionally or negligently contributed to an increase in the amount of losses caused by non-performance or improper performance, or did not take reasonable measures to reduce them. This is evidenced by Article 404 (Fault of the creditor) of the Civil Code of the Russian Federation.
Step four: Making a decision with legal implications.
At this stage, you must decide how you will exercise your legal rights as a creditor.
If all documents are drawn up correctly and all actions for the voluntary return of receivables are completed, then the law provides you with the following methods:
1. Judicial order
2. Insurance procedure
3. Assignment of the right to claim (cession).
4. Transfer of debt to a solvent debtor.
5. Contract of agency for debt recovery.
What should be considered when choosing each method?
A. Judicial order
You can apply the court order in any case if the debtor refuses to pay the debt and you have all the primary documents confirming the debt. In this case, you need to take into account:
1. The limitation period during which you can claim the debt. At the moment, it is defined as three years from the moment the obligations arise. Those. within three years from the date the debt arises, you must send a statement of claim to the address of the arbitration court in the form provided for by the Code of Arbitration Procedure of the Russian Federation. The day of delivery to the post office or to the office of the arbitration court will be the day of filing the application.
2. Who performed the actions of legal significance? If they were produced by the debtor's employees, the debtor is liable for the actions of its employees, if they were subsequently approved by the debtor. Approval can be expressed in actions. Otherwise, if the actions of the employees are not approved, then the debt can be claimed directly from the employee. If these were third parties (employees of third-party organizations), then the debtor is responsible for their actions within the framework of their duties.
3. The creditor has not taken actions that increase losses and make it impossible to fulfill obligations.
4. Even if you have not prescribed a penalty in the contract, you can claim it on the basis of the Civil Code. In this case, the losses will be compensated to the extent not covered by the penalty.
5. You have all the evidence of debt. Evidence of debt must be in writing, as provided for by the legislation of the Russian Federation. The evidence is: an agreement regulating the relationship; waybills or acts of performed works (services); power of attorney to sign such documents; as well as other indirect evidence of debt.
6. You must be prepared for the fact that the trial will be delayed for a period determined by the Arbitration Procedure Code of the Russian Federation. The decision of the arbitral tribunal may be reviewed by the court of appeal. Appealed on cassation to the Federal District Court. Appealed in the order of supervision in the Supreme Arbitration Court of the Russian Federation.
7. In case of differences in the documents, the court may make a decision only on the basis of the original documents.
8. If the contract is recognized as not concluded or void, you retain the right to prove on the basis of primary documents. But here you need to take into account that for each primary document there will be a statute of limitations.
9. In case of going to court, the debtor may submit counterclaims. Therefore, before going to court, try to find out if you have debts in other relations with the debtor.
B. Insurance order.
The insurance procedure is applied if this contract falls under the insurance policy and you have declared an insured event within the terms stipulated by the contract. It is imperative to monitor the fulfillment of obligations under the insurance contract in the order of work with debtors. Remember:
1. Before signing the insurance contract, you must carefully read the terms of the contract. You must understand which events are suitable for the occurrence of an insured event and the time of its announcement.
2. You must notify the debtor of the occurrence of an insured event and announce the transfer of the right to claim to the insurance company. The insurance company, by way of subrogation, has the right to demand from the debtor only the amount that it paid you.
3. The remaining actions will follow from the obligations of the insurance company specified in the insurance contract.
B. Assignment of the right to claim (cession).
When the right of claim is assigned, the receivables are assessed for recoverability. The valuation is usually performed by the party acquiring the receivable.
1. Assignment of the right to claim may take place on the basis of an agreement or a law. On the basis of the law, the right to claim can be transferred:
As a result of the universal succession in the rights of the creditor
By a court decision on the transfer of the creditor's rights to another person, when the possibility is provided for by law
As a result of the performance of the obligation of the debtor by his guarantor or the pledgor who is not a debtor under this obligation
In case of subrogation to the insurer of the rights of the creditor to the debtor responsible for the occurrence of the insured event.
In other cases provided by law.
2. It is not allowed, without the consent of the debtor, to assign a claim under an obligation in which the identity of the creditor is essential for the debtor.
3. The ceding creditor shall be liable to the new creditor if the debtor's debt has not been proven in court.
D. Transfer of debt to a solvent debtor.
A debt transfer can only be made to a solvent debtor at the initiative of your counterparty, therefore, before entering into a debt transfer agreement, you must verify the financial solvency of the new debtor. In doing so, remember:
1. A debt transfer agreement is drawn up between the debtor and another company that has obligations to the debtor.
2. An agreement on the transfer of debt is allowed only with the consent of the creditor.
3. The new debtor may present the same claims as the old debtor.
D. Contract of assignment for the recovery of debt.
The debt collection agency contract is chosen only in order to receive more qualified debt collection services. You are outsourcing debt collection. Do not forget:
1. A contract of agency implies an action to collect a debt on your behalf by proxy. To do this, you must be sure of the legitimacy of the methods of reclamation. Because, in case of using illegal methods, the responsibility may lie with you.
2. Under the agency agreement, the person claiming the debt for you will use the same methods as you.
Once you've made your decision, take action.
Analysis of some products of the credit market for work with receivables.
In order to issue a commercial loan, if there are no free funds, you must refinance somewhere. The market for credit products is now large.
As the analysis of credit market products shows, most products can only mitigate the impact of the formation of overdue receivables, namely, ensure the absence of a shortage of working capital, but by no means eliminate it. As the saying goes, "the bank gives an umbrella when the sun is shining and takes it away when it starts to rain." Only recently have credit products appeared that allow you to work effectively with receivables. But we will consider all possible products.
1. Factoring.
2. Forfaiting.
3. Financing services secured by receivables.
4. Credit line.
5. Simple bank loan.
Factoring - resale of the right to collect debts; commercial transactions by proxy; a service related to receiving money for a sale on credit. A big advantage of factoring as a system is to inform you about cases of non-payment to companies that supply your customers.
Factoring with a supplier's guarantee by its very nature does not relieve you of the risks associated with the occurrence of overdue receivables, since you act as a guarantor for the client. Factoring services are expensive, so Factoring with a supplier's guarantee is not an effective risk management tool.
Factoring with credit risk coverage costs more than the factoring guarantor service, but shifts the credit risks to the factoring company. This means that you will have to raise the cost of production by the percentage of banking services.
Forfaiting is the purchase of negotiable debt from a creditor on a non-recourse basis. This means that the buyer of the debt (forfaiter) assumes the obligation to refuse - forfeiting - from filing a regressive claim against the creditor if it is impossible to obtain satisfaction from the debtor. The purchase of a negotiable obligation occurs, of course, at a discount.
