Debt collection between companies: out-of-court and judicial routes
Recovering what you are owed takes strategy. The judicial route is not always the first choice — out-of-court collection often resolves matters faster and at lower cost.
The out-of-court route
Before suing, it is usually worth attempting a direct solution: formal notification, negotiation and, where appropriate, protest of the instrument. These measures pressure payment and preserve the commercial relationship, besides being faster.
The judicial route
- Collection action: where there is no enforceable instrument, to establish the debt;
- Enforcement: where there is an enforceable instrument (contract, check, trade note), seeking payment directly;
- Monitory action: for debts backed by written evidence that lacks the force of an enforceable instrument.
How to choose the route
The decision depends on the type of document evidencing the debt, the amount, the debtor's profile and the urgency. An initial assessment avoids wasting time and money on the wrong route.
Frequently asked questions
Is it worth collecting before suing?
In most cases, yes. Out-of-court collection is faster and cheaper and often resolves the matter without the need for a lawsuit.
What is an enforceable instrument?
It is a document to which the law grants force for direct collection through enforcement — such as contracts signed by witnesses, checks and trade notes — dispensing with the stage of establishing the debt.
Need guidance on this topic?
This article is informational. For guidance on your specific case, talk to our team.