Two of a kind

In Europe, the financial crash of 2008 hit Spain harder than most. Although the nation’s economy is in better shape these days, there is still a significant problem of late payments and debt default, as two of Intrum Justitia’s Spanish customers can attest.

Construction sector companies Grupo Puma and Hune have both experienced issues with customers paying late, either unintentionally or intentionally defaulting on their debts, or disputing the agreed price. Sometimes the person with debt has no insurance, making what is owed even more difficult to recover. Issues such as these can cause a company liquidity problems and business insecurity, as Intrum Justitia’s 2016 European Payment Report found.

 These troubles persist in Spain despite a law which sets compulsory and binding terms for payments for business-to-business, with no time extensions allowed. The law gives a maximum of 30 days’ payment time for administrative entities, and 60 days from the date of receipt of the goods or rendering of services for private companies.

 A further challenge is collecting what is owed in a way that doesn’t damage a business relationship that perhaps has encountered only temporary difficulties. After all, Spain’s economic challenges have been especially tough.

 Time to seek expert help…

Case study 1: Grupo Puma

Grupo Puma is a group of construction companies of 25 years’ standing, specialising in products ranging from mortars to insulation, asphalt and light pavements. It has 18 production and distribution centres in Spain. Like many in the sector, the group faced a very challenging few years when the financial crisis caused the country’s construction boom to come to a sudden halt.

 According to the group’s Director of Commercial Risk, Jorge Artiles, “The problems come from non-receipt of invoices, claims or intentional non-payment.”

 Working with Intrum Justitia has given Grupo Puma expert support in collecting its debts, with the right balance between clarifying the situation for the end-customer and showing sensitivity to their situation, which Intrum’s long experience in the industry helps them to achieve.

 “Usually, it is very effective for the client to understand that we have debt recovery professionals working to collect a debt that relates to their company, and doing it this way has a higher percentage of effectiveness than if we did it ourselves,” explains Artiles.

 “Intrum also helps us with those clients who don’t have credit insurance coverage—in which the customer is late or intends to default—in claiming the payment of arrears.”

 These days, Grupo Puma is in a much happier position. “We are going through a bit of a bonanza as far as collections are concerned,” says Artiles. “Our economic situation has improved, and although the general rate of defaults is low, it is obvious that all the recoveries that have taken place have a positive impact on our bottom line.”

Case study 2: Hune

Hune specialises in machinery and lifting equipment hire for the construction industry. The company is based in Madrid but has offices throughout Spain.

 For Hune, the payment problems take a couple of different forms, as, Núria Perez Campillo, the company’s Risk Manager, explains.

 “Late payments were causing us a lack of liquidity and affecting our cash flow. We also experienced price discrepancies with some customers, despite the fact that we had previously agreed the fee with them. Unpaid damage is another issue, where the equipment is damaged during the hire process but the customer refuses to pay for it. These are frequent problems for us.”

 These weren’t things that Hune were able to sort out by itself, so the company turned to Intrum Justitia:

 “Because all the dealings with the customer are exhausted, the only way for the customer to react and pay has been with the intervention of Intrum Justitia,” says Perez Campillo.

 This has helped put Hune’s finances on higher ground, while maintaining the balance with keeping good business relationships.

 “With the intervention of Intrum and its specialised staff, we recovered debts that were ingrained, allowing us to recover a significant percentage of our clients' debt that was previously regarded as doubtful for collection,” says Perez Campillo.