Forfeiting (from the French a forfait - the whole, the total amount) is a specific form of lending to exporters by buying from them commercial bills accepted by the importer (or other debt claims for foreign trade transactions), without the right of regressive claim against the seller in case of non-payment of the bill. Forfaiting is used mainly as a way of refinancing a commercial loan in foreign economic turnover, it is a form of transforming a commercial loan into a bank one.
The forfaiting mechanism is used in two types of transactions:
in financial transactions - in order to quickly realize long-term financial obligations;
in export transactions - to facilitate the flow of cash to an exporter who has provided a loan to a foreign buyer.
The main negotiable instruments used as forfaiting instruments are promissory notes. However, other types of securities may become the object of forfaiting. It is important that these papers are “clean” (containing only an abstract obligation).
Accounts receivable financing services increase the cost of risk but reduce the ability to bear the full amount. And from this point of view, they are not very effective. In addition, you are not liable for non-fulfillment or improper fulfillment by the debtor of the claim that is the subject of the assignment, if it is presented for execution by the financial agent, unless otherwise provided by the agreement between you and the financial agent. You need to read the contract very carefully on this topic. But there is a plus in such an agreement, it does not provide for the obligatory consent of the debtor.
The cost of the line of credit is high, but this does not relieve you of the possibility of overdue receivables and default by the debtor. In addition, it requires collecting a lot of documents to receive it.
Credit is the lowest interest for the use of funds, but it alleviates the lack of working capital, but does not exclude the possibility of the formation of overdue receivables. And in this case, the consequences of the possibility of the risk of non-payment will be borne by you.
In any case, the bank always leaves itself the opportunity to curtail the program. And in this case, you will be left alone with the "accounts receivable".
Credit policy of the enterprise.
Like any policy of an enterprise, a credit policy is not only an internal document of an enterprise, but also a set of measures aimed at working with receivables. This policy defines the procedure for managing receivables and making decisions related to such management. Credit policy - is one of the main documents of any commercial enterprise.
The goals of an effective credit policy are:
increase in sales volumes in the short and long term to achieve the required profitability;
maximizing the effect (income) from investing financial resources in receivables;
achievement of the required turnover of receivables;
limiting the relative growth of overdue receivables, including doubtful and bad debts in the structure of receivables.
The following measures will help limit the increase in receivables:
the basic concept of the system of effective credit conditions is customer-orientation. Thus, all conditions are created for each buyer to comply with financial discipline: an effective credit limit is provided, an effective credit period calculated, depending on the stage of the life cycle of the distribution channel according to option No. 1 or No. 2, price discounts and price margins that encourage the buyer to reduce terms of payment for delivered goods. Obviously, in this scenario, the occurrence of overdue receivables is a consequence of unwillingness to pay or genuine force majeure (which happens very rarely). In this case, the creditor has not only legal, but also economic grounds to immediately begin the procedure for pre-trial settlement of the economic dispute;
the size of the loan is limited by the size of the effective credit limit, which limits the risk of reducing the turnover of receivables;
standards for assessing buyers and conditions for granting a loan reduce the risk of overdue receivables and slowing down their turnover due to: inclusion in the distribution system of only creditworthy buyers; concentration of efforts on the most attractive buyers according to the criterion of net marginal profit; monthly assessment of the current solvency of each client and the appointment of a credit status associated with the tightening of credit conditions with a negative deviation in the turnover of receivables from the required value; an unambiguous link between the debtor's credit status and the relevant credit standard.
accurate determination and coordination of the actions of all specialists involved in the collection of receivables at all stages of the procedures of the lending process;
automating the process of tracking receivables allows you to stop shipments in case of default by the client;
actions to prevent the occurrence of overdue receivables at the stage of work with the client will reduce the risk of its occurrence.
The obligatory conditions of the document on the credit policy of the enterprise are:
1. Procedure for concluding a contract and responsible persons
2. The procedure for setting a credit limit, methodology and responsible persons
3. The procedure for motivating the client for the absence of overdue debts, criteria and responsible persons.
4. Procedure for reviewing the credit limit, grounds and responsible persons
5. Procedure for establishing the client's risk class, grounds and responsible persons
6. Credit limit authorization procedure and responsible persons
7. Credit control procedure and responsible persons
8. Special conditions for exceeding the credit limit, procedure, grounds and responsible persons.
9. Procedure for collecting overdue debts, grounds and responsible persons
10. Issuing penalties, grounds and responsible persons.
Sometimes possible sources of financing are also prescribed in the credit policy.
Responsible persons in the credit policy are prescribed by position, in accordance with the staffing table of the enterprise, in order not to make changes to the credit policy every time the management changes.
The credit policy should be clear and precise, as well as obligatory for all structural divisions of the enterprise. It should be consistent with legislation, accounting standards, pricing policy. It must be communicated to all persons involved in the credit control procedure.
Usually, the credit policy at the enterprise is introduced after the formation of a certain amount of receivables, but I would introduce a credit policy with the issuance of the first commercial loan. This will save you from having to enter it in the future and will initially determine the conditions for commercial lending to client firms. Such transparency will help to avoid or reduce the possibility of overdue receivables. Which, of course, will affect the financial stability of the enterprise.
Is it worth issuing commercial loans at all?
In this case, the opinions of experts are divided. Some call receivables a competitive advantage, others say there is no need for commercial loans.
Observing these opinions, I noticed that everything depends on the business practices in each specific type of activity.
Let's take consulting as an example. Hourly pay and billing based on specific hours worked. Thus, payment is possible for the performance of work and services rendered. You won't do otherwise.
If you are selling a well-known and bought product, then there is no need for a deferred payment.
The amount of receivables is influenced by factors that can be conditionally called internal and external
External factors include:
the state of the economy in the country - the decline in production, of course, increases the amount of receivables;
the general state of settlements in the country - the crisis of non-payments unequivocally leads to an increase in receivables;
the effectiveness of the monetary policy of the Central Bank of the Russian Federation, since the limitation of emissions causes the so-called "money hunger", which ultimately complicates the settlements between enterprises;
the level of inflation in the country, so with high inflation, many enterprises are in no hurry to pay off their debts, guided by the principle that the later the debt payment deadline, the lower its amount;
type of products - if these are seasonal products, then the risk of growth in receivables is objectively determined;
market capacity and the degree of its saturation, so in the case of a small market capacity and its maximum saturation with this type of product, difficulties naturally arise with its implementation, and as a result, an increase in receivables.
Internal factors:
The balance of the credit policy of the enterprise means an economically justified establishment of the terms and conditions for granting loans, an objective determination of the criteria for the creditworthiness and solvency of customers, a skillful combination of providing discounts for early payment of invoices by them, taking into account other risks that have a practical impact on the growth of receivables of the enterprise. Thus, incorrect setting of the terms and conditions of lending (provision of loans), failure to provide discounts for early payment by customers (buyers, consumers) of invoices, failure to take into account other risks can lead to a sharp increase in receivables.
