Debt Collection from International Clients

Debt Collection from International Clients

For businesses dealing with foreign clients, it is normal to create an agreement to receive payment when delivering the product to the customer.

Most foreign trades proceed as expected and customers pay the money by the due date.

Unfortunately, occasionally the payment is not received or intentionally not paid by the client.

In such cases, one legal method for debt collection is filing a lawsuit in court that handles international trade affairs.

This path will cost a lot of your valuable time and resources.

Furthermore, you will have to take time away from focusing on your business.

Your time is a resource, and spending more of it on debt collection can become harmful to running and managing the business.

It is important to know that there are specialist agencies that can help you with overseas debt recovery.

Before taking their help and escalating the matter, it is prudent to consider and discuss the issue professionally.

There may be a simple or logical explanation on why the debt has not been paid. Having a conversation like this with the debtor could resolve the matter amicably.

A Difference in National Payment Terms Could Create Delay’s 

It is entirely possible that there are differences in trade terms and policies between your and your client’s country.

This could sometimes create a misunderstanding between payments that you are expecting and what your client expects.

With this in mind, it is necessary to discuss payment terms thoroughly before you proceed with an agreement.

A fixed amount in common currency should be decided upon as the actual payment.

When you are conducting trade with someone in another country, you should always have a signed agreement. This will help the debt recovery process should it become an issue.

In some cases, your client may ask you to revise the payment terms. This may be due to financial difficulties on their side or something similar.

If there is a genuine reason for this, it is acceptable to propose an extension or an instalment-based payment plan.

You may also choose to add interest if this is the case.

If you intend to attempt the collection of an international debt independently, then you will need to learn the legal processes of collecting a debt in your client’s country.

As well as this, you will need to spend even more time on the actual act of collecting a payment.

In every case, it is better to instruct a specialist international debt collection agency.

An agency will handle all matters relating to the collection of your international debt, and provide you with a quick, low-cost and effective resolution.

Varying Market or Trade Cultures Also Causes the Difference

During the Covid-19 pandemic, virtually every sector faced significant losses. As well as this, many production firms needed to temporarily close.

With this in mind, many of your business’s clients may be facing their own financial difficulties.

In such cases, there are obvious chances of delayed payment.

With this in mind, it is important to perform all due diligence and a thorough credit check on all new clients. This is especially true for a foreign customer, as it may be more difficult to reach them later if there are issues.

Taking the time to reduce any risk at this point is an excellent safety measure.

If these checks reveal things such as poor credit rating, or a history of non-payment issues, it is advisable to withhold your services.

It goes without saying that you should take all steps to ensure that you will get paid for your services. For clients who are overseas, this is even more important, as they may be outside of your own country’s laws.

A specialist debt collection agency could inform you of the foreign market trends to understand the delay and prepare a helpful strategy for the recovery of debt.

Language Barriers Could Lead to Miscommunication of Payment Terms

It is always good to communicate trade-related details in your native language. This will help you to express yourself more effectively.

However, you should expect that some foreign customers do not speak or understand your native language.

It may not be possible for both parties to understand either one’s native language. In cases like these, it is better to try to communicate through an international language.

An example of this could be English, which is widely spoken and written for most official purposes.

As a last resort, hiring a translator who can assist both parties and become a conduit for communication is also an option.

Restriction for Non-Residents in Collecting International Debts

There are various laws and rules that outline collecting debts on a global level.

Instructing a professional international debt collection agency is the best solution. They will already be an expert in these laws.

Such firms can legally collect the debt on your behalf through litigation or settling the matter outside the court.

These firms save you from getting involved in all court-related procedures. They also save you spending your valuable time chasing a debt instead of focusing on growing the business.

A debt collection agency will usually charge a small commission fee for their services. Many collect their costs from the debtor instead.

The ‘right’ agency will charge a low fee, which is a minuscule cost compared to that of attempting to go through the court system.

As well as this, these fees are cost-effective when compared to the time and resources you would have spent otherwise if you handled the case independently.

Physical Presence Creates a Significant and Helpful Impact

Sometimes the customer will delay or ignore the payment. They do this because they feel safe being in a foreign country, far away from your authority.

Obviously, it is not simple or effective to leave your business behind and travel to a foreign country to collect an overdue invoice. If so, what are the alternatives?

A professional international debt collection agency will have collections agents in every nation.

These agents are experts in their own respective country’s debt collection laws. Their knowledge and expertise ensure that your money can be recovered.