In the world of entrepreneurship, managing overdue invoices and handling debtors is an inescapable part of the journey. In Estonia, the number of expedited payment order proceedings is on the rise, with over 400,000 enforcement proceedings on bailiffs’ dockets. Surprisingly, only about 6% of all debts are owed to individual creditors, as the rest involve legal entities. This makes outstanding debts a significant concern for entrepreneurs. So, what should you do if an Estonian company owes you money?
- Initiate Communication Early: Start negotiations as early as possible. It’s essential to send reminders promptly and offer a reasonable extension if needed. All communication should be in writing to prevent potential disputes later on. While discussions over the phone can be useful, all agreed-upon terms must be confirmed in writing. This is also crucial for extending the statute of limitations. In Estonia, the statute of limitations for claims is three years, so it’s unwise to wait too long.
- Request Additional Security: To avoid court proceedings, you can always request additional security for debt repayment, such as guarantees, collateral, or mortgage to secure the debt. There are various options to consider when seeking an agreement.
- For Smaller Claims, File a Payment Order Proceeding: You can file a payment order proceeding for claims up to 8,000 euros (main claim plus ancillary claims). The state fee for a payment order proceeding is 3% of the claim amount, which is considerably lower than the fees associated with a regular lawsuit. Filing the application is straightforward, and most importantly, you do not need to provide evidence or an extensive legal analysis of the situation – you simply need to refer to the outstanding invoices.
- For Larger Claims, Go to Court and Consider Applying for Precautionary Measures: In cases of substantial debts, consider taking the matter to court and applying for precautionary measures. With valid reasons, the court can freeze the debtor’s bank accounts or impose restrictions on the disposal of the debtor’s assets (real estate etc).
- Seek Compromise and Establish a Payment Plan: Payment plans can be negotiated at any stage of the dispute. Even if the case has reached the payment order or lawsuit stage, you can still reach a compromise, which the court can validate. Payment plans can also be established during the enforcement process with the bailiff. It’s always wise to find an agreement that satisfies all parties involved.
- Collaborate with the Bailiff: When a claim reaches the bailiff, collaborate with them. Creditors may have more information about the debtor than the bailiff can access. For instance, whether the debtor has valuable personal property that can be seized, if there are outstanding debts from the debtor’s business partners that the bailiff can collect, or if the debtor is expecting project payments. Effective enforcement requires cooperation between the creditor and the bailiff.
- Seek Legal Counsel: Every country’s legal system and laws are unique. It is strongly recommended to consult with Estonian legal advisors who can help establish an appropriate course of action to expedite the satisfaction of your claims.
In conclusion, managing overdue invoices and dealing with debtors is an integral part of business, but it doesn’t have to be overwhelming. Initiating communication early, seeking compromises, and collaborating with legal professionals can help you navigate the complex landscape of debt recovery in Estonia. By following these steps, you can increase your chances of resolving outstanding debts in a timely and efficient manner. Hedman Law Firm is happy to help you throughout the process.