Debt collection in Czech Republic
The confidence index on the Czech economy began to grow again in June 2018, approaching levels that had not been seen for over 10 years. However, this growing economic trend is accompanied by a high risk of Insolvency.
According to the Český statistický úřad – The Czech Statistical Office of Prague – the trust index on the economy returned to growth in the Czech Republic in June 2018 after the slowdown recorded in May, re-approaching the highs of 15.8 points. Similar levels were not seen since May 2008, or from the pre-crisis period.
The Economic growth was driven by the Industrial production which grew faster than expected for the third consecutive month in June. In fact, the industrial production recorded an annual increase of 3.4% in June, against 1.4% in May and 2% increase higher than expected by economists.
As regards foreign trade, the main trading partners of the Czech Republic are Germany (32,8%), Slovakia (7,7%), Poland (6), France (5,1%), United Kingdom (5), Austria (4,4%) and Italy (4,2%).
Foreign direct investment comes mainly from the Netherlands (23,4%), Germany (14,1%), Luxembourg (11,9%), and Austria (11%).
Czech Republic imports from the rest of the world especially these products:
- Electronic equipment: (US $ 30.7 billion)
- Machinery: ($27.3 billion)
- Vehicles: ($ 17.5 billion)
- Plastics: ($9 billion)
- Mineral fuels including oil: ($ 8.9 billion )
- Iron and steel: ($ 6 billion)
- Pharmaceuticals: ($ 4.6 billion)
- Medical and technical equipment: ($3,6 billion)
- Furniture and lighting: ( $3.4 billion).
So according to the data of June 2018 the economy is experiencing a great growth, but this is accompanied by a high risk of insolvency.
So let’s see how Debt collection works in the Czech Republic. The Debt collection process in the Czech Republic can be divided into two stages: The extrajudicial and the judicial phase.
- During the extrajudicial phase, collection takes place without Court intervention. In principle, we always start the Debt collection process with the extrajudicial phase. At this stage, Invenium try to prevent Court intervention, as this can be expensive. We will contact the Czech debtor to demand payment. If the debtor does not pay within a set period of time, we can commence legal proceedings following the creditor’s instruction. Often announcing legal proceedings can convince the customer to pay.
- While during the judicial phase, we do involve the Court in order to make your Czech debtor pay. If the Czech debtor refuses to pay during the extrajudicial phase, after discussion with the creditor, we can proceed with the legal action and go in Court. We will provide the creditor with all information in advance regarding the likelihood of success of debt recovery matter. We also will inform the creditor in advance about the potential costs and the time of the procedure.
Before choosing one of the two procedures, Invenium analyzes the situation of the Country in which it has to recover a credit, in this case the Czech Republic. After analyzing the so-called Country and Opportunity risk we also analyze laws and the Local Legislation in force.
Therefore, Invenium has legal partners in the most important Czech cities; one in Prague and the other in Brno. Our partners have deep experience and knowledge of legislation and regulations in Czech Republic. In addition, they are fully aware of commercial traditions and culture. This makes the Debt collection procedure easier.
To conclude we can say that most of the cases are solved with the extrajudicial approach because the procedure is easier to implement and, in economic terms, it costs less.