What measures can you take in order to reduce the risk of (damage in the case of) the liquidation of your debtor?
The liquidation of a debtor often comes as a complete surprise to his creditors. This is understandable: a debtor is hardly likely to tell everyone about his financial concerns. When creditors find out about those issues, they will usually stop making deliveries and do everything they can to minimise payment arrears. In that case, the liquidation becomes a self-fulfilling prophecy. So what can you do to reduce the risk of damage?
- know your debtor;
- apply a strict accounts receivable policy (do not allow for payment arrears to build up);
- ask for securities from third parties or otherwise (such as collateral, right of pledge, mortgage right);
- deliver goods subject to retention of title.