Forfeiture is a clause that in some cases is included in a loan contract. In terms of debt recovery, this clause is very important since it allows the establishment which grants the loan to be able to request full reimbursement of the amount remaining due immediately if clauses linked to the credit are not respected. To better manage your business finances, we suggest you find out what lapse of term is when it comes to debt collection.
What is lapse in debt collection?
The forfeiture of the term is a legal clause found in certain credit contracts. This clause helps protect the establishment that lends the money since it will be able to claim its due immediately if the company which signed the contract does not repay its credit according to the established terms. When the clause is included in a credit contract, you should know that it can be triggered by the financial institution without the intervention of the courts. A company therefore has every interest in being wary of this forfeiture clause and repaying the installments of its loans according to the established schedule.
Forfeiture of the term can be brought into effect, for example, if a debtor does not repay their due dates correctly or if they do not respect their contractual obligations. It can also be triggered in the event that the debtor is no longer able to repay his credit normally following an unforeseen situation. Before signing a credit contract, we therefore advise you to read all the clauses and conditions carefully and to ensure that you will be able to meet the monthly payments of your loan until the end.
Some tips to better manage these finances and avoid forfeiture of the term
To avoid a situation triggering the forfeiture of the term, we advise you to take care to manage your finances well. Nowadays, there are many comprehensive IT solutions to help you manage your accounting or debt collections. So do not hesitate to rely on a specialized software to maximize your cash flow.
Before taking out a loan, always make sure that you will have enough cash to repay it. To do this, we recommend that you carry out simulations but also manage your payments as best as possible. Your software can help you follow up with your customers on time or better manage all of your invoices to improve your cash flow.
How to deal with a forfeiture of the term if you can't avoid it?
In the event that you cannot prevent your financial institution from triggering the forfeiture of the term of your credit contract, we advise you to start by contacting your bank advisor to try to negotiate the repayment conditions amicably.
Then do everything in your power to reduce your operating costs so that you are able to repay the money owed without completely jeopardizing your company if you can. You must not forget that triggering this clause beyond causing you financial problems has every chance of seriously damaging the reputation of your company. We therefore advise you to be vigilant enough to repay your credits on time in order to avoid putting your credits at risk. your business and its image.
And you, have you ever been faced with a case of forfeiture of the term in terms of debt recovery?
