For many companies, defaulted receivables represent important resources that should be available in cash. When this portfolio grows without a defined strategy, recovery can become increasingly difficult and costly.

That is why increasing the volume of collection efforts does not necessarily increase recovery.

The key is understanding which cases should be prioritized and which strategy should be used in each situation.

Not every debtor should receive the same approach

A portfolio of defaulting debtors can include completely different profiles.

There are debtors with financial capacity and an interest in negotiating, cases in which an out-of-court approach can produce quick results. In other cases, a more in-depth asset analysis or legal action may be necessary.

Treating every case the same way can mean wasting resources and time.

Structured legal management starts precisely with diagnosing and segmenting the portfolio.

Data-driven strategy

The analysis can consider factors such as the amount of the debt, how long it has been in default, the debtor’s profile, the history of the relationship, the existence of guarantees, ability to pay and recovery potential.

Based on this information, cases can be classified and prioritized.

This makes it possible to focus legal efforts on situations with the greatest financial impact or the greatest recovery potential.

Out-of-court or in court?

Out-of-court collection can be an efficient alternative in certain cases, especially when there is room for negotiation.

Formalizing agreements, debt acknowledgments and guarantees can provide greater legal certainty and set clear payment terms.

When negotiation is not enough, legal action may be necessary.

What matters is that the choice between one strategy and another is not automatic. It should take into account the characteristics of each case.

Legal and finance working together

Credit recovery should not be isolated within the legal department.

Financial information helps set priorities, while legal analysis makes it possible to assess risks, guarantees and recovery possibilities.

This integration can turn collection into a management activity, with indicators and portfolio performance being monitored.

The focus shifts to the financial result of the strategy, not just the number of notices sent or lawsuits filed.

Effective cash recovery

MV Law’s work in the legal management of defaulting debtors includes portfolio diagnosis, segmentation, strategy definition, out-of-court negotiations, formalization of agreements, asset analysis, legal action and results monitoring.

The goal is to build a strategy that fits the profile of the portfolio and the company’s financial objectives.

Because a good collection strategy is not the one that collects more. It is the one that recovers better.