Collecting debts domestically is already tedious enough, but collecting debts abroad quickly turns into an obstacle course. Different business cultures, specific negotiation levers, lengthy and complex procedures, local legal specificities: the challenges are unique and the barriers are many! Our experts help you successfully collect your debts, regardless of where your debtor is located.
An unpaid debt and its duration do not reflect the same situation depending on the country of the debtor company. And the ways to recover these debts also differ! To avoid jeopardising your commercial relationships and maximise your chances of getting paid, a tailor-made approach is required. This practical guide has been developed by our experts based on the 70,000 collection cases we handle each year and the stories behind our 91% average global collection rate.
Africa: preliminary litigation and late payment interest
Legal proceedings are generally lengthy and inefficient. And when a decision is reached, it is very difficult to enforce. Coface's debt collection experts have developed a specific pre-litigation process. At the end of the amicable phase, the case is handed over to a local lawyer before legal proceedings are initiated. Another lever that can be used is to negotiate the waiver of late payment interest in exchange for payment of the debt, a method that has proven successful in many cases!
North America: don't wait (above all) for a response
The exorbitant cost of legal proceedings (paid by the claimant) and the difficulty of getting in touch with debtors affect the success of debt collection. Legal proceedings are only economically worthwhile for large debts. For smaller amounts, an amicable agreement with a payment plan remains the only realistic option. Another distinctive feature is the low percentage of successful calls and reminders from North American debtors, with whom negotiations are largely conducted by email. Therefore, do not neglect email communication and prioritise physical visits to obtain a reply from your debtors.
Latin America: use personal channels
Put all your energy into the amicable phase: legal proceedings are long and expensive, and courts require original documents with notarised certification. In Latin America, debtors almost never answer their business contact details, so as soon as a case is opened, it is urgent to get the debtor's personal contact details. ‘Nowadays, instant messaging services such as WhatsApp make it easier to get in direct contact with company decision-makers,” advises Nathalie Paris, Claims and Debt Collection Director for Coface Europe and West Africa.
Asia-Pacific: payment schedules and debt write-offs
In this region, you will need to be extremely patient when it comes to legal proceedings. To give you an idea, in some countries, the final court ruling was handed down after five years of proceedings! During the amicable phase, the main obstacle is non-compliance with negotiated payment schedules (90% of cases), which require strict monitoring. Keep the pressure on the debtor by sending regular reminders to encourage them to honour their debt. Another cultural particularity is that once contact has been established, many companies offer debt write-offs, a practice that is very common in the region.
China: take advantage of progress in the legal system
Over the past decade, legal proceedings have become more efficient, with a remarkably effective enforcement phase. This positive development reflects the modernisation of the Chinese legal system and a greater desire to secure international trade deals in a context of economic openness.
Central Europe: a simple reminder is sufficient
Fear of debt collection is a powerful lever. Debtors respond and react quickly: in 50% of cases, they spontaneously propose a payment schedule. The company's reputation and respect for financial commitments are fundamental to the regional business culture. Coface's field negotiators often achieve immediate results, with one in two visits resulting in payment.
Western Europe: favourable environment
Collection rates are excellent, legal proceedings are affordable and judgments are enforced efficiently. Collection procedures are simplified thanks to the European order for payment procedure (fast and inexpensive) and the European Small Claims Procedure (no court hearing, claims under €5,000), which greatly facilitate cross-border proceedings.
Coface's main asset in international debt collection is that we work with teams able to collect in 190 countries, covering 95% of global trade. Our 200 local managers and experts, as well as our 250 legal partners and lawyers, are familiar with local payment practices, country-specific regulations, procedures, deadlines and local legal requirements.
Thierry Gasnier, Group Debt Collection Director
How to secure your international trade receivables
While trade barriers tend to disappear in our globalised world, specific differences in legal systems and payment behaviours still remain. Don't let unpaid invoices abroad compromise your growth and cash flow. Calling on international debt collection experts is now a strategic necessity for any export-oriented company.
Take action to secure your international trade receivables with Coface's solutions tailored to your specific issues:
- Discover our debt collection solutions and benefit from the expertise of a global player in trade credit risk management.
- You already have an unpaid debt abroad? Contact a Coface expert now and get a personalised assessment of your case.
- Longer-term solutions such as Trade Credit Insurance are available to ensure payment of your invoices
- To protect yourself as much as possible, our Business Information services assess the financial health of your partners and provide predictive scores on their solvency.
