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In an ideal world, the perfect scenario would be one where companies would order products and services and pay for them correctly, within the deadline. In practice, however, we know that this is not the case.

For different reasons, many companies and customers end up not honoring their commitments and causing inconvenience and impasses in negotiations, which leads to a situation that is feared by many people: the outstanding financial obligations.

Do you want to know more about this topic, how it impacts companies and how to avoid it? In this article, we will explain a little more about it. Check it out!

What are financial obligations?

A financial obligation arises when a company registers with credit reporting agencies a debt that has not been paid by another company in a negotiation. This information is recorded in a database for five years after the maturity of the obligations.

It should be noted that they are different from protests, which is when a person or company fails to pay a security and is registered with a Notary’s Office for Protested Notes. The financial obligations aim to prevent the granting of credits to defaulting companies, while the protest aims to receive debts by officially exposing them.

How do they impact the business?

Outstanding financial obligations impact both sides. For the debtor, the registration of the outstanding obligation makes obtaining credit difficult, which, in case of need, can be fatal for the survival of the business.

As for the company that does not receive the amount due, the risk is the impact on cash flow and on the financial health, as well as being an impediment in the pursuit of a healthy future.

How CAN outstanding financial obligations be avoided?

Several losses may arise with the outstanding financial obligations, but it is possible to avoid them. Check out how to accomplish this below.

Check for outstanding obligations at institutions before closing the deal

For companies that do not want to be jeopardized by debtor companies, it is always advisable to carry out a prior analysis before doing business. Check if there are any outstanding financial obligations registered with credit reporting agencies, and only make the decision to enter into a contract after a thorough analysis.

Establish a credit policy

Laying out the company’s duties in a normative way is always a good option to organize processes. Therefore, establish a credit policy with specific rules.

A good practice is to never grant credit or provide products to new customers. In addition, prioritize retaining trusted business partners whose payment is assured.

Learn how to negotiate

This tip is valuable both for those who have not received the money and for those who are in debt. After all, as we discussed, outstanding financial obligations are bad for both parties involved.

Thus, knowing how to negotiate and reach a consensus can be a great solution to avoid inconvenience. It is always good to consider that not everyone fails to pay in bad faith, and that a good relationship and intermediation are essential in conversations.

Monitor the information daily

Always keeping an eye on outstanding financial obligations and contracts with suppliers is also essential. That way, it will be easier to quickly identify any payment that has not yet been made and that is due. As a result, it will be possible to solve problems quickly.

How can technology help prevent and control outstanding financial obligations?

For some of the issues we mentioned, technology can be a great partner. After all, there are currently complete software’s that help to centralize data and information, allowing a better monitoring and assertiveness in decision-making. These tools also send alerts about contracts and debts maturing, making day-to-day monitoring much easier.

With the numbers and data that these tools are capable of collecting in hand, it is possible to have a better overview of the business and the financial obligations of suppliers and customers. They are great for helping companies with debts resulting from management difficulties, or those whose cash flow is being affected because they do not know the origin of the non-payment.

Are you curious to learn more about how these tools may help you? Then check out our article about the importance of software for controlling the costs and profitability of your company!