Availability of a control system for receivables.
Professional and business qualities of the management of the company involved in the management of receivables of the enterprise.
Other factors.
At its core, the decision to issue a commercial loan will still be made by the company issuing it. And in many respects it will proceed from a competitive situation in the market and solvency of clients.
When issuing the first commercial loan, you must:
Remember that the procedure for dealing with receivables should not depend on the popularity of the company-buyer. There were cases when well-known companies created one-day firms for non-payment for goods, work performed and services rendered.
Remember that timely repayment of receivables depends only on the timely and correct actions of the management of the creditor's company.
Remember that the market risks of the debtor company are difficult to prevent, because they depend on the correctness of the decisions of this company. But such risks can be affected in a timely manner.
Before organizing a commercial lending program, it is necessary to clearly define the "Credit Policy" of the enterprise and regulate the procedure for working with commercial loans.
It is necessary to ensure operational management accounting in the company
It is necessary to ensure the independence of technical work with loans from the influence of customers, i.e. to separate the technical and client parts of the work. Moreover, technical workers in no case should communicate with customers.
Many companies, when starting to work with accounts receivable, do not pay attention to the procedure for working with it, skip some steps in the sequence of working with it. This is especially true for costly checks of counterparties and work with primary documents. It should be noted that unclosed receivables are direct losses in the work of the company. Namely, the procedure for working with receivables helps to avoid all risks in relations with counterparties.
Conclusion
The current trend of opinions about commercial lending, transfers such lending from the category of competitive advantages to the category of risks of working with a company. A receivable is a consequence of a commercial loan.
The maximum possible amount of investments in commercial loans and receivables is considered by various experts to be from 10 to 30%. When evaluating the receivables of companies, the quality of work with commercial loans is also evaluated.
However, receivables have always been an asset of the company. In case of non-payment of tax fees or initiation of bankruptcy proceedings, it may be seized. It can be given up. But a liquid asset is only that debt that can be claimed quickly enough.
Therefore, only the correct work with receivables is the key to the success of the company. Otherwise, commercial lending should not be allowed.
This article is an attempt to combine the methods of risk management, financial analysis, methods of security services, legal services and methods of work of the sales department in the framework of working with receivables to draw up a general picture of working with it.
In this article, we have not touched on the negotiation methodology when working with receivables. But we will talk about this next time.
We continue to publish materials on how to build an effective receivables management system. Today we will talk about the intricacies of communication with debtors. The head of the project for financiers of CFOs Territory Natalia Gurinovich tells.
We continue to talk about how companies today work with receivables. In the last article, we talked about building an effective system for the return of "receivables" and which of the employees should be involved in this. Now let's talk about how to work with debt that has already arisen (or is about to arise), as well as about the psychological intricacies of communicating with debtors.
3 questions with answers that the debtor should know
I recommend starting with explanatory work. It is advisable to notify the client in writing (send a pre-compiled memo on working with a commodity loan), as well as verbally pronounce the sequence of actions, answer these questions:
Question 1: Why is it important to pay receivables on time?. Explain the reasons:
1. Preservation of trusting partnerships. We strive to develop partnerships, trust and respect the choice of customers. Therefore, we ask you to treat our demand with the same respect - to pay off receivables on time.
2. Preservation of preferences and discounts. Future conditions for working with our company depend on your financial discipline.
3. Preservation of reputation. The more reliable the reputation of your company is, the more comfortable conditions for deferment and discounts you will receive.
4. Providing from the company an additional discount for "advance payment".
Question 2: “What to do if you do not have time to pay on time?”. Explain the sequence of actions:
1. Alert the sales manager/company representative in advance and explain the situation.
2. Provide a letter of guarantee stating that you undertake to repay the overdue debt within a certain period (but not more than 30 calendar days from the date of delay). Also pay a fine.
Question 3: “What happens if you cannot make the payment within the agreed time?”. Explain how the company will respond:
1. If within 3 calendar days from the date of the delay a letter of guarantee with new payment terms is not provided and an agreement on the extension of the terms is not signed, the company will file a pre-trial claim.
2. If the delay without a letter of guarantee is more than X calendar days, the company may lose the right to receive further delays.
3. If on X calendar day from the moment of the delay you did not pay and did not provide a letter of guarantee on debt restructuring, the company's security department (collection agency, etc.) takes control of the overdue debt management situation.
If on X calendar day from the date of the delay your company has not paid, then we submit the documents to the court in accordance with the signed agreement.
What is "preventive" work? The client understands that in your company the management of accounts receivable is systematic. The option to “use” the money for free will not work.
- For 3-5 business days. It is better to call not only the person responsible for procurement, but also the accountant to remind you of the approaching deadlines.
- For 1 business day. Remind that the deadline is about to come.
- On the day of the debt. If the client claims that the money has “gone”, but you don’t have it yet, ask for a copy of the payment order.
To effectively monitor due dates (especially if there are a lot of debtors), you will most likely need an ERP solution that will automatically remind customers of delinquency. It will not be possible to keep these hundreds of counterparties in your head.
What to do when the delay has already come?
Example 1 The delay was one banking day. In this case, the seller should call the client and find out the reasons for the delay in payment. If you delay the call, there is a risk that the client will consider the amount of debt as insignificant for the creditor. And he should know that the partner controls the situation and is determined, firm, but friendly.
Example 2 Delay from 5-6 banking days. A claim letter must be sent to the debtor's e-mail and fax. It must contain:
Example 3 The delay was 10-11 banking days. The letter of guarantee was not provided, and the supplementary agreement was not signed. Documents can be transferred to the company's security department (legal department, external or internal collectors). In this case, either pre-trial debt collection begins, or the preparation of a lawsuit in court.
- It will cost the company much cheaper and faster
- After the trial, the chances of resuming a relationship with a client are minimal
- As you know, winning a lawsuit does not mean getting money (the debt itself and interest for using other people's money)
Of course, your company can set its own deadlines for responding to delays and rules for pre-trial debt recovery.
Reasons: why customers do not pay on time
Understanding them, it is easier to make decisions about how to repay the debt:
1. Economic reasons. The client is experiencing financial difficulties (for example, of a seasonal nature). Today it is common in the enterprise of the agricultural sector. Before the start of the transaction, it is necessary to find out if the client has cash gaps and offer him a longer deferment with the payment of interest. Or involve banks, factoring and leasing companies as financial partners.
If the client really cannot pay according to the schedule, it is necessary to restructure the debt, defer its payment, but with the payment of interest. In especially difficult cases - to take assets or products from the client on account of the debt.
2. Reasons of a "political" nature. For example, a change in management or the owner of a company, a change in legislation in a country - region (the introduction of any bans or duties). These reasons are difficult to foresee. There is no universal solution here, except to insure the risks of non-return with an insurance company.
