Accounts payable management

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Temporarily the borrowed funds which are subject to return to the contractor form accounts payable. In article we will consider the sanctions arising at delay of accounts payable, methods of its repayment and ways of a delay of payment for debt obligations of the legal entity. On examples we will consider how creditors can recover a debt in case of a deliberate tightening of payment by the debtor.

Accounts payable undoubtedly favorable source of financing of the company. But only in some cases.

1. Commodity credit

Regulations on the commodity credit are established by article 822 of the Civil Code of the Russian Federation. In this case the goods are acquired at the supplier with earlier stipulated payment by installments of payment without conditions about percent. There are cases when such percent is already put in the cost of the goods. At acquisition at the contractor it is necessary to make the full analysis of the acquired goods, and also its price - to find out, how many would cost these goods at payment after delivery of arrival of his buyer without payment by installments.

Sometimes, that after approach of term of payment the seller some time waits for payment and reminds of himself. But generally phone calls with the requirement about payment are distributed at the debtor the next day.

Practice of commercial relationship shows that from the moment of emergence of need of payment for the put goods and drawing up the statement of claim by the creditor on average passes 2 months. During this time it is possible "to turn" the debt sum and to get profit. Huge minus of such way of a delay of payment consists in loss of positive reputation of the company debtor.

When using the commodity credit it is necessary:

- adequately to estimate efficiency of credit policy of suppliers, it is correct to determine accounts payable cost taking into account discounts, delays, credit limits and other conditions;

- to make the correct decision on expediency of work with suppliers;

- to increase profitability of the enterprise in general and the accounts payable;

- in coordination to operate not only creditor, but also receivables;

- to reveal and eliminate the reasons of poor control of accounts payable;

- to motivate employees, for more effective work with accounts payable.

2. Monetary credit

At not return of the commodity credit it is simpler to be unpunished, than at not return monetary. The creditor goes to court without waiting minutes of delay so far as concerns money more often.

Most likely, it is explained by psychology of the person. Collecting percent for delay of non-execution of the obligation for payment of a debt also usually joins in the claim. As a rule, percent make a reservation in the contract but if they aren't registered - the rate of refinancing of the Central Bank Russian Federation works. The payment for use of someone else's money serves one of incentives of voluntary return of the credit.

According to article 395 of the Civil code of the Russian Federation the size of a payment for use of someone else's money is equated to discount rate of bank percent on the date of presentation of the claim. The size of this rate makes 8,25% today. This fact considerably weakens the stimulating influence of this sanction. Influence of this sanction would be more notable in case of increase in this rate.

For example, in 2003 this rate made 21%. However the rate of refinancing is established by the Central Bank Russian Federation and serves far not only for determination of the extent of responsibility for use of someone else's money therefore in the near future, taking into account a present rate of inflation and financial policy of the Central Bank of the Russian Federation it isn't necessary to expect it sharp growth.

Here It should be noted that in case of considerable delay of payment the contractual penalty, most likely, will "be cut down". But, as practice shows, including explanations of the supreme courts in order that the court considered a contractual penalty ("the run percent") not corresponding to consequences of violation of obligations, that is obviously overestimated, it is necessary:

1) it is obligatory to declare the petition for decrease in the size of a penalty with reference to article 333 of the Civil Code of the Russian Federation. In case of absence of the respondent debtor in court and not submissions of the such petition you shouldn't hope for "reduction" of percent better.

2) In the petition it has to be specified obvious disproportion of a contractual penalty. As well-founded arguments there can be a link to the customs of a business conduct and percent which are usually acting in the concrete region included in the contract.

It is also possible to compare the size of a principal debt and the size of a penalty. Often they are comparable, and sometimes the penalty even exceeds the sum of a principal debt. At last, it is always possible to note absence some losses, significant, critical for the company creditor, for delay of execution of the obligation, the old and close enterprise relations between contractors, etc.

Often actions of debtors can contain the structure of a criminal offense qualified as fraud, that is structure of article 159 of the criminal code of Russian Federation.

At a long non-payment of a debt the creditor takes the following actions:

1. Holds telephone negotiations.

2. Personally meets the contractor's representatives. Personal meetings are always more convincing the points of view of psychology, than telephone negotiations, it needs to be understood.

3. Sends claim letters. In most cases the claim order of settlement of disputes is fixed in the contract. At its non-compliance, that is submissions of the statement of claim in arbitration court without the preliminary direction to the debtor of a claim, the arbitration court takes out definition about leaving of the statement of claim without consideration according to article of 148 agrarian and industrial complexes of the Russian Federation. It means considerable loss of time as for trial on the merits it will be necessary to direct a claim the registered mail with the assurance of receipt for the creditor and to give reasonable term for its consideration. For the debtor it is excellent tactics of protection against the claim and good payment by installments during which it is possible to find ways of repayment of debt.

