The Five Biggest International Recovery Challenges
by Abby Larson on November 04, 2014
Late-stage debt recovery can often be a tricky area to navigate. When you add the challenges of international recovery – collecting those older debts from businesses located in foreign countries – your difficulties are multiplied. There are a number of challenges unique to international late stage debt collection, such as:
1. Negotiating Language and Cultural Barriers
During international recovery, there’s a good chance that the language you usually do business in is not the same one primarily used by your debtor in another country. While about 90 percent of the population in The Netherlands speak English, the percentage is much lower in India. Having someone available to speak the language well enough to deal with financial and legal nuances is important. And effective, precise communication relies on more than just speaking the same language in the literal sense. There’s also a necessary element of cultural understanding—crucial to not only to build a stronger rapport with the customer, but to avoid any missteps that could potentially threaten your relationship (or at least cause you a lot of embarrassment).
2. Understanding Local Laws Where Your Debtor Is Located
Each country’s debt collection laws are different, affecting creditors’ options. In Australia, for instance, courts will not hear actions on debts older than six years. In Brazil, each state and municipality has its own magistrates and judicial system. Bulgaria does not allow creditors to charge debt collection costs, which can make late stage debt prohibitively expensive to collect. An understanding of local laws is necessary to protect your legal interests and to avoid losing money during international recovery.
3. Handling Negotiations Across Numerous Time Zones and Countries
If you are on the opposite side of the globe from the client who owes you money, talking to someone on the phone or getting prompt replies to email can be difficult. The difference in time zones can mean having someone available outside the usual business hours. The time differences can also mean a protracted collection process once contact is made as each party waits for the other’s business day to start.
4. Finding Reliable Local Legal Counsel
It is cost-prohibitive to travel to every debtor’s country, but it can also be hard to determine the skill and trustworthiness of legal professionals from far away. Without strong contacts in the debtor’s country, companies can run the risk of hiring counsel that is not up to the job. It’s easy for money to be wasted on legal actions that are not likely to get results.
5. Investing the Right Amount of Time
Dealing with late stage debt can be an extremely drawn-out and time-intensive process. Over time, it’s important to find a balance between the work hours invested pursuing international late stage debt and the value of what can possibly be collected.
There is a fine risk management line that must be negotiated when dealing with late stage foreign debt. Recovering these late stage international debts without losing too much during the collection process takes patience, time, and understanding of the myriad factors involved. In many cases, the intricacies are best handled by dedicated experts in this field. By knowing what can be handled in-house and what can be handed to a quality agency, you can recover more of your old debts without sending good money after bad in the process. With clients and our own professionals all over the world, we’re well-versed in international collection processes. To ask questions or learn more, we encourage you to reach out to us.