Why Debtors don’t pay?
- No funds/on verge of bankruptcy
- Internal disagreement/lack of authorised approval
- The transaction did not go ahead/could not find an investor
- IPO failed
- The services have been provided out of scope and were not pre-agreed by the client
- Disagreement with the amount of the invoice
- Dissatisfaction with the quality of services rendered/goods delivered
- Spoilt relationships between the debtor and the client
- Change of the management in the company
- “Debt hoppers” – people jumping from one company to another getting free advice, leaving a $100K invoice behind and moving to the next law/consulting firm
- Not aware of the liability: an invoice had not been received/was delivered to the wrong address/person
- Weak contractual documentation: the client can’t sue and the debtor knows this
- Destination: a debtor resides in a different country, hard to reach
- Foreign language barriers
- The goods have been delivered, but the debtor could not sell them. No sales/ no money to repay the debt
- Shareholders with funds hide behind their empty/bankrupt companies