Receivables to the distributor - a good tool for managing not only sales, but also relationships. True, only if it is properly managed. Competently - it does not distribute the receivables "left and right", as already there are several articles on the site "Notes of the marketing specialist", to monitor timely repayment, and, if necessary, to restructure it as well.
What is a receivables restructuring?
The need for restructuring of the distributor's receivables (changing the debt structure) can arise only under the occurrence of circumstances that prevent the distributor from performing his duties in relation to the receivables provided to him. Please note that debt restructuring is a measure applied to borrowers who are in a state of default, i.e. they are not able to service their debt.
The article in the article below is not about when the distributor has the opportunity, but does not want to extinguish the receivables in the mode established by the supply contract. Thus, the decision to change the debt structure can be formed only after a comprehensive assessment of your borrower's ability to repay the receivables.
The definition of "restructuring receivables" is not contained in Russian law. However, such a description can be found in the bylaws. For example, according to Art. 105 of the Budget Code of the Russian Federation, debt restructuring is understood as “agreement-based termination of debt obligations ... with replacement of the said debt obligations with other debt obligations providing for other terms of service and repayment of obligations”.
The need for restructuring of the distributor’s debt
In practice, the term "restructuring" is often given a wider meaning, and its specific content may vary and depends on the agreements of the parties.
Restructuring may involve:
writing off part of a distributor’s debt
assignment of all or part of the debt for a longer period
mixed form, involving the cancellation of part of the debt, the postponement of the fulfillment of obligations and the increase in the value of the debt, due to penalties.
Restructuring of receivables excludes recourse to the court, and therefore implies a further relationship between the supplier and distributor, and therefore serves the interests of the distributor and the supplier.
The benefit of the distributor from the restructuring of the receivables is obvious: he gets a chance to restore his financial "health", at the expense of the supplier. The supplier will be able to maintain partnerships with the trading partner, to keep in his product portfolio, on the dealers' shelves and in the market segment occupied by the distributor.
The form and conditions for the restructuring of receivables, as well as the need for it itself, depend on many circumstances, including:
interest in continuing the relationship with the distributor;
understanding the financial condition of the debtor and its reliability;
availability of security (pledge, surety, security payment), etc .;
history of relationships with the distributor.
On the restructuring of accounts receivable from a legal point of view
The agreement on the restructuring of accounts receivable is a civil law transaction. Therefore, its conclusion is possible only with the mutual understanding of the conditions and the consent of the parties. The specific legal formulation of the restructuring of receivables depends on the nature and content of the agreement of the parties. How far the proceedings have gone (pre-trial stage, court) also determines the legal execution of the agreement.
In this article we will analyze only tactics and legal tools that are reasonably used to resolve conflicts that arise in terms of debt restructuring before going to court.
So, the case:
The supplier of goods and the Distributor concluded in general a standard supply contract, according to which the supplier undertakes to deliver goods in lots to the distributor, and he, in turn, undertakes to pay for the goods delivered in a timely manner. In connection with the declared financial difficulties, the distributor made the delay in payment of the consignment. At the request of the manager about the need to repay the debt, the distributor said that he had a deadline for paying taxes and debts on other contracts.
Of course, by virtue of the provisions of the supply contract and in connection with paragraph 5 of Art. 486 of the Civil Code of the Russian Federation, the supplier may suspend further deliveries until full payment of all previously transferred goods, notifying the distributor of the desire to collect the debt in court. But:
This will not resolve the dispute, although it will confirm the seriousness of the intentions of the seller.
Judicial proceedings, starting with the preparation of the statement of claim, are not a quick matter. the money will freeze, along with them the relationship with the distributor
At the time of the proceedings, the distributor's shelves will be released from the supplied goods, which means that the supplier’s goods may be replaced by the same from another supplier.
