A customer has stopped paying and the amount is large enough to hurt. The first question asked is how to collect, but the more useful one is what the receivable is actually worth and how much money and time is worth spending on it. The answer depends on the state the debtor is in, and that can be established in half an hour, for free.
Establish the debtor’s position first
The National Bank of Serbia register of enforced collection shows whether a company’s account is frozen, for how much and for how many days. The Business Registers Agency shows whether bankruptcy or liquidation has been opened and who represents the company. Both are public. Almost everything else follows from those two facts: a company frozen for three days is a different case from one frozen for eight months, and a company in bankruptcy is a third case under entirely different rules.
Where the freeze has run a long time and the amount is growing, the probability of being paid falls every month, however undisputed your invoice is.
When the debtor’s account is frozen
Starting enforcement puts your claim into the queue. Everything arriving in the debtor’s account is consumed in a prescribed order rather than one you choose. In practice your recovery depends on two things: how many creditors stand ahead of you, and whether the debtor still has any income at all. A company that is frozen but still trading and invoicing pays down gradually. A company that has stopped has nothing to pay anyone with.
At this stage a settlement is often better than enforcement. A debtor who sees a way to keep trading will more readily agree to a payment plan or a set-off than watch everything disappear into the queue. A settlement backed by security, a promissory note or a pledge, produces a better outcome than a position in the line.
When the debtor is in bankruptcy
Expectations change fundamentally here. Claims are filed to a deadline and ranked by category. Creditors holding security, a mortgage or a pledge, are paid from that asset. Unsecured suppliers generally stand well behind them and recover a small share, and recovery takes years regardless.
The deadline for filing a claim is strict and missing it cannot be repaired. It is the one item here where nothing is weighed or postponed; it goes to counsel immediately. Everything else can wait a week. This cannot.
What the receivable is worth
A receivable from a frozen or bankrupt company sits in the books at its full amount and is worth a fraction of it. There is a market for such claims, through assignment at a discount, and the price on it is the most honest valuation you will get. If someone offers fifteen thousand euros for a hundred thousand euro claim, that tells you what recovery really looks like, even if you decline.
The decision is commercial rather than emotional. Litigating carries legal fees, court costs and years, with an uncertain result. Assignment gives a smaller amount now and frees up the time of the people who would otherwise chase it.
When to stop spending on collection
A rule that is easy to apply: when the expected cost of collection exceeds the realistically expected recovery, the file is closed. Add to the cost the time of your own people, which is rarely counted and is not free. Receivables are then written off, subject to the accounting and tax conditions, and it is worth checking what is required for the write-off to be recognised for tax, because that is often learned too late. Watch the limitation period as well, since a time-barred claim loses all value, including its resale value.
How this is prevented
- Checking the enforced collection register before granting a customer credit terms, and periodically for existing customers.
- An exposure limit per customer, expressed as an amount, not exceeded without a decision.
- A rule for when deliveries stop, written down and applied without exceptions.
- Security from larger customers, a note or a deposit, agreed while the relationship is good.
The most expensive mistake is continuing to supply a customer who is late, in the hope of being paid once things improve for them. That is how a small receivable becomes a large one.
When this becomes your problem
If one customer accounts for more than a fifth of your receivables and their account is frozen, this stops being a collection question and becomes a question about your own liquidity. At that point the calculation is how long your company can run without that money and what changes in the plan, and the conversation moves from collection to managing your own cash flow.
Where to go next
- A frozen company account: what happens next
- Working capital as a source of cash
- Buying out of bankruptcy
- Restructuring or selling under pressure
This describes practice and is not legal advice. Filing deadlines, ranking of claims and write-off conditions are checked with counsel and your accountant on the specific case. Where exposure to a single customer is large enough to change your plan, it is worth calculating early what happens if none of that money arrives.