Accounts receivable collections
The provision of business in Ukraine involves its challenges and risks. One of these risks is the counterparty's failure to fulfill its obligations. In particular, a delay or complete absence of payment under the contract. In such a case, entrepreneurs are forced to resort to the procedure of accounts receivable collection. Collection may consist of the following stages:
- Verification and analysis of the debtor's property status
- Pre-trial settlement
- Court proceedings
- Forced collection
In this article, we suggest considering what each of the specified stages includes, and whether it is necessary to go through each of them to receive funds.
VERIFICATION AND ANALYSIS OF THE DEBTOR'S PROPERTY STATUS
To obtain debt, an important step is to collect and analyze information about the debtor. Several factors may indicate his solvency, such as the presence/absence of judicial or enforcement proceedings, vehicles, and membership in sanction lists. This is not a complete list of what a specialist will analyze to choose the most effective strategy.
PRE-TRIAL SETTLEMENT
In a situation where the next call or e-mail to the counterparty did not lead to payment, do not rush to file a lawsuit. Often, to receive payment, it is enough to turn to means of pre-trial settlement of the dispute. Such can be both the sending of an official letter of demand and a pre-trial claim.
Their main difference lies in volume. In the letter of demand, it is enough to indicate the essence of the request and the amount of debt that the debtor must pay. The pre-trial claim, in addition to the above, will also include a list of sanctions that may be applied to the debtor for late payment, and their detailed calculation.
At the same time, liability can be both specifically defined by the terms of the contract and general, according to the Law. For example, Article 625 of the Civil Code of Ukraine provides that a debtor who has overdue a monetary obligation is obliged, at the request of the creditor, to pay the amount of the debt, taking into account the established inflation index for the entire period of delay, as well as three percent per annum of the overdue amount, unless another interest rate is established by contract or law. That is, 3% per annum can be charged on the amount of debt regardless of whether the contract provides for liability for late payment.
Currently, the law does not stipulate the obligation of pre-trial settlement of a dispute. Therefore, unless the contract provides otherwise, the creditor may immediately apply to the court to protect his violated rights. However, the use of pre-trial settlement methods can significantly reduce the time and costs that cannot be avoided in the case of going to court.
COURT PROCEEDINGS
If the verification and analysis of the debtor indicate the need for a quick response, or if the means of pre-trial settlement failed to induce the debtor to make payment, it is necessary to refer to the court.
The appeal includes the study of all documents confirming the existence of debt and its non-repayment, the writing and filing of a statement of claim, and in some cases the application of measures to secure the claim.
The consideration of a case by a court involves not only studying documents, but also participating in court sessions. Modern technologies allow participating in the consideration of the case offline in the courtroom, as well as online using the unified judicial information and telecommunications system "Electronic Court". The judicial process is divided into the stages of preparatory proceedings and consideration of the case on the merits, and also provides for the possibility for the parties to exercise their procedural rights and fulfill their obligations. That is why the support of the case by a professional representative is so important. According to Art. 16 of the Code of Commercial Procedure of Ukraine, the parties to the case have the right to use legal aid, and representation in court, as a type of legal aid, is carried out exclusively by a lawyer (professional legal aid), except in cases established by law. Consideration of the case on the merits by the court of first instance ends with the adoption of a court decision.
The decision of the court of first instance may be appealed in the courts of appeal and cassation. Court decisions that have entered into legal force are binding throughout the territory of Ukraine, and in cases established by international treaties, the consent to which has been granted by the Verkhovna Rada of Ukraine, - also beyond its borders.
FORCED COLLECTION
At the same time, the presence of a court decision issued in favor of the creditor is not yet a reason to start the procedure of compulsory collection. According to Art. 327 of the Code of Commercial Procedure of Ukraine, the execution of a court decision is carried out based on an order issued by the court that has considered the case as a court of first instance.
To start the collection procedure, it is necessary to contact the competent authorities. Enforced execution of decisions is entrusted to bodies of the state executive service (state enforcers) and private enforcers.
Based on the result of the submission of the order for enforcement, the executor opens enforcement proceedings, within the framework of which measures such as collection of funds, securities, other property (property rights) and corporate rights can be applied in particular, but not exclusively.
Summarizing, we note that the collection of receivables can consist of several stages and involves the use of various legal instruments. Therefore, turning to qualified specialists for help can significantly reduce the time and resources you spend.