Sold goods "A" by ABC analysis and undelivered in time will slow downsales of goods of category "B" and "C", which means the distributor’s debt will only grow. If you are not in court, you will have to use other means of resolving the conflict on the repayment of receivables. How to manage accounts receivable so as not to quarrel with partners a transaction involving the mutual assignment of the parties in relation to the original terms of the supply transaction. If the consent to the assignment is determined by the parties, then, as I wrote above, you can use several mechanisms for adjusting the terms and conditions of the receivables fixed in the supply contract. The supplier’s concessions The supplier can provide the distributor with one of the options: payment by installments - determines the conditions under which the distributor repays the debt in parts (equal or not equal) on certain fixed dates. Thus, an extreme date is determined by which all debts must be repaid. It provides a deferment of payment for the goods delivered - determines the date later than specified in the supply agreement, upon the occurrence of which all debts must be repaid. in addition, the supplier can determine the date on which the distributor is exempted from paying interest and penalties when all receivables are paid. Distributor’s concessions A distributor can accept one of or all of the supplier’s proposed options for debt restructuring: agrees to the supplier’s review of the total contract value, subject to the refinancing rate set by the Central Bank. The distributor may agree to the supplier’s external control of the dealer network by the supplier’s management, in relation to the debt, the dealers ’shelves, in terms of the supplier’s goods. The distributor can agree to share and share in the supplier’s marketing programs held earlier by the supplier.The distributor can agree to the supplier’s property or as a pledge of a certain property of the distributor. One of the options for the distributor’s assignment is the transfer to the supplier of the share or debtor’s share (debt-for-equity swap) on the amount of the debt is pledged or owned by the supplier. Providing a deferment or installment payment for the goods, as well as a change in interest (fine) for late payment, does not serve as a basis for rewriting (reissuing the existing contract), since it does not change the subject of the parties ’initial obligations. Assignments under the contract are executed by appendices to the current supply contract. New contractual terms However, the parties are entitled to enter into an agreement to replace the original delivery / payment obligation with another obligation. In this case, the previous obligation, like the previous contract, will be considered terminated due to the other party’s obligation set forth in the new contract. The supply contract and the marketing contract between the parties - offsetting of claims. There are situations when the parties ’relations are not limited to one contract. For example, between the distributor and the supplier, in addition to the supply agreement, there is also the so-called marketing agreement - an agreement to provide marketing services for the promotion of the supplier’s products. In this case, in case of non-fulfillment of the obligations to pay off the receivables, the supplier often refuses to fulfill the obligations on promotion of the products recorded in the marketing agreement. The distributor, being a debtor under the supply agreement, can already act as a distributor in another agreement with the distributor. Since both parties are bound by mutual obligations under two civil contracts, it is possible to consider the option of offsetting claims. As a general rule, a statement of one party is sufficient for offsetting (Article 410 of the Civil Code of the Russian Federation), while a statement of offset must be received by the relevant party to terminate the commitment by offset. The condition of offset according to the rules of art. 410 of the Civil Code of the Russian Federation is the reciprocity (counter character) and the uniformity of requirements, as well as the deadline for meeting the requirements. However, this does not prevent the parties from concluding an agreement on termination of non-uniform obligations or obligations with a non-compliance deadline (Clause 4 of the Resolution of the Plenum EAC No. 16 On the freedom of contract and its limits "on March 14, 2014). If the distributor again violates the obligations, if the distributor again violates the obligations, the newly concluded contract or the annex to the existing contract may provide ivat that the terms of the restructuring will automatically lose their force and validity of the original terms of the contract or the terms of immediate payment of all receivables zadolzhennosti.To same can be provided for the transfer, pledge or the ownership of the property transferred to the repayment of debt. if such a transfer does not take place within the specified time, the supplier will have the right to demand no longer the transfer of property, but the performance of the initial obligation. (PostovIAS Presidium dated June 17, 2014 No. 2826/14). Something instead of the result: Restructuring of receivables is permissible only after understanding the causes of the debt and its prospects Continuing cooperation In the event of restructuring, use the right to audit debt and external management of the management, in terms of ensuring the repayment of the receivable. In the event of a repeated violation of agreements, do not those and do not be fooled. Long-term practice of debt collection attempts suggests that once having violated, reissuing the debt and violating again, as a rule, they are not going to pay at all.