Challenges in Debt Recovery for SMEs in Malaysia: A Lawyer’s Perspective

Common Challenges Faced by SMEs in Debt Recovery

• Limited Resources: SMEs often lack the financial and personnel resources necessary to effectively pursue debt recovery, leading to challenges in managing unpaid debts.

• Customer Relationships: Close relationships with clients may deter SMEs from pursuing aggressive debt recovery tactics, risking potential future business.

• Lack of Legal Knowledge: Many SME owners are unfamiliar with their legal rights and the debt recovery process, which can hinder effective action.

• Longer Payment Cycles: Industries like construction often have extended payment timelines, putting pressure on SMEs’ cash flow and increasing the urgency for debt recovery.

• Power Imbalances: Larger clients may dominate negotiations, leading to unfavorable terms for SMEs and making it harder to recover debts.

Potential Solutions for SMEs

Clear Contracts

Drafting detailed contracts with explicit payment terms can help protect SMEs’ rights and clarify expectations, making it easier to address breaches.

Early Intervention

Proactively addressing overdue accounts through regular follow-ups can prevent debts from escalating, demonstrating to clients the importance of timely payments.

Utilizing Mediation

Engaging in mediation can facilitate amicable resolutions without the need for lengthy litigation, preserving relationships while effectively addressing disputes.

Debt Recovery Services

Hiring professional debt recovery agencies or legal firms can provide expertise and resources that SMEs might lack, allowing them to focus on their core business activities.

Credit Checks

Conducting thorough credit checks before extending credit to clients can help mitigate the risk of non-payment, enabling SMEs to make informed decisions about whom to do business with.

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For expert advice and to get started, call us at:

Office: 06-6012272

Partheeban (Direct): 012-6021374

Or visit us at one of our offices:

Main Office: No.6 (1st Floor), Jalan S2 D38, Magistrate Square, 70300, Seremban, Negeri Sembilan​.

Branch Office: No.14B Jalan Kenari 5, Bandar Puchong Jaya, 47100, Puchong Jaya, Selangor Darul Ehsan.

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Empower Your Business, Secure Your Financial Future. Take proactive steps to manage debt recovery and protect your hard-earned revenue. Explore effective strategies today to ensure your SME thrives tomorrow.

A message from A. Partheeban & Co., Legal Advocate.