Credit Risk & Commercial Debt Recovery
Sales That Do Not Turn into Cash Are Not Full Growth
Overview
Recovery does not start with the first demand letter. It starts when the business decides who can buy on credit, up to what limit, against which evidence and security, and who can approve an exception.
A trade receivable is more than a number. Behind it sit the customer's identity, signing authority, orders, delivery, acceptance, invoices, objections and security. The stronger that record, the stronger the recovery, whether the business chooses to give time, settle or enforce.
The Same Balance Can Hide Six Different Files
An invoice for goods is not an invoice for services, an insured debt is not managed like an uninsured one, and a foreign buyer is not pursued like a local one. The source of the debt sets the route, not the size of the balance.
Suppliers and Distributors Selling on Credit
Supply repeats quickly and exceptions become the rule: an exceeded credit limit, incomplete purchase orders, deliveries to many branches or discounts never agreed in writing.
Where the problem starts 2
- 01
Supply Continued Despite the Outstanding Balance
Sales fears losing a key customer while Finance sees exposure doubling. Without a record of who approved the exception and what the company got in return, a commercial decision becomes an unpriced increase in the debt.
- 02
Discounts and Returns Have Merged with the Principal Balance
The customer disputes one return or incentive and withholds the whole account. The small adjustment must be separated from the established amount so the entire debt is not held hostage.
What the file must show
The account-opening file, verification of the company and its signatories, the credit limit and payment terms, then orders, deliveries, invoices, credit notes and returns. Every exception needs an approver, a duration and something in return.
Service, Contracting and Continuing-Work Businesses
Proving the invoice was sent is not enough. Payment may depend on a completion stage, an approval or a report, and the customer may turn an administrative delay into a technical dispute after the due date.
Where the problem starts 2
- 01
The Work Was Performed but Approval Was Never Issued
The customer used the service while its internal approval stayed pending. The file turns on the payment conditions, the evidence of performance and who had authority to accept or object.
- 02
A Technical Objection Appeared After the Claim
A general objection raised months after use is not a reservation recorded at handover, and it should not hold back the undisputed part.
What the file must show
The basis of the instruction, scope of work, delivery and approval stages, comments during performance, invoices and completion certificates, separating what needs an expert from what the documents already prove.
Businesses That Insure Their Sales Against Non-Payment
Credit insurance does not turn every late invoice into an indemnity. The policy defines covered buyers, limits, waiting periods, notices and the steps required on default or settlement.
Where the problem starts 2
- 01
Supply Continued Beyond the Insured Limit
Extra exposure, or supply after default appeared, can reduce the portion the policy covers.
- 02
Terms Were Agreed with the Debtor Before the Insurer Was Notified
A new due date, a discount or new security may be sound commercially, but its effect on cover must be checked and any required consent obtained first.
What the file must show
The debt file and the insurance file move together: credit limits, the date default first appeared, notices, continued supply, proposed settlements and claim documents, so a deal with the debtor does not weaken the claim against the insurer.
Businesses Rescheduling Customer Debts
Rescheduling can save a viable customer, or give a distressed debtor time to move assets if it is not built on information, security and measurable milestones.
Where the problem starts 2
- 01
The Debtor Offers Instalments Without a Real Down Payment
A schedule that starts months later with no security may only postpone the problem. An offer is measured by what is paid now, what is acknowledged and what secures the balance.
- 02
Settlement Was Reached with a Weak Entity
The business may continue through a shareholder or affiliate while the contracting debtor holds no assets. Security is taken from whoever holds enforceable value.
What the file must show
A settlement that confirms the balance and its source, sets the down payment, schedule and security, keeps existing rights and states the consequence of default, after checking the signatory's authority and the security's real value.
Businesses That Finance or Factor Their Receivables
Sound receivables can be turned into cash before default, but the financier reads the invoice, delivery, objections and customer exactly as a recovery lawyer would later.
Where the problem starts 2
- 01
The Invoice Relates to a Service Open to Objection
The looser the acceptance, the higher the risk of recourse against the seller or of the receivable being refused for financing.
- 02
The Portfolio Holds Receivables of Different Quality
An established debt from a regular customer is not priced like a disputed claim or a concentrated exposure. The legal sorting of the portfolio comes before the financing decision.
What the file must show
The contracts creating the receivables, their assignability, notices to debtors, debtor defences, concentration and recourse events, and confirmation that the factoring party is licensed.
Debts Owed by a Company Showing Signs of Distress
At this stage another demand letter is not enough. The question is whether the delay is incidental, or whether waiting loses value every day.
