Commercial debt portfolio recovery

The Challenge

Distribuciones Ibericas, a nationwide wholesale food distributor, was facing a liquidity crisis caused by an overdue receivables portfolio that had reached 2.8 million euros. The 47 debtors ranged from small local businesses owing a few thousand euros to regional chains with balances exceeding 200,000 euros.

The internal collections team had exhausted amicable approaches over more than six months with no significant results. The situation was particularly delicate because many of the debtors were long-standing clients with whom the company wished to maintain commercial relationships after resolving the outstanding debts.

Our Approach

We implemented a triage system that classified the 47 cases into three categories based on amount, age, and collection viability. For the first category, debts exceeding 100,000 euros with solvent debtors, we initiated direct negotiations with proposals for structured payment plans and additional guarantees. The second category, mid-range debts with debtors experiencing difficulties, was addressed through partial write-off agreements in exchange for immediate payment.

For the most challenging cases where negotiation did not advance, we initiated payment order proceedings and, for the larger amounts, enforcement actions. The key was coordinating the legal strategy with a commercial approach, always keeping the door open to negotiation even during court proceedings. Each case had a predefined escalation timeline that maximized opportunities for out-of-court resolution.

Results

Within four months, 2.6 million euros were recovered, representing a 92% recovery rate on the total portfolio. Seventy-eight percent of cases were resolved through out-of-court settlements, preserving commercial relationships in the vast majority of instances. The court proceedings initiated in the remaining cases produced favorable rulings that strengthened the company’s negotiating position for future default situations.