4. Appeals to arbitration court. In case of the positive decision, approximately in two months, taking into account the appeal, the creditor receives the court order.

5. Further two options are possible: or the creditor (execution creditor) sends the court order to the bailiff, or addresses directly to the bank serving accounts of the debtor. In the first case executive production can be tightened for long months as judicial police officers-performers in Moscow are strongly loaded, not always honestly fulfill the duties. All correspondence inquiries in tax direct Russian Post, namely, other bodies possessing information on property of the debtor (Federal Registration Service, traffic police, etc.), resolutions on seizure, on the address of collecting on property of the debtor, etc. that considerably drags out process of collecting debt.

The second way, that is presentations of the original executive documents in bank, much more effective, however it is effective, if:

A) to the execution creditor accounts of the debtor are known

B) the debtor has the necessary sum on the specified accounts.

What to do if all these measures didn't lead to desirable result?

Further ways fork: or the creditor bankrupts the debtor, or files in law enforcement agencies a petition for fraud. 
To make the decision on bankruptcy of the debtor it is necessary to find out degree of need of this fact for the creditor, whether he as a result in other words will receive an amount of debt or in vain will spend time and, besides, money.

Briefly this way of collecting debt can be described as follows. The application for recognition of the debtor by the bankrupt is submitted to arbitration court of the subject in the location of the debtor. The state duty (4 thousand rubles) is paid and the desirable arbitration managing director is specified. If the company debtor really wishes to continue the business activity, submission of such statement will be effective in the way to return the money back as bankruptcy procedure introduction significantly limits governing bodies of the debtor under the authority of business activity.

Law enforcement agencies carry out an inspection according to the statement of the creditor, criminal case concerning officials of the debtor is brought. But to prove the fact of fraud quite difficult, generally carrying out check or even the message to the debtor about intention to address to law enforcement agencies has the effect.

In order that saw corpus delicti in actions of officials of the debtor, it is necessary to prove intention, that is the fact of that the debtor, signing the contract, from the very beginning I wasn't going to execute it that is quite difficult.

We will give an example from practice.

The large company delivering the completing materials to planes made shipment of goods to the contractor. It was the new client, and the history of cooperation with this company wasn't. But in the course of negotiations the agreement on payment payment by installments was reached. Payment by installments made 3 months. In case of violation of terms of payment delay cost of 2% was established. The contract for delivery was signed, delivery is made. After the term of payment, telephone negotiations and the direction of claim letters of payment didn't follow. The arbitration court passed the decision in favor of the creditor, the debtor on a meeting wasn't. The court order was sent to bailiffs. Bailiffs couldn't find for the debtor. Then the CEO of the company creditor made the decision on the address with the statement to OBEP. After the first negotiations of employees of OBEP with the head of the company debtor within 2 days payment was made, and taking into account percent for delay of payment, stipulated in the contract.
The example is given in confirmation of the statement about need always to pay on the debts.

At last, it will be sometimes more favorable to concede the right of the requirement to the debtor, that is simply "to sell" a debt to other person. Such decision needs to be estimated in each case separately, it will be very often more reasonable to sell the right of the requirement for the sum smaller, than to hope for foggy prospects of receiving the money back. It is important to remember that, according to article 390 of the Civil Code of the Russian Federation the person conceding the right of the requirement bears responsibility only for invalidity of such requirement, but not for its non-execution. In other words the company which redeemed the debt having the right to make a claim only from the creditor in case such requirement wasn't in general or the transaction basis of emergence of a debt is invalid that, in a case with the available judgment, is excluded.

Methods of repayment of accounts payable

We will consider some methods giving the chance of receiving various concessions from the creditor.

1. Carrying out clearings

The enterprise has debt obligations before the company to which it also has counterclaims. Such situation doesn't need to be revealed if in the organization management not only creditor, but also receivables is coordinated. Usually in such cases previously sign the reconciliation statement of mutual settlements to avoid then difficulties in proof in court.
In that case it is possible to make clearing, and unilaterally. It is only necessary to notify the second party by means of the direction of the registered mail with the notice.

2. Renewal of accounts payable

Here it is not about repayment of all debt, and only its part. And so, the sense of this action consists that the company offers poor any obligations the credit to translate in provided, for example pledge or in percent due to reduction of an amount of debt or extension of terms of use of money.

3. Concession of shares of the company

Shares of the company (except actions of new release) are offered in exchange for improvement of credit conditions. This option is good only if requirements of creditors to this company makes an essential share of its cumulative debt, or thus the creditor wants to make a diversified portfolio.