3. Action of irresistible forces, force majeure. Natural disasters, drought, hostilities. Here, too, there is no universal solution, except for insurance.
4. Bad faith debtor. The client initially chooses the tactics of "dynamizing" creditors. The principled position is to live as long as possible and free of charge at "someone else's expense". Large holdings often fall into this category of debtors.
Important: even at the stage of granting a deferral, identify these clients and carefully control their debts. The problem is also “cured” by a very tough attitude towards the delinquency of the client's debts (for example, by contacting collectors or going to court). It is important not to delay taking action here.
5. Market reasons. Occur when there is a lot of competition in the market, and supply exceeds demand. The client can manipulate suppliers: for example, take from those who give a big respite.
If your company does not have competitive advantages that are clearly expressed and obvious to the client, this factor will be the most significant and painful.
Here you need to either negotiate with the client, or stop working with him. Most likely, he uses you as a "temporary supplier", which can be replaced at any time with a new one.
6. Weaknesses in your business processes. They cause a reciprocal negative attitude of customers, the loss of their loyalty. For example, violation of delivery dates, damage to goods, a large percentage of shortages and defects, slow work with complaints. These shortcomings need to be eliminated, a department for customer service and complaint acceptance needs to be created. Correct errors at your own expense.
Popular excuses for non-payers
In my experience, non-paying clients have a standard set of excuses. Therefore, it is important to be able to work with them. A few practical tips:
1. The bank is “to blame” (did not make the payment, or made it later). Just ask for a copy of the payment order to confirm the payment.
2. Promise to transfer money (promises in words, but takes no action). Ask to confirm the fact of the debt and its amount. This will help make sure that the debtor is going to pay - at least he knows exactly how much he owes.
Also ask for a specific payment date. Then ask again: “Do I understand correctly that on June 5 you will pay all the debt?”. Thank the client and say that you trust his words. It is important to communicate with the person who makes the decisions.
3. Justifying problems with software or hardware. The procedure is similar. Also show that you understand the client's problems.
4. The client does not agree with the amount of the debt. Especially if there was a return of the goods and there are discrepancies in the numbers on the reconciliation acts. In this case, you need to ask to pay the amount, the size of which does not raise questions. For controversial positions, you need to quickly conduct an internal investigation and send copies of documents confirming your innocence and a new reconciliation act to the client.
5. If a client complains about a shortage or marriage, it is important to urgently correct the mistake: find out the causes of the problem. If the problem is confirmed, replace the defective product or supply the missing one.
6. The client refers to force majeure circumstances. For example, floods, droughts, crop failures, low purchase prices for its products and other "streamlined" problems.
In this case, ask the client to sign a new debt restructuring schedule with interest.
Who do debtors pay first?
My experience shows that there are categories of creditors whose debts are returned in the first place:
1. Those who are afraid: a serious company with a security department and qualified lawyers. Position yourself as such a company.
2. Those without whose services the business cannot work. For example, Internet service providers or transport services. Depends on the type of business.
3. Those who are difficult to deceive. Who has information about the movement of goods and money, internal plans and difficulties of the client.
4. Those with whom the debtor has long-term personal relationships. And who is uncomfortable to refuse.
5. Those who employ persistent and persistent specialists who systematically and regularly demand debt create psychological discomfort for the debtor.
6. Those with whom good communication is maintained, with whom it is "convenient and pleasant to work."
7. Small creditors. “Don’t ruin your reputation and relationships because of little things.”
All others receive payouts on a first-come, first-served basis.
How to build a conversation with debtors
There are several principles for dealing with debtors that will help you collect debts and maintain relationships with clients:
Avoid personal. Communicate from the position of the seller. "Nothing personal - these are the rules of work in our company." Be respectful. No need to offend and offend the dignity of the client - this will only aggravate the conflict.
Confidence. Without apologizing or making excuses. You are standing up for your rights.
concreteness. Clearly record all agreements: a guarantee of payment must be put on paper and an additional agreement on the payment of penalties for the period of debt prolongation must be signed. Motivate to pay faster. Point out the bonuses that timely payment will bring to the client and the negative consequences of delay.
persistence. Communicate until you get a clear result: either payment, or a letter of guarantee, or a direct refusal (in this case, the security service and the legal department come into play).
Natalia Gurinovich
From 1998 to November 2014 Financial Director and Member of the Board of Directors of Belagro Group of Companies (trade in spare parts and agricultural machinery, service, logistics in 4 markets: Belarus, Russia, Ukraine and Kazakhstan).
Vitaly Komlev, Deputy General Director of Klyuch-consulting LLC
In fairness, it should be noted that the organization's receivables are also formed by the debts of employees for the amounts of money issued in the account. However, as a rule, these amounts are very insignificant - in comparison with the amounts indicated in the contracts concluded, and precisely because of the insignificance of these amounts, we will not consider this component of the organization's receivables in this study.
The relevance of the topic under consideration is eloquently evidenced by the fact that considerable attention is paid to the issues of the emergence of receivables and the possibilities of its collection in the special literature. And this attention is very justified. Almost every business entity in the course of doing business has encountered the fact that its partners do not pay for the shipped goods, work performed or services rendered within the prescribed period. Unfortunately, it seems possible to state that it has become, figuratively speaking, a custom of Russian business turnover.
Based on the meaning of the regulations governing accounting issues, receivables are an integral part of the assets of business entities, along with working capital, equipment, real estate, etc.
With regard to the definitions of Art. 128 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation), receivables are one of the objects of civil rights (namely, property law).
It is immediately necessary to stipulate that there is no separate legislative or other regulatory legal act that would regulate the procedure for collecting receivables. Therefore, many organizations, based on their own practice or the business practices of their counterparties or business partners, develop their own local regulations, the purpose of which is to provide methodological support for the process of paying off receivables.
An analysis of the practice of activities of economic entities, together with an analysis of the current legislation and existing judicial practice, makes it possible to form some general algorithm for the repayment of receivables existing in an organization.
Conventionally, work with receivables can be divided into the administration of receivables and activities aimed at its elimination.
Accounts receivable management includes:
- establishment of receivables;
- analysis of established receivables;
- formation of a reserve for doubtful debts;
- writing off debts that are uncollectible.
Let us consider in more detail the work of the organization's specialists at each of the designated stages of work to eliminate the arisen receivables.
Accounts receivable administration. Establishment of receivables
General rules for the establishment and reflection in accounting of receivables for settlements with suppliers, buyers and contractors and the creation of reserves for doubtful debts are fixed in the accounting policy of the organization.I believe that it is not necessary to further substantiate the thesis that the indicators reflected in the accounting (financial) statements of the organization should be real. It is the provision of objective data that is one of the tasks facing the accounting department of an economic entity, for which a periodic inventory of debts is carried out.
