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What is international debt collection?

Paying late payments can be stressful, not just because they can test your patience. In the event of a delay, it can affect the flow of cash and relations with your customers. When you have international clients, outstanding debts could be more problematic because the exchange rates fluctuate constantly. Collection of international debts is often more difficult than collection on a domestic basis. If you have clients and customers from overseas countries, it’s crucial to know how to recover the unpaid debt.

What is international debt collection?

In international credit collection, you are the practice of seeking money that is overdue from customers in a different country, to pay the seller for services or goods that you provide to them. The initial step in your process will be to express your desire to be paid to the international customer However, you might need hire an outside service to pay the due amount. If your method isn’t working, you may want to engage a collection agency to take care of customers who haven’t paid regardless of whether the customers are located outside of your own country.

How can international debt collection be done?

International debt collection follows the identical four steps to domestic debt collection.

Standard debt collection methods. If you’ve had the experience of following the non-paying customer using your regular communication channels previously, then you’re comfortable with the standard methods of debt collection. International debt collection ought to start this way, despite the difficulty of collecting cash from clients who are located in other countries. If you have a long-term overdue payment it is possible to mention possible legal actions.

Engaging with international debt collectors. If your client is unable to pay their debt even after your payment is made, then you might consider hiring an agency to collect. The agency will be in contact with your client in order to assist in the payment of your debt. Before proceeding through this part to complete the transaction, you must make sure that you choose a business that can get the task done.

Legal actions. Another benefit when using a collection agent to collect the debt rather than pursuing debt recovery on your own: Collection agencies are able to alter the credit report of a debtor, or take other legal steps which encourage payment of debt. These actions and changes take place within the country of the debtor, instead of your own. But, they do not always lead to the payment that is the final stage of the collection of international debt.

Legal decisions. When the agency that collects your debts decides to take the case of your collection to the court eventually, a judicial decision is issued. This ruling is binding and your debtor has to adhere to the ruling. If your debtor does not conform to the legal requirements then you may seek enforcement from the authorities of the country of the debtor. However, the process of enforcement, as well as the decisions preceding it, might be different depending on where the debtor’s location is.

International debt collection laws

In the case of domestic debt collection it’s likely that you are familiar with the way it takes place – since the same laws apply to you as well as the debtor. But in international debt collection the process is different since there aren’t international laws that govern debt collection.

However, any debt collection actions against a client who is outside your country must adhere to those of your country of the client. In other words when you’re trying to collect for debts from the German client, yet your business is based within the U.S., then German debt collection laws govern the procedure. The collection company you select will have experience in accordance with the laws of the country of your client.

In addition, in order to be able to obtain an international debt collection judgment, the person who is a debtor has to reside in a country that is a signatory to international agreements. In Europe for instance there is the Lugano Convention and Brussels I Regulation provide guidelines for the collection of international debt.

How to collect debt abroad

International debt collection is an arduous, lengthy process but there are ways to make the process less stressful in the long run by applying these suggestions:

1. Select the best partner for debt collection.

The majority of discussions regarding recouping the debts of clients who aren’t paying the possibility of using collection agencies, since they are experts in the field of debt recovery. This particular expertise isn’t something every creditor can claim A freelancer, for instance, might not have the experience or the time to pursue an invoice that hasn’t been paid in the course of their normal job. In certain situations it’s possible to hire an attorney for debt collection rather than an agency could be more efficient.

If you decide to go beyond the traditional methods of debt collection and talk to attorneys and collection agencies as well as lawyers who are experts with international debt collections in order to determine the most appropriate option for your requirements. It could be based on the country in which you’re seeking debt collection because some laws favor attorneys who are seeking debt collection over organizations who are doing similar work. In the event of a contestable claim from the customer, consider an attorney.

2. Select a debt collection company who has the right knowledge.

As we mentioned, certain collection agencies have more experience in pursuing the debts of a particular nation than the other. Consider asking the agencies you’re looking at hiring about their experiences in the field of international debts. You should only be willing to collaborate with the service if it has proven to be successful in the area of your client.

If you are unable to locate an agency that has experience in the country you’re looking for you can try contacting agencies in the area of your client. They will be aware of the process of collecting debt in the area that your client has. If the agency has foreign clients, they may be a suitable match.

3. Evaluate the situation before employing an international debt collection agency.

It’s natural to want to settle your debts in the shortest time possible. often the hiring of an agency to collect debt isn’t the solution (at at the very least not right now). Here are a few things to think about before making the move:

Another request is never bad. Sometimes, all a non-paying client requires is a gentle push to pay, particularly when your account is just slightly behind.

Late fees can be a factor in. In other instances, reissuing bills with the late charge (or simply threat to do it) could be enough to force the customer to pay. Also, you’ll avoid having to pay an agency to collect by using this method.

Collection agencies can burn bridges. If a customer who isn’t paying is one of your largest and most loyal clients, then you might prefer to delay hiring an agency for collection until you have no alternative, as it could damage the relationship.