D-4- Debt collection within the scope of international and european transactions


Debt collection is a major concern for importers and exporters. Statistically, export and import managers will have to solve one of these issues. What is seemingly accessible, if not evident, in England, is complicated as soon as the transaction becomes an international transaction. Language barriers, regulations, and distance complicate the collection of unpaid debt.

Resorting to extreme measures to resolve the commercial relationship, indicates the company made the wrong decisions regarding payment choice. In effect, each transaction is unique and the mode of payment must be decided in accordance with the exporter and with the country where the transaction takes place.

Now, if the exporter has anticipated the problems, it will have identified the level of interlocutory solvency. Some companies propose that type of service.

In all cases, the company would have kept the invoices, the delivery slips, the purchase orders and all commercial contracts. In the instance of an outstanding payment (an unpaid invoice), the invoice is or is not challenged.

4-1- Procedure for a payment order in Europe: invoice not challenged

In the first instance, with an unchallenged invoice absent an agreement, the exporting company has the opportunity to set up the procedure for a payment order.

Even though the European Community elected not to address the problem with directive 2000/35/EC (to combat late payment in commercial transactions), a payment order procedure has been implemented and applied. The objective is here to simplify, expedite and reduce "cross-border litigation costs concerning uncontested civil and commercial pecuniary claims". "The European order for payment is recognized and enforced in all European Union (EU) countries except Denmark without the need for a declaration of enforceability."

4-2- The individual collection methods

First of all, the experience has shown that an amicable agreement is preferable to an elongated trial. Then, you should know that the collection methods and courts differ from one country to another. Nonetheless, in all cases, the first step is always the same -- furnish a written follow-up (in English, if possible). In contrast, if the debt amount is significant, it is advisable to go directly to the customer's location.

As formalities differ depending on the country, you will have to adapt your mailings, addressing specifically the head of collections in each country. The company can seek consultation from experts specialized in the country.

In all cases, and in addition to telephone follow-ups, it is recommended to confirm all correspondences in writing. The company can seek consultation from experts specialized in the country

In all cases, and in addition to telephone follow-ups, it is recommended to confirm all correspondences in writing. Finally, signatures must be obtained for all negotiated agreements.

4-3- Use the services of a specialized company, a lawyer or an export-credit insurer

If, despite the good-faith efforts of the exporter, there is a failure in debt recovery, external expertise can be sought. The objective then will be expedience, without regard for formalities.

Then, the first choice must be made by the company is between a lawyer and a service provider. This first choice is essential and depends heavily on the amount of the debt and on the country of the transaction.

In effect, the service providers have a significant advantage. Given their size, these companies can have correspondents in the creditor countries, which facilitates low-cost debt collection.

Legal consultation should be a given in dealing with a significant debt amount. Indeed, even though their fees are high, the latter have important knowledge in the area of rights, practical field experience, and have often implemented bilateral agreements with others foreign firms that allow them to act efficiently.

The credit insurer

Some credit insurers now offer debt collection services to all companies, even non-clients. They offer their expertise in "unsecured debt collection."

4-4-Debt collections costs

The amount of fees from specialized service providers must have been negotiated "with success fees" (payment in case of success).