Let me remind you that the requirement to conduct an inventory is contained in Art. 11 of the Federal Law of December 6, 2011 No. 402-FZ “On Accounting” (hereinafter referred to as the Accounting Law) and in the Regulation on Accounting and Accounting in the Russian Federation, approved by Order of the Ministry of Finance of Russia of July 29, 1998 No. 34n (hereinafter - PVBU-34n). At the same time, the result of the inventory is a comparison of the actual availability of the relevant control objects with the data of accounting registers. In other words, when conducting an inventory of debts, the accountants of the organization need to make sure that the amounts of receivables and payables reflected in the accounting are confirmed by the relevant primary accounting documents: invoices, acts, payment orders (for example, for the transfer of an advance), expenditure cash orders (for example, for issuing a loan), etc. Therefore, the task of the inventory commission in a somewhat simplified version can be formulated as checking the availability of documents confirming the actual value of each debt. In no other way to fulfill the requirement of Art. 11 of the Law on Accounting will not work, because in accordance with the norms of Art. 10 of the Law on Accounting, the accounting registers reflect the data contained in the primary accounting documents. Therefore, if there are no primary documents, such a debt must be recognized as unconfirmed, and, therefore, in relation to it, we can say that such an asset (or, in other words, receivables) cannot exist in accounting and must be written off in the prescribed manner.
At the same time, it seems necessary to note that in accordance with the provisions of Part 1 of Art. 9 of the Law on Accounting, primary accounting documents draw up the facts of economic life. At the same time, paragraph 8 of Art. 3 of the same legislative act establishes that the facts of the economic activity of the organization are transactions, events, operations that have or are able to have an impact on the financial position of an economic entity, the financial result of its activities and (or) cash flow. A cumulative consideration of the above norms allows us to conclude that the act of reconciliation of calculations, so popular in the accounting environment, is not a primary accounting document, on the basis of which entries can be made in the accounting of an organization. Consequently, the reconciliation of settlements with debtors and creditors, in essence and in its status, is not part of the inventory (with the exception of reconciliations of settlements with the budget and banks, the obligation of which is provided for in paragraph 74 of PVBU-34n), and in the accounting (financial) statements of an economic entity, only those amounts of debts that, in the opinion of a particular organization, are correct (that is, unconditionally confirmed by the available primary accounting documents) should be reflected.
At the same time, it is noteworthy that the wording of paragraph 73 of PVBU34n allows us to conclude that in the accounting documents of counterparties the amounts of debts may not coincide, since settlements with debtors and creditors are reflected by each party in their financial statements in amounts arising from its accounting records, recognized by it as correct (ie, documented).
Experts recognize that the absence of a requirement for reconciliation acts as the main primary accounting documents does not mean at all that they can be completely abandoned. Experts note that it is advisable to reconcile settlements with counterparties, because this procedure helps to identify errors and inaccuracies made in accounting. Nevertheless, as noted earlier, the accountant will make entries on the accounting accounts, correcting the identified errors, not on the basis of the reconciliation act, but on the basis of primary accounting documents.
Attention should also be paid to the fact that in the Recommendations to audit organizations, individual auditors, auditors on auditing the annual financial statements of organizations, given in the letter of the Ministry of Finance of Russia dated 09.01.2013 No. 07-02-18 / 01, the Ministry of Finance of Russia, referring to paragraph 27 PVBU-34n, drew the attention of auditors to the fact that for the purposes of compiling accounting (financial) statements, an inventory of property can be carried out on any date, starting from October 1 and later, but an inventory of liabilities (during which debts are identified) should be carried out on as of December 31 inclusive. In this regard, it is clear that the final documents related to the inventory can be dated to the year following the year of debts. Nevertheless, the discrepancies identified during the inventory between the actual availability of objects and the data of the accounting registers are reflected in the accounting (financial) accounting of the organization in the reporting period to which the date as of which the inventory refers. This approach is provided for in Part 4 of Art. 11 of the Accounting Act.
At the same time, specialists note that in real activities for the administration of receivables, one should not be limited only to the established mandatory inventories. In order to ensure internal control, an inventory of obligations is recommended to be carried out at least once every six months, and even better - quarterly.
| Guidelines for the inventory of property and financial obligations and the forms of documents drawn up during the inventory are determined by the current order of the Ministry of Finance of Russia dated June 13, 1995 No. 49. And although the specified departmental one still retains not only its legal force, but also its relevance , experts admit that the INV-17 form “Inventory Act of Settlements with Buyers, Suppliers and Other Debtors and Creditors” used in the inventory of obligations and the appendix to it in the form of a certificate are somewhat outdated. In this sense, the opportunity provided to organizations to use other forms of documents (unified, modified or independently developed) is an undoubted benefit. Ideally, the forms compiled during the inventory should solve the problems of not only accounting, tax, but also management accounting. However, the refinement and, moreover, the development of a new form of the document require the involvement of the efforts of various specialists of the organization who are able to understand and justify the need to remove or add certain columns. It would be very appropriate in this regard to take into account the opinions of third-party experts, auditors and other specialists. For example, the expert Solovieva A.A., guided by the fact that the purpose of the inventory is to confirm debts with the relevant primary accounting documents, suggests that information about the details of the contract, invoices, acts, payment orders and other documents be reflected in the act (certificate to the act) of the inventory, but the column “What the debt is for” proposes to exclude, since it does not carry a useful information load. In her expert opinion, it is also advisable to include such columns in the final documents as:
Analysis of established receivablesThe receivables of the organization established in the process of inventorying liabilities are subject to additional study and analysis in terms of assessing the prospects for its repayment. In the process of this analysis, all established receivables are divided into three groups: |
- receivables recognized as prospective for repayment;
- receivables that do not meet the requirements for recognizing them as uncollectible, but the repayment of which will be associated with certain problems (subsequently, this debt is taken into account when forming a reserve for doubtful debts);
- receivables that meet the criteria for recognizing it as uncollectible (subsequently, this debt is subject to write-off in the prescribed manner).
The second group, as a rule, is formed by overdue receivables - debt with an expired maturity, which is established by an agreement or other document containing obligations.
The third group in its absolute majority is formed by overdue debts, for which the limitation period established by civil law has expired.
At the same time, it should be borne in mind that tax legislation, depending on the state of the overdue debt, divides debts into prospective for repayment, doubtful or completely hopeless for collection.
Doubtful debt in accordance with the regulatory requirements of paragraph 1 of Art. 266 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation), any debt arising in connection with the sale of goods, the performance of work, the provision of services is recognized if this debt is not repaid within the time limits established by the agreement and is not secured by a pledge, surety, bank guarantee.
Uncollectible debts for tax purposes as defined in paragraph 2 of Art. 266 of the Tax Code of the Russian Federation are considered debts for which the established limitation period has expired, as well as those debts for which, in accordance with civil law, obligations are terminated due to the impossibility of their execution, on the basis of an act of a state body or liquidation of the debtor organization. This definition of uncollectible debts corresponds to the provisions of Art. 196, 416, 417 and 419 of the Civil Code of the Russian Federation.