Where the problem starts 2
- 01
Many Promises, No Payments
New people handling payment, missed dates and refusal to give information or security change the assessment, even if the debtor keeps responding.
- 02
Other Creditors Have Brought Claims or Attachments
Delay can change the practical order of recovery. We check the grounds for attachment, any guarantor or third-party receivable, and whether bankruptcy or restructuring proceedings have begun.
What the file must show
A fresh assessment of the debtor, its assets, security and pending proceedings, to decide between a precautionary measure, a secured negotiation, or restructuring or bankruptcy proceedings.
From Credit Limit to Enforcement: Where the Position Weakens
- 01
Customer Onboarding
RiskMaterial credit is opened for the wrong entity or without confirming authority.
ControlCorporate records, signing authority, core commercial information and approved sale terms before meaningful exposure.
- 02
Credit Limit & Security
RiskThe limit becomes a number that is repeatedly overridden without a documented risk decision.
ControlClear exception authority, value in return for added exposure, and security tested for source, scope, term and usability.
- 03
Order, Supply & Delivery
RiskThe invoice is correct in the ledger while the purchase order, delivery or acceptance trail is incomplete.
ControlLink each receivable to the instruction and evidence of performance, acceptance and any timely qualification.
- 04
Exception & Continued Supply
RiskThe business keeps selling beyond limit or maturity without defining why more exposure is acceptable.
ControlOne escalation point across Sales, Finance and Legal, and a clear return for continued supply — payment, acknowledgement, security or reduced exposure.
- 05
Due Date & Objection
RiskA limited dispute blocks the full balance, or a late objection is treated as though it always existed.
ControlIsolate the established amount, record when and how the objection arose, and determine whether it affects the debt or only part of it.
- 06
Insured Debt
RiskAn extension, settlement or continued supply affects cover or notification duties without anyone joining the two files.
ControlMove the debt and insurance files together and test every concession against policy conditions.
- 07
Settlement & Rescheduling
RiskTime is granted while recoverability deteriorates and the creditor receives nothing new.
ControlEstablish the balance, obtain an upfront payment or improved security, set measurable milestones and define the consequence of renewed default.
- 08
Proceedings & Enforcement
RiskThe business wins a judgment against an entity with no realistic assets or cash flows to execute against.
ControlAssess assets, security, third-party receivables and route economics before proceedings, with enforcement designed into the file from the outset.
Insured Debt Has Its Own Clock
Credit insurance does not turn every unpaid invoice into an automatic claim. Cover depends on decisions made before supply, at the first delay and throughout recovery.
- 01
Before Supply
Confirm the buyer, approved credit limit, covered transactions, exclusions and any required security before exposure is created.
- 02
First Overdue Amount
Record the maturity date, objection position and outstanding balance; review whether further supply or a credit-limit change is permitted.
- 03
Notification
Give the insurer every notice required by the policy, in the required form and within the applicable period. Internal escalation should occur before the deadline becomes critical.
- 04
Waiting Period and Recovery
Coordinate collection steps with the insurer. A concession, rescheduling or continued supply may affect cover if it is made without the required consent.
- 05
Claim and Indemnity
Present the debt, delivery, acceptance, notices and recovery record as one coherent file, and distinguish covered loss from disputed or excluded amounts.
- 06
Subrogation and Post-Indemnity Recovery
After indemnity, confirm who controls further recovery, how proceeds are allocated and what cooperation or document-transfer obligations continue.
Where Problems Surface
- 01
Credit Is a Shared Business Decision
Sales sees the relationship, Finance sees the exposure and Legal often sees the file only after flexibility has become risk. The answer is known decision points for limits, exceptions and stopping supply.
- 02
A Receivable Is Not One Number
Part of a balance may be established, part genuinely disputed and part poorly evidenced. Treating all three alike weakens negotiation and delays collecting the undisputed amount.
- 03
A Valid Invoice Can Still Take the Wrong Route
A written, due and quantified debt may call for a payment order after formal notice. Damages, or works needing expert evidence, usually go to ordinary proceedings. The wrong route loses time before the merits are even reached.
- 04
The Debtor Is Moving Assets, and Attachment Is Not Automatic
Non-payment alone is not enough. Precautionary attachment needs its legal conditions, supporting facts and identified property, so we look for assets and third-party receivables early.
- 05
A Judgment Is One Stage of Recovery
Winning in court does not meet the financial goal unless it turns into enforcement. Asset location and third-party receivables belong in the file before judgment, not after.
Legal Framework
There is no single debt collection law. Civil, commercial, procedural, insurance and financing rules overlap, and the route depends on the debt, the parties and the security.
