Successful claim management for your company
Every company in the B2B sector is familiar with the phenomenon: everything seems to be settled in the contract, but then unexpected changes occur. Either there are delays at the supplier, unforeseeable difficulties in project implementation that push back the entire order or a calculation that cannot be met in the end. Claims or counterclaims arise that now need to be actively collected. This is where claim management comes into play. With the right tactics, conflicts and legal disputes can be avoided right from the start. In the following article, you can find out which strategies are hidden behind the term “claim management”.
Definitions and Terms
The term “claim” refers to claims that deviate from the initial order. These can be directed against both clients and contractors. With regard to claims, a B2B-Company can therefore be both debtor and creditor. The deviating claims can result from unexpected additional costs or missed deadlines, for example. The term claim management merely describes the handling of these claims.
Known in German as “Nachforderungsmanagement”, this principle aims to enforce the unexpected claims against the contractual partner or to ward off their own claims. The focus is always on mitigating the commercial consequences arising from these unforeseen claims and, ideally, resolving the problem cases by mutual agreement.
Strategies for claim management
Over time, various strategies have been developed in practice for dealing with such unexpected claims. Firstly, there are active and passive claim management strategies. Preventive and defensive claim strategies take a different approach. We would like to present these different models to you below and give you an overview of the various options for action.
Preventive claim management
Let’s start with the strategy that prevents the problem of unexpected claims from arising in the first place: Preventive claim management: here the focus is primarily on possible causes of claims that have not been factored in. Ideally, you will not have to deal with specific claims in the end. This preventive strategy usually requires close collaboration with the co-operation partners. On the one hand, the weak points in their area of activity should be investigated, but also their own structure and possible sources of error should be critically evaluated. In addition, the contract should be drafted in such a way that it pre-empts potential disputes and subsequent legal disputes. We are also happy to support you here at our law firm in Munich.
In summary, the preventive strategy aims to maximise risk control and prevent potential claims from arising in the first place. Now to the various strategies that take effect if unexpected claims do arise.
Active claim strategy
Firstly, active and passive claim management. Both strategies approach the issue of unexpected claims from opposite perspectives.
The active procedure looks at the original contract and specifically searches for possible additional claims. It analyses in detail where any claims can be asserted against the business partner. Companies therefore try to actively identify claims and confront the contractual partner with them. However, this should not be done too aggressively so as not to jeopardise the business relationship. Even if claims are actively sought, a solution strategy should still be developed in collaboration with the project partner. But this is also optional. A subtype of the active strategy is the aggressive strategy. Here, the aim is not to find an amicable solution, but to maximise the benefits of the claims made.
Passive claim strategy
Passive claim management pursues a fundamentally different strategy. Here, a good business relationship with the business partners is the highest good. Your own actions are geared towards not offending the other party and avoiding conflicts as far as possible.
In concrete terms, this means accepting claims that the other party makes against your own company. Own claims are neither actively sought nor demanded from the other party. If a company pursues this strategy, unexpected events within the contractual relationship usually end to its own disadvantage. The passive strategy therefore requires recourse to preventive claim management. If disputes can be avoided from the outset, unwanted claims will not arise in the first place. The few claims that do occur can therefore be ignored in the interests of good business relations.
Defensive claim management
Finally, the defensive strategy should be mentioned. Just like passive claim management, this strategy does not initially demand its own claims. However, the motives are different. The aim of withholding claims is to defend against possible future claims by the other party. Initially, business relationships should not be jeopardised, but you also do not want to be left without a defence if the project partner pursues a more active strategy. Claims, including the necessary data and legal bases, are therefore collected in order to be able to defend against these unexpected claims in the future.
Tips and tricks
In addition to the strategies described above, various general rules have been developed under the heading of claim management in order to be prepared for unexpected deviations from the contract and the resulting claims. These are often based on aspects of the different strategies. On the one hand, careful contract drafting with professional support should be mentioned here. The contract should also be regularly reviewed for gaps and problem areas.
A detailed calculation and documentation of all requirements from the contract should also always be carried out. If changes are made, disputes can also be dealt with retrospectively by submitting a concrete offer before the additional costs are incurred.
Companies should also keep thorough records of all changes in order to avoid difficulties in providing evidence at a later date. It is also helpful to inform the contractual partner at an early stage in the event of deviations from your own area of responsibility and to jointly determine options for action. In addition, companies should always know who they are entering into long-term contracts with. A review of the business partner can prevent unwanted surprises. Finally, a balance must always be struck between passive and active strategies. Should you prioritise the good relationship or the claim in a specific individual case? Flexibility is generally more effective here than rigidly pursuing a strategy of action.
In all these questions and processes, legal assistance in the B2B sector is of great benefit. Whether in the drafting of contracts or the enforcement of specific claims. Our lawyers at LLP Law|Patent in Munich are available to you at any time and will be happy to advise you on how you should organise your claim management.
Patricia Lotz | Rechtsanwältin (Lawyer)
Ms. Lotz focuses mainly on court proceedings. For over fourteen years, she has primarily represented industrial clients and SMEs in the IT and technology sector. She is also experienced in private construction law, employment law, commercial administrative law in disputes with trade offices amongst others and in the special case of “company audits and pseudo self-employment” in social law on behalf of companies.
Her primary goal is to avoid legal disputes wherever possible. However, if this is not possible or reasonable, she develops a suitable litigation strategy with her clients based on her many years of experience throughout Germany before civil, labor, administrative and social courts. Ms. Lotz also provides legal advice on employee invention law and foreign trade law, particularly on the export of dual-use goods.