The general algorithm for the analysis of accounts receivable and its assessment is set out, for example, in the Rules (standards) for auditing activities approved by Decree of the Government of the Russian Federation of September 23, 2002 No. 6965. In a form closer to the practical financial and economic activities of the organization, this algorithm for analyzing accounts receivable should find its own reflection in the accounting policy of the organization (or in one of its appendices).
In the analysis of receivables, the first priority, it seems, is to determine the period of occurrence of receivables. Most often, this period is set when studying the contract with the counterparty. It should determine the terms of payment for the delivered goods, services rendered or work performed. Only after these periods have expired, the debt becomes overdue and is subject to accounting as receivables, more thorough control and monitoring.
A slightly different mechanism is used if the concluded contracts do not specify the specific terms of payment for the delivered goods (work performed, services rendered). In this case, the rules of paragraph 1 of Art. 486 of the Civil Code of the Russian Federation: the buyer is obliged to pay for the goods immediately before or after the seller transfers the goods to him (unless otherwise provided by law, the contract of sale or does not follow from the nature of the obligation). In addition, it is necessary in this case to take into account that, in accordance with the regulatory requirements of paragraph 5 of Art. 5 of the Federal Law of June 27, 2011 No. 161-FZ “On the National Payment System”, the bank must make the payment no later than 3 business days. Thus, the delivery must be paid for within 3 working days from the date of acceptance and transfer of the goods7. And only from that day can the debt be considered overdue, recognized as receivable and included in the list of controlled debts.
If, however, you have paid for the delivery of the goods in advance against the supplier's invoice without a contract and the invoice also does not indicate the delivery date, other rules based on the statutory provisions of Art. 314 and 457 of the Civil Code of the Russian Federation. In accordance with them, you formally require the supplier to fulfill the obligation within a specific period, which must be reasonable. And if you did not indicate a specific period in your claim or the supplier does not fulfill your requirement, then the delivery obligation must be fulfilled within seven days from the date you submit your demand for its fulfillment. That is, it is practically impossible to determine the period of delay in delivery until a claim is officially sent to the debtor demanding the fulfillment of the obligation.
It is recommended to send the claim (demands for the delivery of goods in accordance with the prepayment made), as well as any other business letters in the event of possible prospects for subsequent litigation, to counterparties by registered mail with a list of attachments and a return receipt, since the signature on the receipt notice is the only undeniable confirmation of receipt of the letter. I repeat, after 7 days from the date of receipt by the debtor of the demand (claim) with a request to fulfill the obligation to supply, the debt should be recognized as receivable and its amount should be included in the list of overdue debts.
Formation of a reserve for doubtful debts
An important stage in the work with the organization's receivables is the formation of a reserve for doubtful debts. The procedure for creating a reserve for doubtful debts is determined by the Accounting Policy of the organization, developed in accordance with the Accounting Regulations (hereinafter - PBU) "Accounting Policy of the Organization" (PBU 1/2008), approved by order of the Ministry of Finance of Russia dated 06.10.2008 No. 106n.It must be emphasized that the provision of the Accounting Policy of the organization that is not created is contrary to the legislation on accounting. The reserve for doubtful debts includes any unsecured debt, both overdue and not overdue, not only for goods, works and services sold, but also for advances transferred, as well as for issued interest-free loans. The allowance for doubtful debts is not created in relation to:
- debts in respect of which the organization does not have documents confirming its occurrence and size;
- debts on interest-bearing loans, which, due to the requirements of the Order of the Ministry of Finance of Russia dated December 10, 2002 No. 126n PBU 19/02 “Accounting for financial investments”, are financial investments, therefore, not a reserve for doubtful debts, but a reserve for impairment is created in respect of them;
- debts (even past due) that the entity has confidence that they will be repaid.
The amount of the reserve for doubtful debts in accordance with the requirements of clause 3 approved by Order of the Ministry of Finance of Russia dated 06.10.2008 No. 106n PBU 21/2008 "Changes in estimated values" is an estimated value. At the same time, receivables are reflected in the balance sheet of the organization less the amount of the reserve for doubtful debts. This procedure is enshrined in clause 35 of PBU 4/99 “Accounting statements of an organization”, approved by order of the Ministry of Finance of Russia dated 07/06/1999 No. 43n.
The formed reserve for doubtful debts is used (reduced) in the course of the organization's activities in three cases:
- recognizing the debt as uncollectible and writing it off in the prescribed manner;
- repayment by the debtor of the existing debt (in whole or in part);
- changes in the estimated value of debt.
In accordance with the requirements of PVBU-34n and PBU 21/2008, the formed reserve for doubtful debts is reviewed annually (as a rule, this occurs based on the results of a mandatory inventory of liabilities).
To be continued...
Business processes and debt management policy of the client company
It's no secret that in many companies there is a tacit setting of management to delay payment terms. This is the easiest way to replenish working capital, and without collateral, paying interest on loans, and even without providing a package of documents. The logic is simple: in order to double the turnover, it is enough to double the payments to all suppliers.
All business processes and company policies are implemented by people, and it is because of the human factor that failures occur even in the case of well-defined regulations. The next two groups are related to employees.
Employees of your organization
Working with remote control can be compared to a burning coal that everyone throws to each other, not wanting to hold it in their own hands. This is not surprising, because it is difficult to gain recognition and fame in this simpler way, and there are a whole load of problems and responsibilities. Therefore, all departments and employees do not want to be extreme, and ultimately the sales department is responsible for working with debts.
A separate issue is the structure of remuneration of sales managers, whose duties include debt collection. In most companies, the system is applied: until the money arrives, the transaction does not count towards the plan. In fact, the question is: gingerbread today or next month. As a result, a disproportion arises - the organization's turnover lacks millions of rubles, and the manager did not receive several thousand, which he hopes to receive next month. If the client pays. At the same time, any sales manager is afraid of “putting it on the debtor”, fearing the termination of cooperation. All these circumstances lead to the fact that, in fact, the work of collecting debts is an AND DB - an imitation of violent activity. There are eight main ways to link employee bonuses to DZ performance. We will discuss this issue in detail in the corresponding chapter.
Client company employees
Two groups of reasons can be distinguished here: the first is the usual mess and slovenliness, and the second, which companies that won tenders for the supply of power ministries periodically (especially in the 1990s) encountered, is described in detail in my book "Kickback - Special Technique of the Client Attractions". The scenario was typical. At the appointed time, payment from one or another department was not received. The meeting with a comrade colonel, and sometimes a general in charge of the financial unit, began with a fifteen-minute story by the latter about the situation in the Russian army and the problems of its re-equipment. After that, the sacramental sounded: “There is no money. It is not known when they will be…” And here, if there was a suggestion captivating with novelty and originality about an evening trip to a restaurant, during which the issue of “targeted compensation for the efforts of the negotiators” could be discussed, the situation was resolved. Another issue is that often the personal bonus ate up the lion's share of the company's margin. Fortunately, in recent years, such incidents have become much less.
