Increasing payment problems in Russia
We see an increasing amount of small and big sized companies, but also very well-known companies in Russia who are causing problems to suppliers in South America. Companies with financial problems who cannot pay their bills anymore and companies that are well known for many years and suddenly disappear, leaving huge amounts of debts behind. Is this a new trend?
In the last year we can name at least 5 reputable flower import companies in Russia who left hundreds of thousands of Dollars of unpaid bills in Colombia and Ecuador and shut down their business. These importers have been in business for many years and are known to a lot of farms in South America, without any problems. They were represented at international fairs and bought flowers from dozens of farms. Nobody would see it coming that these debtors would suddenly disappear.
We did research to some of these cases and noticed that there definitely was a chance to see this coming. In one particular case, the first problems started in February 2018 already: some farms had pending invoices with this client and stopped supplying. This is the part where a farm should warn other farms (either through local organizations like Asocolflores and Expoflores or through the AgroCheck database). From May 2018 the total debts increased rapidly each month and more farms stopped supplying, but most of them didn’t take immediate actions to warn other farms. This Russian importer was in business till March 2019 (more than a year after the first problems started) and then disappeared after Women’s Day and the owners left the country.
Don’t wait to long with taking (legal) actions against a debtor. If a debtor is more than 60 days late with payments, we advise you to start a debt collection procedure immediately. Did you know that the probability of collection in the flower business is only around 75% if a debtor is 90 days late with payments? And only 55% if a debtor is 180 days late with payments? And only 35% after 1 year? It is better to spend a small amount on commission fees for a debt collection agency instead of loosing a lot more by just waiting till your debtor finally pays… or disappears.
You have been warned. Don’t let this happen to you! We noticed that more and more companies in South America are becoming victims of doubtful debtors. It is better to spend a small amount of money for proper research to your client, than have a lot of damage afterwards. We only have to warn you once in a few years and you will easily gain profit from your membership. Besides that, AgroCheck Collections can help you to collect the debts of your client.
If you would like to have more information, feel free to contact us.
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