Focus on the costs of legal collection proceedings
Initiating legal collection proceedings in the event of non-payment is an issue that can concern any company.
In some cases, particularly for SMEs without in-house legal departments, the question of legal costs can become an important issue.
The initiation of litigation and the choice of procedure require an in-depth analysis of the risk-benefit ratio.
Let’s take a look at the cost of legal proceedings and the solutions available to companies.
Cost of legal collection
Before starting legal collection proceedings, it is crucial to understand the different types of costs that will be charged to the creditor:
- Fixed costs associated with launching the procedure
- Fixed costs associated with issuing a writ of execution
- Fees of the court commissioner or lawyer
- Billing of bailiffs’ offices for each act (you don’t know the number of acts in advance)
The cost of legal collection will vary according to a number of factors, such as the nature of the dispute, the complexity of the case, lawyers’ fees, court costs, and so on.
A lengthy legal procedure invoiced by a bailiff is bound to be costly, as bailiffs will invoice you for each new legal action.
In the event of voluntary payment by the debtor, the bailiff also receives emoluments paid by the creditor.
This emolument, calculated on the sums recovered, can be either flat-rate or proportional.
Generally speaking, legal proceedings are considered for claims in excess of €2,000, given the costs outlined above.
However, there are a few ways to avoid paying the full price for claims under €2,000.
Simplified legal proceedings or home visits by a judicial commissioner for claims under €2,000 can achieve results, even on the smallest claims where amicable settlement has failed to get the debtor to react.
Using a fixed-price collection company
To keep costs down and guarantee the recovery of your claim, we offer package deals that cover all the costs of legal proceedings, from obtaining a judgment to enforcement.
Lump-sum settlements avoid surprises; costs are known from the outset, enabling the customer to assess the appropriateness of taking legal action in relation to the amount owed.
We offer expert advice and analyze creditworthiness in advance, as well as the probability of default within 12 months, which are decisive factors in deciding whether or not to take legal action.
- Find out more: How to succeed in legal proceedings?
The success rate is high, but it can take time, sometimes months or even years.
In 95% of cases, there are no additional costs.
We can also help you decide which procedure to take, so that you don’t get involved in unnecessary procedures that are likely to be rejected immediately.
Why incur collection costs?
In a commercial context, it is advantageous for the creditor to make examples: indeed, debtors, especially when a customer works locally or regionally, can quickly adopt bad habits if the creditor is known for not pursuing.
This is particularly true for BtoB receivables.
In the event of a favorable judgment,Article 700 of the French Code of Civil Procedure stipulates that costs and other damages obtained are paid to the creditor, more or less “offsetting” the costs incurred.
An important reminder: using an external company to take the necessary steps enables you to recover certificates of irrecoverability, which in turn enables you to reclaim VAT on the corresponding invoices. In conclusion, receivables management and legal collection are crucial to a company’s financial health.
Understanding the costs involved in legal proceedings and choosing the best approach to debt collection are strategic decisions.
It is essential to consider not only the direct costs of legal proceedings, but also the long-term benefits, such as preserving business reputation and deterring poor payment practices.
By choosing the right strategy and being diligent in managing unpaid debts, companies can maintain their financial health and long-term viability.