The only market where personal bonuses were linked to timely payments was the pharmaceutical market in the 1990s. Then there were no large pharmacy chains, and the decision on which pharmaceutical distributor to take products from and when to pay for it was made by the head of the pharmacy. At that time, there was a widespread system of “fines” for pharmacists for a part of the rollback - in case of late payment. After networks began to play a major role in the pharmaceutical market, this practice became a thing of the past.
In one of the holdings, whose managers I advised on building a system for working with receivables, the financial security department collected and summarized statistics from various areas of working with debts. Below I give an enlarged group of reasons and a percentage of the total number of debts.
Of course, these figures will vary depending on the size of transactions and market segment, but the general pattern is obvious. Indeed, in most markets, the number of fraudsters fluctuates between 2-5%, and “temporary lack of funds” combined with “inefficient business activity” account for about half of the reasons why a counterparty delays payment.
Conclusion: we often shift the responsibility for non-payments to contractors, not wanting to see the “log in our own eyes” and admit the fact that our system of prevention and debt collection is ineffective, and our employees have no motivation for this psychologically unpleasant and fraught with the loss of customers issue.
At the beginning of the book, I spoke about the reaction of Finnish partners to Russian non-payments. Now is the time to notice that not only crystal-clear businessmen are born in the West. Western business culture did not emerge on its own, but is the result of harsh conditions and total transparency in which local business operates. In particular, this is the result of the created multi-level system of protection against debts, the quick and ruthless exclusion from the economic turnover of all companies that do not fulfill their financial obligations on time.
For example, in the US, UK, Germany and the Scandinavian countries, there have been programs for sharing data on customer payment behavior for many decades. Thanks to them, data on the delay in payments by one or another entrepreneur quickly become known to all market participants - with the corresponding consequences for him.
A Russian businessman told me how, in the early 1990s, he commissioned a young employee to open an office in London. He did not cope with his task and, having quit, settled somewhere in the West. A couple of years later, my friend made a second attempt to enter the London market. To his surprise, at first they did not want to rent an office for him for a long time, demanding an advance payment, and then they refused to bring furniture. It soon became clear that earlier his former sloppiness employee had not paid the bill for a fax received on a deferred payment basis. Information about this instantly got into the Dun & Bradstreet database (this company is the world's largest collector of payment information), after which everyone began to shy away from the company with a sonorous Russian name, like hell from incense.
Russia has its own system for the exchange of payment information and monitoring of the client portfolio - SPARK-Monitoring of payments. The experience of this project shows that more and more companies in our country want not only to deepen their own protection against debts, but also to build a system of collective defense against non-payers.
For us, this strategic task is in the long term.
Summary
In this chapter, we looked at the do's and don'ts: the basic mistakes and omissions in dealing with debt. In the next one, we will analyze the correct process of working with remote sensing, its stages, as well as the goals and objectives facing the employee who work with debts at each stage.
Feedback from the training participant Dmitry Tkachenko "Effective work with receivables"
“I really liked this training and was extremely useful for me as the head of the legal department of BERG Holding, because the solution to the problems disclosed at the seminar is clearly, accessible and schematic. I can put everything into practice in the way that was discussed at the seminar and in relation to our business. The most striking topic for me was pre-trial work with clients. As a rule, the legal department does not deal with this, but the topic is interesting and suitable for introducing it among our management. Thank you very much!"
Galina Alexandrovna Ishmuratova, Head of Legal Department, BERG Holding
Chapter 3
Stages of work with receivables
Any process can be decomposed into stages and stages. This is exactly what we will do in this chapter for the process of working with receivables - we will analyze the “skeleton”, the sequence of stages of working with it, and in the following chapters we will increase the “meat” on it: specific techniques, technologies and chips.
At every training, I ask the same provocative question: at what point does work with overdue receivables begin?
What will you answer this question?
From the participants of the training, I often hear answers: "When the money did not come", "When the client refuses to pay." Do you think they are correct? No?
So when do we start dealing with debt? Right! At the zero point, when no one owes anything to anyone yet, the product or service has not been delivered, the contract has not been signed, and we can refuse to cooperate with this counterparty at any time. This is the stage of negotiations.
Negotiation are different:
1. About the beginning of cooperation with deferred payment. This situation is found in many markets where deferral work is standard practice, even at the level of first trades.
2. On the transition to work with a deferred payment after the "test" period of prepaid work, during which the parties evaluate their capabilities and sales volume.
3. On increasing the credit limit, without which it is difficult to increase the turnover.
The situations are different, but in any of them, an employee working with debts needs to answer two groups of questions:
1. Can the counterparty pay on time? Will his financial condition allow him to do this? Does he sell the products he took on a deferred payment basis? If not, will he be able to pay for it from his own funds?
2. Will the counterparty “want” to pay within the time period stipulated by the contract? How does it settle with other providers? What is the organization's payroll policy?
In short, the main task of this stage is to determine whether the counterparty will be able and willing to pay on time. There is another, no less important. Which? Answering this question, let's remember the main task of the police: the prevention and prevention of offenses. The police have a different one - protection from criminal encroachments. It seems that the semantic fields are close, but in the first case, we prevent evil, stop it at an early stage, and in the second, we fight back and counteract the process that has already gained momentum. It's no secret that to prevent the hooligan actions of a noisy company, a banal check of documents by a police squad is often enough. And that's it!
But we digress. Let us turn to the third task of the stage under consideration - the prevention of the occurrence of overdue receivables (PDD) during negotiations. In fact, we are talking about preempting possible excuses from a potential debtor at a stage when there is no debt yet. We will talk more about how to do this in the corresponding chapter.
This stage is wonderful because if the counterparty has not passed the test and has not instilled in us confidence in its reliability, we, being aware of the risks, can refuse to work with him and thereby save a huge amount of financial, time and nervous resources. If we decide to work with a counterparty and sign an agreement, the next stage begins - implementation of agreements. The supplier fulfills its obligations to ship goods or provide services, and the payment deadline stipulated by the contract has not yet come.
The main task of this stage is the correct, legally flawless execution of transaction documents, thanks to which, in the event of a disputable situation, we will be able to confirm the fulfillment of our obligations. Otherwise, events may develop as in the example given in one of the previous chapters, when the company did not have documents confirming the fact of delivery, and as a result, it “donated” several million rubles to counterparties.
