Forwarding
Your policy includes an overdue period or collection period. In most policies, this is sixty days after the original due date. As long as the debtor pays their invoices within sixty days of the due date, you can continue to do business under the cover of the policy. All payments you receive can be attributed to the oldest outstanding item. However, if the oldest outstanding item exceeds the overdue period, coverage for new invoices will be cancelled. We then advise you not to conduct any more transactions with the debtor. Does the debtor still pay after the due date and does this bring the oldest outstanding item back below sixty days? Then you can conduct new transactions under cover of the policy again.
Tip
It may happen that after shipping the goods, the debtor himself has already given notice that he cannot pay by the agreed due date. As long as payment is made within 60 days of the original due date, there is no problem. However, if the debtor indicates that he will pay later, it is best to contact us immediately for further instructions.
Debt collection transfer
Your policy includes a deadline (usually 15-30 days after the overdue period has passed) within which you are obliged to transfer a claim for collection. However, you can also do this earlier. Our advice is to submit the case for collection as early as the overdue period (usually 60 days after the due date).
If you have a bad feeling about (the payment behaviour of) the debtor, you can transfer the case even earlier. If the debtor comes up with a credible story and you want to give your client a little more time for the sake of the commercial relationship, ask for a formal agreement from your insurer for a deferred collection transfer. Keep in mind that a direct debit transfer results in an automatic coverage freeze. Thus, new deliveries can no longer take place under cover of the policy.
Tip
Send a final demand letter before handing over a case for collection. Put the debtor in default and hold him liable for all interest and costs that will be incurred in collecting the outstanding items. You can indicate that you would like to solve the case together, but that your insurer now obliges you to proceed to collection in a timely manner. Xolv can provide you with sample letters in several languages.
