When foreign companies have a bad Credit scoring in Germany
Companies with different foreign branches sometimes have difficulties in overviewing all the bills that has to get paid and in rejecting the unjustified bills. Often times it is a grey area between justified, partly justified and not justified bills. Also the central office often needs to double-check, to inquire, to renegotiate and so forth. However a lot of German companies (potential or existing business partner) use different credit reference agencies, for instance Verband der Vereine Creditreform e.V. , CRIF Bürgel GmbH and Arvato infoscore GmbH in order to examine the credit rating of potential or existing business partner.
Once the credit scoring is under average it can cost lots of efforts to recover the original state.
Even companies that have no cash flow problems at all can have alarming credit scorings.
We have had cases where even very successful foreign companies got into credit scoring trouble just because 1 single staff member from the German branch has forgot to forward letters from courts & court officers to the central office .
How we approach such cases
In any case it is mandatory to solve those credit scoring problems as soon as possible.
Firstly it is necessary to demand the report on current information held by above mentioned credit reference agencies.
Secondly we will be able to give our clients a “gap analysis” on errant information.
Thirdly the registered data about the company needs to be under study. Nobody should underestimate how important it is to have correctly saved data about a (foreign) company .
Fourthly it is to examine how all of the concerned claims can be eliminated meaning justified bills have to get paid, regarding partly justified claims it is mandatory to reach a settlement or to offset the outstanding amount for peremption reasons. If unjustified bills are not legally decided it is time to defend against it. If unjustified bills are legally decided it is mandatory to offset the outstanding amount for peremption reasons.
Fithly it is to create a timescale like this (here based on the date 30th April) and to act on it:
- Until 10th May receiving answers of Creditreform, Bürgel and Arvato infoscore GmbH
- Until 14th May planning next steps and answering letters of Creditreform, Bürgel and Arvato infoscore GmbH and (if necessary) placing new deadline to them: 24 th May for subsequent improvements and to delete negative entries
- Until 24 th May receiving answers of Creditreform, Bürgel and Arvato infoscore GmbH
- Until 26 th May planning next steps and answering letters of Creditreform, Bürgel and Arvato infoscore GmbH if necessary; placing new deadline to them: 10 th June for further improvements and to delete unsettled negative entries
- Until 1 st June sending call letters to possible creditors that caused possible negative entries at Creditreform, Bürgel and Arvato infoscore GmbH placing deadline to countermand negative entries: 10 th June
- Until 12 th June sending call letters to Creditreform, Bürgel and Arvato infoscore GmbH in order to re-evaluate the credit scores after receiving all correct firm information and after having deleted wrong negative entries; placing new deadline to them: 21 th June for re-evaluating the credit scores
- Until 14 th June sending call letters to possible creditors that caused possible negative entries for possible subsequent improvements; placing new deadline to them: 21 th June
- 25th June evaluating facts of the matter / current position /are consequences necessary or not ?
Usually credit reference agencies save data about negative entries until the end of year 3 after offsetting the claim / settlement amount.
That said at least some Creditreform branches if not all will delete the negative entries abortively if all of the (former) creditor agree to do so.
Also if they cancel the negative entries in the “Schuldnerverzeichnis” ( public defaulter book) data base the credit reference agencies will follow them.
In general there are good chances to improve the credit rating significantly provided the concerned company and their lawyer(s) have a plan and follow the plan resolutely.