An additional task of this stage is the control by the employee responsible for working with debts of compliance with obligations both on the part of the supplier and the client. Indeed, often the reason (and sometimes the reason) for late payment is non-compliance or untimely fulfillment of obligations by the supplier. In this case, the client “punishes” the supplier by delaying payment, and if the latter makes claims about non-compliance with payment obligations, the answer is: “The way you supplied the goods / provided the service is how we pay.”
Therefore, it is important that the employee whose duties include dealing with debts is at least aware of supply disruptions and operational disruptions. If such a function falls within the competence of the sales manager, he has to ensure that his customers are shipped on time, without failures and in accordance with requests. Unfortunately, in many Russian companies, supply failures are guaranteed without the personal involvement of a manager.
The next important point of working with receivables at this stage is a reminder of the approaching payment deadline. In one of the companies that I consulted, the introduction of such an event into business processes reduced short-term (technical) delay by more than 50%. I will talk about this example in more detail in the corresponding chapter.
And then the "extreme" date of payment came, and the payment was not received. Please note that many contracts contain the wording: “payment on time before ...”, that is, the fulfillment by the debtor of obligations a few days before the “deadline” is quite possible and does not contradict the contract. However, customers often like to delay until the last minute, and sales managers do not encourage them to pay faster.
The named day is the point at which the contractual receivables become overdue. As in the fairy tale about Cinderella at midnight, the carriage becomes a pumpkin, in this case, normal cooperation is re-qualified in violation of the obligations assumed by the counterparty.
This is how a new stage of work with accounts receivable begins. short-term (technical) delay.
To understand the logic of further actions in relation to the debtor, you need to learn the following: in a commercial organization there are two vectors between which the company balances when building work with the debtor.
The first is a focus on maintaining relationships with the client and continuing cooperation with him.
The second is the focus on money back.
The line between them shows the change in the rigidity of behavior from partnership-oriented at the beginning to overwhelming communication at the end (Fig. 3.1).
At the very beginning, when the payment has not been received, we assume that the client is a good one. And indeed, a mistake could well have occurred: the bank credited the money to the wrong account, its own accounting department missed the payment, etc. There is no point in pressing the client right away. After all, we have spent so much effort on attracting him, and if we are not a monopoly, the use of harsh measures at the stage of technical delay can lead to the fact that we will scare away all customers. They will simply go to competitors who do not "squeeze" at an early stage of the existence of debt.
Rice. 3.1
However, as the debtor fails to pay, repeatedly fails to fulfill its obligations, fails to comply with newly drawn up payment schedules, stops responding to calls and letters, our behavior changes and becomes tougher. We are shifting from a customer relationship focus to a cash back focus, gradually escalating behavior through the use of pressure and threats.
This is the general logic of actions in relation to the debtor. At the same time, it should be understood that the most important factor determining the change in the line of behavior in relation to the debtor, whether it will be a “slope hill” or a “steep waterfall”, depends on the reaction to the debts of the head of the company, the consequence of which is a policy prescribed or existing at the level of unspoken norms in regarding debtors.
Case Study
A representative from a large multinational tool supplier attended my training on dealing with debt. He was responsible for working with GOKs - mining and processing plants. According to him, they didn’t even have a legal department and they never sued clients: they shipped the GOK in the amount of the credit limit and, if he didn’t pay, they didn’t do anything - they waited for the next application and shipped on an advance payment basis, and the debt continued to hang. When asked why this was so, there was a simple answer: the position of our management is never to quarrel with customers. It is clear that this applied only to large customers with a regularly arising need, but the fact remains.
In this case, the schedule for tightening work with the debtor resembles a plain.
Case Study
The organization in which I conducted corporate sales training supplied conveyor belts to the GOKs mentioned above. During the crisis of 2008-2009, the management introduced the following standard of work with debtors: if on the day of the expected receipt of the payment, the money did not come to the account, the client was presented with a claim without any calls or negotiations. When a GOK representative himself called back the sales manager, the latter, after listening to the moaning of his opponent, asked the question: “When are you going to pay?” If there was a confident answer that payment would be made within 10 days, the manager agreed to wait without escalating the lawsuit. If the debtor's representative sang a "song" about the crisis, lack of money, etc., the creditor stopped negotiations and went to court. Since GOKs have property on their balance sheets, it was not difficult to get their money back.
A couple of years after the crisis, the head of this company assessed the results of his approach to working with debtors in the following way: began to sue, other suppliers also went to court. However, if we had not applied such a tough strategy then and tried to be good for everyone and “waited by the sea for the weather” - when we were paid, it is not known whether we would have survived that crisis or not.
In this case, the graph mentioned above is almost a sheer cliff.
From building a strategy for working with debtors, let's move on to a more local question: what to do if the payment has not been received, and what tasks are facing the employee responsible for working with debts at this stage?
1. Agree on a new payment date.
2. "Sell" additional respite.
By “selling” an additional deferment, I mean the debtor taking on additional obligations. After all, if we agree to provide an additional delay, we upset the balance: the debtor receives the benefit, we are the losses, diverted funds and lost profits. So the balance needs to be restored. How? We will analyze this in detail in the corresponding chapter.
If the debtor has not fulfilled his obligations to pay on the date agreed at the previous stage, or the date proposed by him did not suit us, the next stage begins - long delay in payment.
In most companies, a delay for a period of more than 10 banking days is considered long-term. If this happens, we understand that the debtor does not have the money to pay or the desire to pay off the debt. Accordingly, if his own motivation is not enough to encourage payment at this stage, we apply increasing pressure, and at the stage approaching the "boiling point" We start using direct threats.
The fact is that situations when a company has no money at all are rare. Most often, the debtor does not have money for everyone. Therefore, the main task facing the debt officer is to increase pressure to get on the list of organizations with which the debtor will have to pay off, demonstrating possible scenarios and forcing the debtor to repay the debt.
In some cases, at this stage, we understand that the debtor has no money at all and that no matter how and no matter how we threaten him, there is nowhere to take the required amount. In this case, the best thing to do is to choose the best option for debt restructuring. In the chapters on the next stages - a long delay in payment and approaching the "boiling point", we will analyze in detail the types of pressure and threats, algorithms for their application and approaches to debt restructuring.
If the debtor did not heed the voice of reason and did not pay at the previous stage, "Boiling point". As water, upon reaching 100-degree temperature, begins to behave differently (actively emit steam, seethe), so the creditor at this stage moves from words to deeds - he begins to consistently implement the threats, the possibility of which he previously spoke about.
It is important that the “boiling point” be strictly defined in time, for example, three months from the date the debt arose. The lack of a clear time reference can lead to the fact that a communicative and manipulative debtor will delay payment for a long time, avoiding sanctions.
In table. 3.1 you will find a list of stages of work with receivables and the tasks facing each of them for employees who work with debts. Ideally, based on this table, you need to create an intra-company regulation for working with debts - taking into account the specifics of your business processes. How to do this, see Chapter 5.
Table 3.1. Stages of work with receivables
