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The history of a corporate collection (collection of debts from legal entities) as a separate direction in credit management in Ukraine counts already several years, leaving however space for handlings of what collection activity is, what for it is necessary, and what are the differences between it and legal activity.

“It is difficult to explain to the clients what and how we do – it is easier to organize the first payment of a debtor, after which client’s questions disappear and trust supplants them”, – Oksana Rudetskaya, head of Legal Entities Debts Collection Department, shares her opinion. “There are many methods of working with debtors, and while applying knowledge and individual approach we invent more and more”, – Mrs. Rudetskaya tells. It is better to tell about specific deals, that were already managed by international collection Agency GCS Ukraine to resolve in favor of the client.

Debtor’s debtor is a creditor’s friend
Ukrainian company “B…” owed Polish company “D…”, working in the market for a short period of time, 27 500 Euro for supplied grocery products. Trying to collect the debt abroad by itself, the “D…” company carried on negotiations, tried to threaten with litigation and even blustered to use violence against the “B…” company director. After 2 months of such “negotiations” the “D…” company understands that to collect foreign debts it is necessary to engage someone from outside. So GCS undertakes this case and starts debt collection in Ukraine. After signing of necessary documents and having previously collected materials, the experts proceeded to business.

After the first contact with the director of company “B…” it has become clear that he knows about the indebtedness (it must be said that frequently such information does not reach the administration), but due to absence of funds on corporate accounts it can not solve this repayment issue currently. Director’s promises to repay the debt in future were uncertain and non-specific. Within the negotiations process director of the company “B…” mentioned that he also had a debtor, who did not return the debt for a long time, and if he managed to get his money back, there will be an opportunity for him to settle accounts with the “D…” company. Having considered the situation at hand, our experts decided to undertake also an affair with the “B…” company debtor – PE “F…”.

For a long time “F…” company did not take any actions for debt repayment, as far as creditor’s passive behavior gave unrestricted postponement, which, and it should be noted once again, is very typical for Ukrainian realities. Director of the company “F…” decided to ignore letters and calls of GCS Ukraine experts, having declared that this was the personal business, and he would not tolerate any intermediaries, after what he did not get into touch. Having decided to find another approach to the “F…” company, international collection agency GCS Ukraine found contact information of this person’s parents, to whom the message was sent for their son to urgently call back concerning the existing debts. The call took its toll. The next day company “F…” director got into touch with our experts and despite his undisguised hostility he declared that he was ready to start the negotiations. Within a short time a promise to repay the debt was received from him, and it was repaid in 4 days.
Company “B…” upheld its promise and immediately after repayment of the debt to it by “F…” transferred all necessary amounts to the “D…” accounts.

“In our work it is sometimes necessary to use very peculiar methods of negotiations, but it is efficient and effective. And so it happened that the debtor’s debtor is a creditor’s friend”, – leading specialist of international collection agency GCS Ukraine , Pavel Manzhosov, smiles.

Not a word against the bill.
Company “K…”, incorporated in the Baltic States, had perfect relations with Ukrainian partner “S…” till autumn, 2008. In autumn, 2008 the partner from Ukraine gained significant debts connected with drop in metal prices which followed the crisis. Company “K…”, understanding the situation at hand and realizing difficulties, connected with compulsory collection of foreign debts, gives 6 month of postponement for the settlement of financial matters. At the end of this period company “S…”, excusing itself with sustained losses, asks for another 6 months postponement. After such a request trust to Ukrainian company disappeared, and Baltic company contacted international collection agency GCS with an appeal to collect the debt abroad.

Having studied all the case details, experts had come to the conclusion that company “K…” has serious indebtedness to the range of other companies and in any ways temporizes for the purpose of secure asset stripping in case if it will be impossible to settle accounts. It was proposed to the “K…” director to sign the bill in exchange for postponement, and he quickly agreed to it, apparently not having consulted the lawyer and not having realized legal significance of this security.
After six weeks the bill was immediately protested and notary writ was received. The company accounts were blocked in a day.
The debtor, reckoning on postponement, or at least for long-term legal proceedings, did not expect such turn of events…
In a week first payments on account of debt repayment arrived to the Baltic company account.

“The bill is somehow old-fashioned… But it works!”, – lawyer Aleksandra Dyadyk comments on the situation.

Reputation is not restorable
One more short story happened quite recently. Company “R…” had outstanding debt to the “N…” company for the supplied fuel. Repayment of debt for reasons undefined has been being delayed day after day despite the fact that before this the companies had been cooperating in the Ukrainian market for more than three years and had an untarnished reputation. Administration of company “R…” justified the delay with crisis and difficult situation on the grain market.

However, experts of international collection agency GCS  found out that “R…”, despite the difficult situation, had some funds, which it had been spending for its current needs. In this case negotiations with the debtor led nowhere – he denied existence of funds and refused to pay. After it has become clear that negotiations fail, we prepared the article for mass media and materials for press conferences, where the unconscientiousness of the “R…” administration was pointed out. Then they were sent to “R…” administration with a warning about possibility of complete loss of reputation in the market and impossibility to do business afterwards.
“R…” lawyer tried to appeal to legal points of commercial confidentiality, but the agreement between “N…” and “R…” did not prohibit to disclose information on commercial relations between the partners.
After this director of “R…” made the only right decision – agreed to negotiate and started to repay his debt monthly. Company “N…” rested satisfied with this variant of problem solution and prerequisites for restoration of former trust appeared between the partners.

“As they say, health and reputation are not restorable, – Natalia Rovinskaya, PR expert, explains success in this case. PR can be a very effective tool for motivation of the debtors to pay. However, I am very glad that so far we had never had to publicly question the reputation of a debtor – we have always managed to agree”.

“As you see, corporate collection is a professional business, I would even say, a vocation”, – Vitaliy Shevel, international collection agency GCS Ukraine director says. “Inventiveness, negotiation skills, ability to learn everything about everything, not crossing the line of law herewith is gained only after years of working on legal and collection arena. That’s why it is better not to risk with debts and debtors, but to contact those, who had chosen this as their profession, especially when it comes to collection of foreign debts”.

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