In Croatia, we have resolved over 40 million euros of debt

The Regional Director of EOS Group for Eastern Europe II states that managing 50 claims of one million euros each is not a problem. The problem arises when you have a million claims of 50 euros each. At that moment, you need a very efficient system so that the collection does not take longer than the claims.

The Croatian branch of EOS Group, operating under the name EOS Matrix, was recently awarded for its success.
– In Croatia, we have created a team that has wholeheartedly embraced the vision of EOS Group and, with its knowledge, managed to localize the Group’s business model to meet the business requirements of Croatian companies and integrate that concept into the institutional rules of Croatian society – says Stojče Taskov, Regional Director of EOS Group for Eastern Europe II, which includes Slovenia, Croatia, Bosnia and Herzegovina, Serbia, and North Macedonia.
EOS Group is a leading global brand in the field of credit risk management, building its risk management concept through the synthesis of best practices developed over 30 years of successful operations in more than 25 countries worldwide.

• There is no need to ask if you have enough work in Croatia. But what is your actual business concept?
– The business concept of EOS Group is in accordance with Croatian legal frameworks and our registered activities. Our proactive communication approach means that we can monitor the normal payment period using software programs, then mediate communication with debtors after the due date, and in accordance with the creditor’s financial policy, we propose programming and reprogramming of deadlines and amounts that will match the debtor’s payment capabilities. We then monitor those deadlines and finally prepare complete documentation for submission to law firms to carry out the legal process of proof or enforcement, and we coordinate and lead the process on behalf of our clients. This means that we carry out the debt collection process from start to finish, on behalf of and for the account of our clients.

• Who are your company’s largest clients?
– The largest clients of EOS Group in Europe are the largest European banks, telecoms, and insurance companies. This is quite understandable considering that they manage the largest number of claims. No one has a problem managing 50 claims even if they are one million euros each. The problem arises when you have a million claims of 50 euros each. At that moment, you need a very efficient system because the collection process can cost twice as much as the claim, so you would have to invest two million euros to possibly collect one million.

• How typical or specific is the Croatian market for EOS’s business?
– After 30 years of operations worldwide, there is almost no local problem we have encountered that we have not been able to solve. In Croatia, for example, due to high demands for liquid capital, we changed the standard practice of entering a new market and instead of traditionally starting a business model with support in debt collection services, building local quality and knowledge for the client and debtor, we immediately embarked on large projects for financing non-collectible debts (debt purchase). In this way, we have purchased over 40 million euros of debt to support the demands of large Croatian clients, regardless of the fact that we have not followed the standard practice of at least three years, which involves familiarizing ourselves with the legal and cultural rules of society before entering into large investments.

• Will the new Law on Financial Operations and Pre-Bankruptcy Settlement reduce or increase the market for your services in Croatia?
– The law quite strictly defines the deadlines in which payments must be made and establishes an institutional mechanism that is activated if those deadlines are not respected, thus generally reducing but not excluding our mediation. The need for our assistance in the regularly contracted debt collection period is now becoming even more relevant – we can help entrepreneurs avoid becoming insolvent or illiquid, thereby also avoiding the administrative penalties that the law prescribes. Mediation services, as a proactive measure to ensure timely collection of claims, can be carried out within the legal payment deadline or during the restructuring phase when creditors give their consent to the restructuring plan, which will certainly include debt collection procedures, where we can be of great help.

• How do you, as an expert in collection issues, perceive the solutions from that law?
– For the first time, I am encountering such a detailed legal regulation of business relationships, so the first thought that comes to my mind is ‘financial discipline’ above all. If successfully implemented, the law could ensure the highest level of financial discipline in business among entrepreneurs. I believe that the law delves very deeply into the regulation of business relationships that arise and change on a daily basis, and thus its direct application can be expected in more than 90 percent of companies in Croatia, which will daily enter and exit the status or framework of application of that law.

• Where do you see the weaknesses of that law?– For the law to be adequately enforced, a significant investment in the organizational potential of the institutions that need to control and implement its application is required.

• However, no law can guarantee companies that they will remain liquid forever if they do not engage in debt management themselves. Is there a successful concept for that?
– The fundamental premise of a successful concept is the correct understanding of the problem. First, there must be an awareness that this is not an organizational-logistical problem of collecting money, but a function of risk management. If this is understood, it becomes clear that there are two functions in the system. The first function is managing information related to customer quality or customer creditworthiness before a sale occurs. Based on that information, a policy of deferred payment should be developed, which is not static. Moreover, it is dynamic and dependent on the level of risk associated with a given customer. The second function is managing cash flows after the sale or the function of collecting its due claims. Our concept is modeled in proportionate intensity of applying legal collection methods according to the reason for non-payment and the proactivity of the debtor, all for the purpose of maximum efficiency. In the best case, it can start and end with active communication or, in the worst case, enforcement.

• How do you assess the Croatian practice in that second case?
– Croatia has its unique model of fast enforcement that is carried out through Fina. Such a model is unique in the region, and based on previous experience, it is evident that it performs its function of capital protection excellently. Fina’s main advantage is the efficiency of the process, which is carried out at very low costs and has great effectiveness. However, Fina has a limited enforcement function, which is only carried out on cash assets, making the fast enforcement system incomplete.

• Would public bailiffs be a better solution here?– The concept of public bailiffs is a broader category because they can, in principle, enforce on cash assets and the total property of the debtor, but their enforcement process is always more expensive than the process carried out through Fina. The enforcement system must be complemented with effective methods of enforcing property regardless of how the office that will perform that function is named.

• What makes one company in your industry more competitive than another?
– When you operate in the product sales industry, it does not matter who you are, but who and what your product is. When you work in the service industry, you sell your vision, your human qualities, and your professional capacity to implement that vision. In that case, it is important who you are. EOS is a global network of top financial experts and credit risk management specialists who interactively exchange their knowledge in the function of developing financial concepts and business models that help our clients minimize the risk of non-collectibility of their claims or simply transfer it to EOS Group through debt sales models. Thanks to our extensive international experience, our flexibility, or ability to adapt to local societal demands, is more pronounced than that of our competitors.

• Does the price of the service play a role?
– The best thing about using outsourcing services is that companies free themselves from high exposure to fixed operational costs. This means that the price is variable and is proportionate to the volume of work and the level of success, and it is charged as a percentage of what is collected. EOS initially bears all the costs of the collection process and charges a percentage of what is collected only after the money is deposited into the client’s account.

• To what extent is the price of your service passed on to the debtor?
– When collecting on behalf of the client, no additional costs may be legally claimed from the debtor, except for the payment of the exact amount owed that the client has entrusted to us for collection. In the case of a mandate agreement, therefore, the creditor-client is the one who pays EOS a fee for the collection work done, and this is only as a percentage of the amount collected, while the debtor is not charged any additional amounts.
In the case of debt purchase, no additional costs are also claimed from the debtor. We only claim the amount that has been purchased and the statutory default interest (interest on maturity), to which we are entitled under the Law on Obligations. Only in the case of initiating enforcement proceedings will the debtor also bear the costs of that procedure; however, for us, initiating enforcement proceedings is only a last resort – we first try to achieve collection through extrajudicial, voluntary means – phone calls and reminders we send to debtors, along with proposals for several types of agreements. Only if the debtor refuses all cooperation, is uncontactable, or there is no other way to collect our claim, enforcement proceedings are initiated.