How to assess whether a receivable is worth pursuing

When a receivable becomes high-risk, most companies consider two options: hiring a lawyer or writing the debt off. But between those two options, there is a step most companies skip — a collectability assessment.

An assessment does not mean you will definitely recover the money. It means you will know whether it is worth trying — before you invest time and money in a process that may not make sense.

In this article, we explain what to consider when assessing whether a receivable is worth pursuing.

Why an assessment matters

Without an assessment, the decision on collection comes down to assumptions:

• Is the receivable really uncollectable?
• Is it worth investing time and resources?
• Is it better to write it off right away?

An assessment answers these questions — before you invest time and money in a process that may not make sense.

Factors to consider

1. Age of the receivable

The older the receivable, the harder it is to collect. After 6 months, the likelihood of collection drops significantly. After 12 months, many companies are already considering a write-off.

But: Age is not the only factor. An 8-month-old receivable may still be collectable if there is a business relationship and the debtor is still operating.

2. Amount of the receivable

We focus on receivables of €20,000 and above. That is not an arbitrary threshold — it is the level below which the individual approach we apply is not economically justified.

The amount is not just a number. It determines how much it is worth investing in the collection process. But it is not the only factor — a receivable of €20,000 may be worth pursuing if there is realistic room for collection, while a receivable of €100,000 may be hopeless if the debtor has no funds.

3. Nature of the business relationship

Is the debtor a long-standing client or a new client? Is there active cooperation, or has the relationship ended?

If the relationship is still alive, there is more room for conversation. If the relationship has ended, there is less room.

4. Why the debtor is not paying

This is the most important question. There is a difference between:

• No funds — the debtor is insolvent or in bankruptcy
• Does not want to pay — a dispute over quality, a delay in an internal procedure
• Cannot pay — a blocked account, an administrative problem

If the debtor has funds but is not paying for another reason — there is room for collection. If the debtor has no funds — collection is unlikely.

5. Country of the debtor

The legal route abroad is unpredictable and expensive. But that does not mean collection is impossible — it means a different approach is needed.

Some countries have more efficient collection systems than others. Some have a culture that values business reputation more.

Red flags — when a receivable is not worth pursuing

There are situations where a receivable is not worth further investment:

• The debtor is in bankruptcy — collection is unlikely
• The debtor is insolvent — no funds to pay
• The receivable is more than 2 years old — the likelihood of collection is low
• There is no documentation — no contract, invoices, or communication
• The amount is below €20,000 — the individual approach is not economically justified

Green flags — when it is worth trying

There are situations where a receivable is worth further investment:

• The debtor is operating — has active business activities
• There is documentation — a contract, invoices, communication
• The business relationship is alive — there is room for conversation
• The amount is €20,000 or more — large enough for an individual approach
• The receivable is not too old — less than 12 months

What individual approach means

An individual approach does not mean we will definitely collect. It means we will:

1. Analyse the nature of the receivable, the documentation and the history of the relationship
2. Assess whether there is realistic room for collection
3. Tell you openly if the assessment shows there is no room

An assessment is not automatic — it takes time, analysis and understanding of the specific case. It is work done before a decision on next steps is made.

What you can do next

If you have a receivable of €20,000 or more and standard collection attempts have not worked — it is worth considering a collectability assessment.

It is not the legal route. It is not mass collection. It is an individual approach that starts with analysis, not with a reminder.

If you'd like to learn more about how we approach cases like these, visit alterclaim.rs/en or contact us at info@alterclaim.rs.