International Debt Recovery Explained

International Debt Recovery

Most businesses today operate internationally, with clients accessing goods and services worldwide.

While this generation of new business is good news and offers more opportunities, it also presents a whole host of new challenges regarding invoicing and payments.

Whether you operate locally, nationally, or internationally, there is always a chance that you won’t get paid.

However, collecting international debts doesn’t have to be a daunting task….when you work with a professional debt collection team (visit our debt collection page for more information about our services).

This post looks at international debt recovery and how you can successfully manage this to keep your business cash flow, flowing.

What is international debt recovery?

International debt recovery focuses on working with a professional debt collection agency that has a network they can rely on to help collect outstanding debts from a business operating in another country.

International collections can seem like a challenge when your debtor is thousands of miles away. Of course, you also face the challenges of knowing and abiding by local laws and overcoming one of the biggest problems: language barriers.

However, international collections can and are carried out effectively and successfully.

How does international debt collection work?

You can sue for monies owed through the English and Welsh courts. Once a judgement is granted in your favour, you will then be able to transfer the case to a local court in your debtor’s country for enforcement.

To transfer the claim for collection, you will have to apply by filling in a very quick and straightforward form and sending through all of the details and information that you have, i.e., the outstanding invoice, amount, contact details, debtor information, etc. The identified collection team will then be authorised to pick this up and start working on your case immediately.

They will be able to trace all foreign debtors, who will be contacted in the same way as in the UK, i.e., phone calls, doorstep collection methods, etc., exhausting all collection methods before taking legal/court action.

If you do need to go to court because payment has not been received, it’s important to be aware that you can litigate in the debtor’s country as well as your own. However, every country has its own laws and rules on collection procedures, and legal proceedings for international collections will take longer to resolve.

Working with an experienced debt collection agency is your best option for navigating local laws and restrictions. They will ensure all procedures are followed correctly to achieve a positive outcome.

Considerations for your credit control process

When operating internationally, you must have robust credit control procedures in place, including when to follow up, how to follow up, when the debt should be passed to a small business debt recovery agency, and more.

You will also require stringent terms and conditions that clearly state the payment terms, i.e., how much is due, when payment is due, and the consequences of late payment, such as additional interest, late payment fees, referral to a collection agency, etc. Clearly set out your expectations from the outset.

Look to reduce the risk of late payment by making allowances for potential international delays and take advantage of local legislation that supports prompt payment.

When looking for a small business debt collection team to help you with international debt, make sure to do your research into their experience, past clients, and network of partners who can support collection efforts internationally. Do they have a good track record? Are they compliant with all collection regulations and guidance, etc.?

It’s important to be aware that debt collection agencies may charge a small handling fee for international collections, and it is advisable to seek clarification on this before proceeding.

A debt collection service you can rely on

Collecting outstanding debts from outside your home country can, at times, seem impossible; however, for your business to continue to succeed and thrive, these debts must be pursued.

What you can do to avoid late payment and to ease the pressure of collecting overseas:

  • Keep the lines of communication open. It’s important that you have built regular communication and touchpoints with your customers into your credit control procedures. For example, once the invoice has been sent, follow up with a courtesy email to make sure everything has been received. Send an email reminder about the upcoming payment due date, and as soon as the date for payment has passed and no payment has been received, follow up with a phone call, email, letter, etc.
  • Check payment terms – standard payment terms can vary, so it’s important that you do your research into this and you have the right terms and conditions set for different customers.
  • Work with a professional debt collection service. Working with an experienced debt collection team is the most effective and straightforward approach to collecting international debt. Avoiding issues and working through any challenges, teams can follow procedures properly and achieve a much higher chance of successful collection.

At Direct Route, we have the knowledge and experience to collect overdue debts and late payments as fast and efficiently as possible.

For more information, contact us today.

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