Various Methods of Debt Recovery for Enterprises

The issue of debt recovery is a major concern for many enterprises, running parallel to their commercial business activities. Through our experience in providing debt recovery services to numerous domestic and international clients and partners, we recognize that this process requires a strategic, clear, and phased approach to achieve the highest possible effectiveness, as expected by enterprises. Therefore, through this article, BKC Law presents an effective debt recovery process based on practical experience and specialized expertise for enterprises to reference and consider implementing.

I. Debt Recovery Methods for Enterprises

Phase 1: Negotiation and Mediation for Debt Recovery

Issuing Written Payment Demands to the Debtor
Modern communication tools such as email, telephone, and messaging offer flexibility, speed, and convenience in information exchange. Consequently, in business operations, most enterprises prioritize these channels for communication and interaction with customers. However, given the strategic, precise, and phased nature of debt recovery, formal written documents and official letters are generally preferred.

A written payment demand is not only an effective means of demonstrating the enterprise’s flexibility combined with firmness toward the debtor but also serves as evidence for initiating litigation, determining the timing of legal action, and establishing an advantageous position in dispute resolution before competent authorities.

Debt Recovery through Negotiation
In addition to sending written demands, enterprises may consider progressive negotiations with the debtor to present their claims more clearly and assertively, following these stages:

Step 1 – Reminder: At this stage, communication channels such as email, messaging, and telephone are used to maintain a polite yet resolute tone, offering a specific and reasonable extension for payment to encourage the debtor to fulfill contractual obligations. The extension period may vary depending on the industry and established transaction practices, but a one-week period is generally considered appropriate in ordinary commercial activities.

Step 2 – Urging: If payment remains outstanding after the extension expires, the enterprise should increase the frequency of reminders to emphasize the debtor’s payment responsibility while maintaining a cooperative attitude. Additional negotiation measures may be employed to secure the debtor’s cooperation in resolving the matter.

Step 3 – Warning: If previous stages yield no positive response, the enterprise may issue a strict and firm warning. Under the terms of the contract and applicable civil and commercial laws, the creditor is entitled to demand compliance with payment obligations; non-compliance may result in legal consequences for the debtor. The enterprise should clearly specify these potential consequences to underscore its determination in the payment demand at this stage. Such documentation also carries legal weight if the enterprise subsequently decides to pursue litigation or arbitration.

As noted, debt recovery requires a clear strategy, and the objectives and significance of each phase must be defined by the enterprise. In Phase 1, a skillful yet thorough and rigorous approach can facilitate cooperation in debt settlement. For difficult debts, this phase establishes a foundation for subsequent stages. Additionally, through these steps, the enterprise can gather information, understand the reasons for delayed payment, and assess the debtor’s financial capacity and willingness to pay. This insight enables the enterprise to better comprehend the debtor’s business operations and devise appropriate measures to recover the outstanding amount in the shortest possible time.

Phase 2: Initiation of Litigation at Court or Arbitration
If negotiation efforts fail, the enterprise may proceed with more decisive action by filing a lawsuit at a competent court or arbitration center. Depending on the complexity of the case, this process may take from 3 to over 12 months.

Under the law, resolution through court or arbitration requires the simultaneous satisfaction of three elements: (i) the existence of a debt and the debtor’s failure to fulfill payment obligations, thereby infringing the legitimate rights of the enterprise; (ii) acceptance of jurisdiction by a competent court or arbitration center under Vietnamese law; (iii) full compliance with pre-litigation steps such as mediation, negotiation, and notification.

II. Debt Recovery Services for Enterprises Provided by BKC Law Firm

BKC Law Firm is highly regarded by clients for its professionalism, proactiveness, and effectiveness. Our strengths lie in a deep understanding of practical negotiation and exchange practices, as well as local legal regulations on debt recovery, applied within Vietnam’s legal, economic, political, and cultural context. With the guidance of experienced lawyers, BKC has successfully supported the resolution of numerous debt recovery cases of varying scales.

All debt recovery activities at BKC are conducted meticulously and carefully—from initial client contact, legal consultation, and case file review to issuing payment demands, participating in settlement negotiations, litigation, or enforcement—to best protect client interests.

Disclaimer:
The above article is intended to provide general reference information and is not meant to constitute specific legal advice for individual cases. We therefore recommend consulting a lawyer before applying any information contained herein.

BKC is a reputable law firm in Vietnam capable of providing legal services related to dispute resolution. Please explore our services and contact our legal department via email info@bkclaw.vn or Hotline 0967 333 246