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Businesses complain they cannot collect debts   0000-00-00 - TBKTSG

Businessmen have been moving heaven and earth to collect debts. They themselves do not have money to make payment with partners.

 

Dang Quoc Hung, Director of Kim Boi Company, a fine art and wood processing company said that it is now the busiest time in the year for him, because he has to urge partners to pay debts.



“We need to speed up the debt collection, so that we have money to pay for materials, pay salaries and Tet bonuses, and of course, pay bank debts,” Hung said.



However, Hung said that it is very difficult to collect debts now, saying that two or three out of every 10 debts prove to be irrecoverable.



“Meanwhile, foreign importers have also put a hard pressure on us, requesting us to lower the sale prices and accept deferred payments, because the sale has been going very slowly,” he complained. “This, plus the low profit due to the high input material prices, both have pushed us against the wall.”



Especially, some enterprises which provide interior decoration services, have to accept to lower prices and provide some free services, while they only charge on main materials and service fee, in order to be able to get paid soon.



Nguyen Minh Dong, Director of Asia Door, which provides doors to construction works, said that the gloomy real estate market has led to low demand and the low solvency of contractors. Dong has admitted that in most contracts, clients make payment after several months the products are delivered. However, about 30 percent of the debts prove to be irrecoverable. Meanwhile, many other contractors have been trying to negotiate to delay the payment.



Seafood exporters have also complained that it is very difficult to collect debts from the European partners. Meanwhile, very few orders have come for 2012 due to the bad economic performance of the European economies. In order to boost exports, a lot of exporters have to accept loosened provisions in payment and do not require vouchers.



A supplier of feed for aquaculture who has a factory in Vinh Long province said that seafood processing companies themselves also buy materials on credit from other suppliers, therefore, they accept easy payment conditions suggested by importers. However, the weak demand from the EU market has made the inventory volume increase.



This has put seafood export companies into dilemma. While they cannot collect debts from European importers, they have to pay debts to domestic suppliers and pay bank debts.



This has resulted in a risky chain, from the material suppliers to processors and exporters, from importers to distributors. “If troubles occur with just one of the links, the whole chain would suffer,” he said.



Businesses try to minimize risks

Lam Thuy Ai, Finance Director of Mebipha, a veterinary medicine and livestock feed producer and importer, also said that her company is facing big difficulties because it cannot collect debts from some seafood companies.



Ai said that the current difficulties have forced the company to apply new strategies to make it get adapted to the current circumstances to minimize risks.



Ai said that her company always tries to provide high quality products, with which, the company can persuade the buyers to prioritize to make payment with her company first, especially when Ai offers higher discounts.



“Previously, we offered the discount rate of 3 percent, while we have raised it to four percent,” Ai said.



Previously, businesses accepted the payment within 60-90 days after the deliveries. Meanwhile, the payment duration has been shortened to 30-60 days.



Ai also said that at this moment, the company would refuse overly big orders, because the big orders are always associated with big financial risks. As for medium orders, the company would require strict payment method.



“Only after getting paid for the first delivery, will we make the second delivery,” she said.



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