4. Concession of the property rights to fixed assets

The arrangement on repayment of part of the credit in an exchange of fixed assets. This method is effective for the companies with a large number of fixed assets, or the fixed assets which are in property aren't important for activity. Otherwise the meaning is lost. The debt is extinguished by transfer of fixed assets to the creditor.

5. Providing bills

The bill is an unconditional obligation to pay to some person a certain sum of money in a certain place to a certain time. Such method exempts the debtor from payment of a debt only for some period, and to the creditor allows to receive further back a large sum, than it was supposed initially.
Perhaps, from all listed ways for the creditor the bill is more favorable. But that is best of all to receive a debt in the form of money and in time is undoubted.

At the same time, for the creditor issue of the bill isn't convenient means as collecting money on it is connected with certain difficulties and formalities. So, for example, the bill has to be shown to the debtor in time specified in it and a place. Usually creditors resort to services of notaries which make a bill protest in the non-acceptance or non-payment. It conducts to additional expenses in the form of fee of notaries who aren't cheap now at all.

Jurisprudence example on the affairs connected with providing bills

At emergence of disagreements or a non-payment on the bill it is possible to be guided by jurisprudence. Here one of jurisprudence examples on the affairs connected with providing bills.

The limited liability company A appealed to arbitration court of the first instance with the claim to Open joint stock company for collecting a sum of money on the bill. The claimant motivated the requirements with that the drawer issued the promissory note with an unconditional obligation of payment of the disputable sum on this bill directly to the third party or on his order any other legal entity.

On the basis of the blank endorsement the claimant became the holder of the bill. Payment the bill by the Respondent not to be made.

Requirements of the claimant are met by the decision of arbitration court of the first instance completely. The resolution of appellate court left the decision of the first instance without change. FAS upheld the decision of the first instance and the Resolution of appellate court.

The respondent doesn't agree with the specified acts and asks to revise them as supervision, referring to violation of uniformity by arbitration courts in interpretation and application of rules of law.

According to the applicant, the court unreasonably satisfied claims as the respondent produced the evidence of lack of the bases of transfer of the bill that testifies to a preryva of a number of endorsements. The applicant specifies that the court didn't attach significance to arguments of the respondent about need of attraction to participation in business of the third party and reclamation of proofs of legality of obtaining the controversial bill at it.

The bases for change or cancellation as supervision of the judicial acts which entered into force are defined by article 304 of the Arbitration procedural code of the Russian Federation.

Having studied the challenged judicial acts and documents enclosed to the application, the court doesn't find the bases provided by the specified article of the Code for transfer of business to Presidium of the Supreme Arbitration Court of the Russian Federation.
By courts it is established that the Claimant is the lawful holder of the controversial bill. By the applicant it isn't proved that, getting the bill, the bill holder knew about lack of legal basis to its delivery and acted consciously to the detriment of the debtor.

At settlement of dispute courts were guided by standards of the Provision on the translated and promissory note, according to which in case of presentation of the requirement about payment of the bill, the person obliged on the bill having no right to refuse execution with reference to lack of the basis of the obligation or its invalidity except the cases determined by point 17 of Situation.

According to point 17 of Provision on the translated and promissory note of the person to which the claim for the draft is made, can't oppose to the bill holder of objection, based on their personal attitudes towards the drawer or towards the previous bill holders if only the bill holder, getting the bill, I didn't act consciously to the detriment of the debtor.

Revaluation of the actual facts of the case established by court isn't within the competence of court of the supervising instance defined in articles 292, 304 and part 5 of article 305 of the Arbitration procedural code of the Russian Federation.
Considering stated and being guided by articles 299, 301, 304 of the Code, the Supreme Arbitration Court of the Russian Federation refused to the applicant transfer of business to Presidium of the Supreme Arbitration Court of the Russian Federation.

In summary we want to tell that for more effective management of debts of the company it is necessary to define, first of all, their optimum structure for the concrete enterprise and in a concrete situation: to make the budget of accounts payable, to develop system of the indicators characterizing both quantitative, and quality standard of a state and development of the relations with creditors of the company and to take certain values of such indicators for the planned.

It is also necessary to coordinate these values with receivables taking into account that the budget of receivables is already made.

The analysis of compliance of the actual indicators to their frame level, and also the analysis of the reasons of the arisen deviations has to be the following step in the course of optimization of accounts payable.

And, at last, depending on established discrepancies and the reasons of their emergence, the complex of practical actions for reduction of structure of debts in compliance with planned parameters has to be developed and carried out.

12 May 2014
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