A growth accelerator for companies, exporting increases the risk of non-payment and limits your chances of collecting your debts. Leveraging global expertise, local know-how and a powerful worldwide network, Coface's solutions maximise your chances of getting your invoices paid quickly, no matter where in the world, and so limit the impact on your company's financial health.
Export & Debt Collection: growth opportunities & commercial risks
Engaging with new clients, diversifying revenue streams and increasing turnover: for any company, international expansion is a powerful growth driver. But developing your business abroad comes with complex and unique challenges, especially when it comes to unpaid invoices. A foreign customer who is unable to pay his invoices weakens your cash flow and could threaten the financial stability of your company. The situation becomes even more critical when it comes to collecting debts in countries where you are unfamiliar with the language, business culture and legal system. All these factors can turn a simple contact with your debtor into a never-ending day, and even jeopardise the future of your partnership with that client!
Acting quickly and mastering procedures are two key factors to success in Debt Collection. As a global leading player in commercial credit risk management for almost 80 years, our global network allows us to quickly mobilise our 250 Debt Collection managers and local experts to collect debts (directly or indirectly) in 190 countries.
Emre Ozer, Group Debt Collection and Surety Bonds Business Development Director.
Collecting close to the debtors: the Coface method
- Step 1: Tailored analysis of the legal environment in the country concerned
Prior to any action, each case is reviewed in depth in the legal environment of the country concerned by the debt. Coface experts analyse the contractual documents (in particular the jurisdiction clauses) to determine the applicable jurisdiction (that of the debtor in 99% of cases) and pinpoint any local legal specifics or potential obstacles that could influence the collection strategy.
- Step 2: the amicable favoured approach
This crucial milestone in the Collection process seeks two key aims: to identify the reasons or potential disputes behind the late payment and to quickly obtain reliable payment commitments.
During this period (30-45 days), Coface teams maintain intensive dialogue with the debtors in their native language, using the most appropriate channels according to regional practices: letters, emails, phone calls and, in some cases, SMS or instant messaging! This close monitoring of both the debtor and the client ensures extreme responsiveness to each step and improves the Collection rate.
As it was recently the case in Brazil, where the determination of Coface's teams finally paid off: by assigning a local negotiator to visit the debtor every month, Coface obtained payment of a €900,000 debt that had not been honoured until then, after three payment plans negotiated directly by the client had failed.
- Step 3: legal action
In contrast to amicable Debt Collection, which can only encourage payment, legal proceedings intend to obtain an enforceable title that compels the debtor to settle their debt. If the amicable phase fails, Coface mobilizes its worldwide network of 250 judicial officers and lawyers to take the appropriate legal action.
Abroad, initiating legal proceedings is so complicated that it is almost essential to rely on bailiffs and lawyers who are fully familiar with local legislation This organisation, led by our 200 Debt Collection managers based in your country, allows us, among other things, to control the costs negotiated with our legal intermediaries more accurately, a key factor in jurisdictions where proceedings are expensive.
- Step 4: Enforcement and collective proceedings
In the event of legal insolvency, enforcement is the final stage of the legal phase: the creditor applies its enforceable title to collect its debts. It therefore compels the debtor to pay through legal means, such as seizures.
The court may decide to initiate collective insolvency proceedings (freezing of debts) or judicial liquidation (sale of assets to pay back creditors). During the investigation, which can take several years, you are supported by a dedicated Debt Collection manager. Based in your country, they act as a bridge between you and local experts. Our client platform guarantees transparent monitoring: you have real-time access to all actions taken and results obtained.
Our ability to collect debts efficiently is based on our local footprint and expertise in debtor companies. We operate directly on the ground, in the debtor's local language, which makes a real impact. Our litigation experts and lawyers have a complete understanding of business cultures and are familiar with the specific procedures and jurisdictions of any given country in which debtors operate.
Emre Ozer, Group Debt Collection and Surety Bonds Business Development Director.
€2.3 million collected from an African country: anatomy of a Coface success
The complexity and the way of collecting vary greatly from one region of the world to another, and even from one country to another, each with its own regulations, payment habits and commercial practices. There is nothing better than a concrete use case to understand the challenging nature of collecting debts abroad. And how Coface takes on its role in quickly activating negotiation levers and winning procedures with debtors on the ground.
A Coface client signed a project with an African government, invoiced over several years. When the final payment was due, the government failed to pay. The outstanding amount: €2.3 million, excluding late payment interest.
After several months of fruitless attempts at amicable settlement, the creditor entrusted the case to Coface. Contact was re-established with the debtor, who agreed to settle the debt amicably.
When the debtor failed to honour yet another commitment, Coface's experts initiated arbitration proceedings before the United Nations Commission on International Trade Law, as specified in the contract's jurisdiction clause. After considering the pleadings of both parties' lawyers, the arbitration judgment recognises the existence of the debt and orders the African state to pay it, together with interest for late payment and the judicial fees.
Faced with the State's reply that it would not comply with its obligations, Coface initiated enforcement proceedings. An additional barrier was that, in the case of a State, it is complex to identify assets which could be seized.
After an in-depth investigation on the ground, Coface's teams located assets belonging to the State in Belgium.
We urgently summoned a Belgian judge, who was able to issue a seizure order to freeze a purchase order for locomotives estimated at several million euros. These assets were frozen in Belgium pending full payment of the debt.
Nathalie Paris, Indemnification and Debt Collection Director of Coface Europe and West Africa.
A winning strategy: the African state quickly returned to Coface to settle its entire debt (€2.3 million), along with late payment interest and reimbursement of legal costs, for an add-on amount of €560,000!
Solutions for securing your international receivables
Yet, the globalisation of trade has not uniformised commercial cultures, payment practices and other local legal specificities, which remain firmly rooted in different regions of the world. This is why every export-oriented company is exposed to the risk of non-payment by nature and therefore has every interest in relying on international debt collection agencies or specialists such as Coface.
Based on nearly 80 years of global expertise in commercial credit risk management, our Debt Collection services greatly improve your chances of collecting your unpaid debts.
Coface's Collection teams are made up of litigation experts and lawyers specialising in global trade, with strong negotiation skills. We limit your losses and disruption to your business... but also your costs: with Coface, you only pay a success fee on collected debts!
Engaging with a professional external partner such as Coface also means safeguarding your commercial relationship with your client. While we take action, you can focus on developing your business.
Secure your international receivables with Coface's range of solutions tailored to your specific challenges:
- Discover our Debt Collection solutions and benefit from the expertise of a global leading player in credit risk management... with nearly 80 years of experience!
- You already have an unpaid debt abroad? Contact a Coface expert now and get a bespoke assessment of your case.
- Longer-term solutions such as Trade Credit Insurance are available to ensure payment of your invoices
- To protect yourself before any deal, our Business Information services assess the financial health of your partners and provide predictive scores on their solvency.
