In an environment of tighter credit conditions, assessing who you do business with, properly documenting transactions, and securing guarantees before carrying out a deal are no longer excessive precautions. They have become essential management practices.

Recently released figures on Brazil's agribusiness sector are drawing attention.

Defaults in the sector reached R$ 48 billion in June 2026, compared with approximately R$ 2 billion five years ago. Over the same period, the delinquency rate rose from 0.54% to 5.63%, with approximately R$ 29 billion of the current outstanding amount concentrated among high-income rural producers.

This situation serves as a warning that extends beyond agribusiness itself.

Any company that sells products, supplies machinery, provides services, or agrees to receive part of the payment at a later date is effectively extending credit to its customers.

And extending credit without properly assessing the financial situation of the other party can turn a promising business transaction into a lengthy collection problem.

Prevention Starts Before the Contract Is Signed

Companies often focus their attention on price, deadlines, and business execution, leaving legal analysis until a problem arises.

The approach should be the opposite.

Before deploying machinery, delivering goods, starting construction, or performing significant services, companies can conduct a preliminary risk assessment of the transaction. This includes reviewing the contracting party's registration status, protests, lawsuits, enforcement proceedings, judicial reorganization, financial restrictions, and other factors that may indicate a higher or lower risk of default.

This analysis does not necessarily mean abandoning the transaction.

It allows companies to decide how to structure it.

A customer with greater financial exposure may warrant advance payment, shorter payment terms, credit limits, or additional guarantees. In other situations, the identified risk can be managed through an appropriate contractual structure.

The key point is simple: risk must be understood before a company assumes its own financial exposure.

When Problems Arise, Documentation Makes a Difference

Once a default has occurred, the approach changes.

At this stage, it is necessary to identify the debtor's assets, existing guarantees, other creditors, ongoing legal proceedings, potential signs of insolvency, and, above all, the actual likelihood of recovering the debt.

Based on this assessment, companies can consider alternatives such as negotiation, structured debt restructuring, debt acknowledgment or acknowledgment of indebtedness agreements, additional guarantees, formal protests, and, when necessary, appropriate legal action based on the existing debt instrument and the debtor's financial situation.

Companies that have kept contracts, receipts, progress reports, guarantees, and other documents properly organized are in a very different position from those that must reconstruct the entire business relationship only after a payment default.

In debt recovery, timing and the quality of documentation often make a significant difference.

Prevention Costs Less Than Rebuilding a Failed Transaction

The sharp increase in defaults does not mean that companies should stop selling on credit or extending commercial credit.

It means they need to do so more carefully.

Before asking only, "How much can we sell to this customer?", companies should also ask:

Who is the customer? What is their financial exposure? Where will the money to pay come from? What assets or receivables could secure the obligation? And if the customer fails to pay, do our documents allow us to pursue efficient debt collection?

These are questions that should be asked before entering into a contract, not only after the payment deadline has passed.

In a market where credit has become more restricted and defaults have increased, contractual prevention, risk assessment, and guarantee structuring are no longer mere bureaucracy.