Receivables management plays an important role in maintaining the financial health of businesses. In Hungary in 2023, companies will face a number of challenges in this area, which need to be managed effectively to ensure liquidity and minimise financial risks. Receivables management solutions are becoming increasingly complex, including payment orders, lawyer's notices and digital notices, which are available to entrepreneurs to recover money. In this article, we review best practices in debt management and when to choose the right solution.

Basics of claims management

Receivables management is a process that involves identifying overdue debts, contacting debtors and managing debts. The aim is to minimise receivables and optimise cash flow. The right receivables management strategy can not only improve the efficiency of receivables management, but can also have a positive impact on the company's customer relationships.

Claims management process

Generally speaking, there is no strict process for handling claims, some companies only use digital notices without taking stronger action, and some start an immediate payment order after a certain deadline without sending a lawyer's notice. In short, there are many customs in every house.

Each company and manager must decide for themselves what action to take when an outstanding debt is overdue and the customer has not paid. If you need help planning this strategy, book an appointment with one of our receivables management experts.

When should I take action and which debt management solution should I choose?

The choice of debt management solution should take into account the size of the debt, the willingness of the debtor to pay and the recoverability of the debt. In principle, the following steps should be followed:

1. Small, recent debts: digital reminders can provide a quick and effective solution.
2. Medium or larger amount, unanswered debt: in this case, a lawyer's demand may be the best option, as the legal weight alone can put pressure on the debtor.
3. Long-standing and substantial debts: if the above methods have not been successful, an order for payment is the most likely to be used to recover the debt.

Debt management steps, i.e. toolbox

1. Digital prompt

In the digital age, businesses are increasingly turning to electronic receivables management. Digital claims are fast, cost-effective, and enable the management and analysis of large amounts of data. Automated systems make it easy to track payment notices and responses, and generate statistics on the efficiency of the claims management process. These mainly include email, SMS notices, but in some cases even call-centre is added to this step.

2. Legal notice

When a digital injunction fails, a lawyer's injunction comes into play. A lawyer's notice carries more legal weight and can be a signal to the debtor that the company is serious about dealing with the claim. The use of a lawyer's demand is particularly recommended when the amount of the debt is significant or when the debtor is stubbornly refusing to pay.

3. Payment order (FMH)

An order for payment is a judicial procedure whereby the court orders the debtor to pay the debt. It is an explicitly legal instrument and should be used when there is no response to the demand or when the debtor refuses to pay. The issuing of an order for payment can speed up the collection of the debt and the creditor may even be able to initiate enforcement proceedings under the court order. It is important to know that the order for payment can also be used to start enforcement proceedings once it becomes final, which means that the bailiff will work to obtain your money by legal means (collection, wage garnishment, auction).

Who should handle my overdue claims?

When choosing the right debt management method, you should consider your own resources, the size of the claim and the urgency of the recovery. Here are your main options:

You can do it yourself

This is the least costly option, but requires considerable IT and legal knowledge. If you do not have these, the process can be lengthy and risky.

Law firm

Choosing a law firm provides legal clout, but the process is often slow and cumbersome, starting a case is complicated and following up can be difficult.

Traditional claims management companies

Traditional claims managers have experience but are often expensive and the monitoring of processes is not always transparent.

DigitalClaims Management (Recommended)

Digital claims management offers a modern, fast and transparent alternative that can significantly simplify claims management processes. Booking this tutorial will give you the opportunity to fully understand the system.

Thousands of businesses already use digital receivables management, and Invoice.com has also integrated

Supervisory organisation in Hungary

In Hungary, the Chamber of Notaries (MOKK) which is a non-litigious debt collection instrument, basically designed by the EU to deal with small claims. When the order for payment becomes final, the case is transferred to the bailiffs, who have additional means to legally collect the debt.

Summary

In the year 2023, it is essential for businesses in Hungary to have effective, up-to-date receivables management strategies in place. Digital demand notices, legal notices and payment orders are all powerful tools to safeguard companies' financial stability. Digital receivables management stands out for its efficiency and simplicity, so it may be worth signing up for a demo to find an effective, tailored solution for your business.