Civil Code No. 131 of 1948
General rules on obligations, performance, assignment, security and damages, depending on the relationship.
Trade Law No. 17 of 1999
Commercial transactions, commercial paper and rules relevant to business obligations and evidence.
Civil and Commercial Procedures Law No. 13 of 1968, as amended
Claims, payment-order procedures where statutory conditions are met, attachment and enforcement routes.
Evidence Law No. 25 of 1968 and Electronic Signature Law No. 15 of 2004
Engaged when relying on contracts, statements of account, email, messages and electronic records, looking at each document's source, its author's capacity and what it proves.
Movable Collateral Law No. 115 of 2015
Creation and registration of security over movable property or economic rights. Its value lies in the asset description, ranking and enforceability, not the label.
Restructuring, Preventive Composition and Bankruptcy Law No. 11 of 2018, as amended
Where late payment becomes broader financial distress and restructuring or insolvency options need to be assessed.
Financial Leasing and Factoring Law No. 176 of 2018
Where factoring or receivables financing is used, or the transaction itself falls within a regulated activity.
Unified Insurance Law No. 155 of 2024 and the regulatory decisions issued by the Financial Regulatory Authority
For insured receivables, where notice, settlement and recovery conduct may affect the insured position.
The scope of cover, exclusions, notification requirements and claim procedures are determined by the Law, the regulatory decisions issued by the Financial Regulatory Authority and the terms of the approved insurance policy.
FRA Rules Where They Apply
Where collection is carried out for a regulated non-banking financial institution, current FRA registration and conduct rules are checked. They are not a blanket licensing rule for ordinary B2B debt recovery.
Does This Look Like Your Current Operating Model?
These are review indicators, not a legal conclusion on every case.
00 / 08
Tick what applies to your business today.
How MASAR Works
We rebuild the credit cycle as it actually happened: customer identity and authority, limits and exceptions, orders, delivery, acceptance, invoices, payments, objections and security. We then separate what is established from what must be built, and what can be pursued now from what needs negotiation or proceedings.
If the relationship needs time, the extension must buy measurable value. If distress signs or asset movement appear, we move before the judgment loses its value.
- For receivables from entitlement-file build through negotiation, settlement, litigation and enforcement, with the decision connected to security, assets, insurance and recoverability.
- For credit-policy design or review: limits, exception authority, stop-supply rules and escalation between Sales, Finance and Legal before the same exposure repeats.
MASAR Recovery™
For businesses that sell on credit: we build credit relationships that stay collectable from the first invoice, and recover what is overdue by the route that protects both the money and the relationship.
Practical Situations
Illustrative situations showing how MASAR approaches a file. They are not disclosed client engagements or guaranteed outcomes.
- 01
A Key Customer Is Overdue but Sales Wants to Keep Supplying
We measure overdue and new exposure, evidence strength, the customer's viability and what the business gets in return. The answer may be controlled supply against payment, acknowledgement and security, or an immediate stop.
- 02
The Debtor Asks for Ninety More Days and Promises to Pay in Full
We ask for a cash-flow picture, a meaningful payment, a detailed acknowledgement, enforceable security, a short staged schedule and a clear consequence of default. If the debtor will not improve the creditor's position, that refusal is itself information.
- 03
An Insured Debtor Requests Another Extension
Policy conditions, notice timing, credit limits and cover are reviewed before any settlement is signed. The negotiation moves with the insurance file, not ahead of it.
- 04
A Foreign Buyer Stopped Paying After Taking Delivery
We review the contract, delivery terms, currency, jurisdiction or arbitration clause, shipping documents and any credit cover, then locate assets and assess enforcement and its cost. A secured settlement where the assets are may beat a valid judgment where there is no money.
What We Need to See
We start with the file, not the opinion. These documents show the strength of a position and its gaps fastest.
Account-opening application, commercial registration, tax number and authorised signatories.
Contract, sale terms, purchase orders and amendments.
Invoices, delivery or performance evidence, acceptance and statements of account.
Credit notes, returns, reconciliations, objections and acknowledgements.
Cheques, guarantees, pledges and other security.
Credit policy, limits and exception decisions, and any credit insurance policy.
Known information on assets and, for foreign debtors, shipping terms and the jurisdiction or arbitration clause.
Common Questions
Start with the Document
Send the contract or sale terms, statement of account and the key objection or extension correspondence. We first read how credit was granted and how the debt became due, then identify what can be proved and what should happen next.
Talk to MASAR before trade credit becomes unintended customer financing.