Hiveterminal: Protecting Invoice Buyers When the Payment Deadline Arrives (or Passes)

Since the launch of our platform, the Hiveterminal team has been doing everything in our power to ensure both invoice sellers and invoice buyers have a great experience using our product. While we do aim to grow, that is not our only goal as a platform. Multiple departments within the company do their best to deal with payment delays and assist invoice buyers in getting their money, securing their high-returns with the best possible user experience!

We recently received several questions regarding how Hiveterminal deals with payment delays from the invoice debtor to the invoice buyer. That is why we are expanding on our previously published blog post to help you understand which steps to take if you find yourself in this situation.

Step One: Give Them the Benefit of the Doubt, but Report After 48 Hours
Once the payment due date has come, Hiveterminal expects on-time payment from the debtor to the invoice buyer. We also allow a grace period of 48 hours for any potential payment delays that are not necessarily the fault of the debtor, such as:

• The payment due date does not fall on a business day, causing processing delays; or
• A cross-border payment is in question, causing postponements.

After the 48 hours have passed, Hiveterminal sends a system-generated email to the invoice buyer asking whether the payment has arrived.

If the payment has not been received, the invoice buyer must report the non-payment immediately. The automated reporting system will trigger notifications for the invoice seller, the debtor, and the Hiveterminal Support Team.

Our support team will immediately attempt to contact the debtor for clarification and will notify the seller about the non-payment by phone. However, the matter still may not get resolved immediately.

Up to 30 Days Later: You May Be Just a Call Away from Receiving Your Investment!
Once the 48-hour grace period has passed and the invoice has been reported, there is a 28-day window of opportunity for the invoice buyer to resolve the situation himself/herself. Time is of the essence, as the chance of you receiving the funds diminishes with time.

In general, no collection agency in Slovenia will start the collection process if late payment is delayed less than 30 days. The mere fact that the debtor has received a notification of a payment being reported will seldom trigger action on their behalf, so you will need to follow-up this step with an email to the designated contact person, which the Hiveterminal Support Team will be happy to provide you with at your request.

You are likely to get an explanation from the invoice debtor for why the payment was delayed. Some explanations will be valid and some will not. Most people in Slovenia have no problem with foreign languages like English or German, but language barriers are sometimes to blame for any miscommunication that may happen when the invoice buyer gets in touch with the debtor. For this very reason, we have prepared this template in English and Slovenian that you can include in your written communication with the debtor. All you have to do is copy it and replace the missing information with data you can find in the Notice of Assignment.

At Hiveterminal, we would always rather receive one email to many than the other way around. We recommend that you CC both our Hiveterminal support email (support@hiveterminal.com) and the seller in your communications with the debtor, as both can potentially help you receive funds faster.

If at all possible, try to reach the debtor by phone. People generally have a harder time ignoring phone calls than emails and you can use this fact to your advantage. Since it will be harder to use any form of non-written communication in any formal collection process, keeping a detailed log of your phone calls (when you called, who you spoke with, which promises they made, etc.) might come in handy, should the standoff last a while longer.

After 30 Days: Consider Collection in Favor of Waiting
At this point, you have to make a decision: Do you keep chasing the debtors yourself or do you engage an outside party to help you?

Outside parties taking over the procedure will decrease your earnings on an invoice, but they are an additional pressure point, one that the debtor may view as less prone to (emotional) deadline manipulation when pleading their case. Once an outside collection company gets involved, the debtor is well aware that the time for games is running out and it is time to settle the debt.

There are different types of collection processes to choose from. You can choose pre-legal collection, as part of which the outside company will chase the debtor via phone and through various forms of written communications. According to the information available to us through our network of partners — including one specializing in the collection — a phone call or two from them will get you the funds 80% of the time.

The first attempt the collection company will make to contact the debtor will always be in written form. A day or two later, they will follow up with a phone call. They will try to reach an agreement to settle the debt immediately or as quickly as possible. If they propose a repayment in installments, the payments will be monitored and the debtor will be reminded of their promises. The length of the pre-legal collection depends on the agreement of re-payment and/or the invoice buyer, so it is hard to give an exact timeline. The same can be said about going from pre-legal to legal collection processes.

In our experience, engaging an outside company will carry a cost of around 5% of the invoice amount for phone and pre-legal collection. Based on the collection agency’s previous experience with the debtor, you will also likely be given a detailed estimate of the time and difficulty required to collect, which may impact the price. But, the agency only gets paid if the invoice amount is collected successfully.

Once you exhaust all pre-legal means of collection, you will want to move on legal collection. To do this, you will have to utilize a template — which we created for you here — formally warning the company that you will pursue legal recourse for collection in eight days. Please note that if you take a DIY (Do It Yourself) approach up to this point, you will need to hire an outside collection agency going forward if this final warning doesn’t get you the desired result.

If the debtor does not settle their debt within this time frame, your claim shall be filed in enforcement procedure before a competent court in Slovenia. The debtor will have eight days to file a complaint e.g. or that the claim has been extinguished in some other way. If no such complaint is filed, the collection process is deemed valid and the debtor will have their bank account blocked and any money on account will be transferred until the debt to the invoice buyer is settled in full. The invoice buyer may also be entitled to a legal interest fee, which is set at 8% interest per year, and legal expenses. In addition to blocking the debtor's bank account enforcement on other types of assets is possible, such as real-estate and movables is possible, if the debtor has any.

In case the debtor does complaint, the court will will commence with a simple litigation procedure, in which the merits of the complaint will be decided.

The invoice buyer who decided on having their debt collected by a collection agency, will already have the person representing their interest specified in the contract they have signed beforehand.

If you’re left wondering how much all of this is going to cost you, let us put your mind at ease. The only difference between the pre-legal and legal processes will be the court filing fee (44 EUR for enforcement procedure if litigation will be needed the fee is calculated based on the amount of the invoice). The cost of representation in court by the collection agency will already be included in the 5% fee.

Collection: What’s the Catch?
There are various misconceptions surrounding collection agencies. One of the most obvious is that they are expensive and that their services can easily be replaced by the (free) efforts of the invoice buyer. This position is largely false. People mostly view their own work as free, but it is not. This is especially true if you are in a profession where your income is based on billable hours. You may be losing lots more by chasing the debtors by yourself.

Invoice buyers are rarely professionals specialized in debt collection. As Hiveterminal is a global platform, they are also not very likely to speak the local language, know the local customs and have a good understanding of the legal process required to collect the outstanding sum. At the end of the day, losing the entire sum, and/or the ability to have a high frequency of reinvestment, will hurt your investment strategy far more than the 5% collection fee.

I Am Sold: Where Do I Sign?
We have successfully cooperated with the collection company Solvis in the past, but it is currently being restructured. We have spent the last month securing a new partnership with a collection agency and completed the process yesterday. We will announce what we consider the easier and better collection for our invoice buyers within the first days of January 2020.