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CORPORATES should prioritise comprehensive due diligence processes when conducting business with both existing and prospective customers to ensure they do not encounter problems when it comes to dealing with debtors, a legal expert has said. Speaking in Harare last week during a debt recovery workshop organised by New Generation Initiatives Consulting, Scanlen and Holderness partner Ms Doreen Vimbai Gapare said by carefully investigating clients, a corporate can come up with a flawless agreement between the parties, which makes recovery easier when the need arises.
“Carrying out a due diligence process assists any business entity in getting to know the calibre of clients that they are dealing with and it is at this stage that businesses should engage the services of professional legal personnel so that they can draft credit agreements and other credit control-related agreements that are flawless,” she said.
Ms Gapare also stressed the need for organisations to empower their credit control personnel through taking part in such workshops that impart knowledge on legal processes and laws that have a bearing on their operations.
“It is important because these are the issues that businesses face in the ordinary course of business and it is critical that they gain sufficient knowledge to mitigate any adverse effects rising out of failure to recover their debts and increase revenue flows,” she added.
Ms Gapare also emphasised the need for corporates to be cautious in their approach when engaging debt collectors so that they achieve cost-effective debt collection while managing to recover their funds.
Another debt collection expert, Mr Absolom Muchandiona who leads Danziger and Partners Legal Practitioners’ debt collections department, Harare office, concurred with Ms Gapare on the importance of such workshops adding that most corporates were slowly appreciating legal matters in relation to their day-to-day operations.
“This is an important topic and I am happy to say there has been a realisation by organisations that debt recovery is a very important component because every cent counts in business and as such no company can afford to lose especially through sheer negligence in the way they prepare their business agreements,” he said.
Mr Muchandiona expressed concern at the rate at which claims are being resisted, mainly because of the absence of proper due diligence on the part of the organisation which at times result in companies going into liquidation.
Workshop organisers NGI Consulting, managing consultant Mrs Florence Mukanga said they were forced to continue with the same topic this month due to the overwhelming response to their first workshop last month.
“We are holding a series of monthly workshops touching on different legal subjects and last month the debt recovery session was oversubscribed and we have had to continue with the same subject this month,” she said.
Mrs Mukanga added that the next workshop is going to touch on labour law and expressed optimism corporates were going to respond overwhelmingly in terms of participation.
The workshop drew participants from industry, security companies, schools, hospitals and the Zimbabwe Agricultural Society.
NGI Consulting are a consultancy corporate organisation that offers turnaround services in diverse fields like business management, ICT, public and social policy, research, monitoring and evaluation and its clients are drawn from a wide spectrum that includes universities, public entities, NGOs, UN agencies and corporates.
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