Collection of accounts receivable is a vital and difficult task. If your business is international, and its customers operating abroad, around the world, collections can be a nightmare.
Distance, time zones and different legal and cultural differences can hamstring their efforts of international debt-collection. No company will have perfect collections over the long term, but there are seven smart tactics to help service the financial risk of international accounts receivable:
Know before you go: In sports, the best defense is often a great offense. Take the offensive by knowing who your customers are. Many national companies make U.S. customers complete credit checks, but then accept purchase orders for completely unknown foreign entities. For non-payment risk, undergo international customers greater scrutiny of national accounts. Start with a Coface credit report or other provider of trust. A small investment in advance ($ 200) can prevent you a known fraudster, gangster or billing deadbeat. International credit checks often reveal much more than would be expected, including names of Directors and investors, values of income and capital and financial ties with related companies. Available in paper: Not all industries or countries operating in paper contracts. Don't discourage you get the basic conditions in the paper. A solid contract reviewed by a national competent lawyer, should help now and later. In the short term, a contract must define accurately the expectations as price and payment terms; in the long term, if you were to default, a contract gives something to present to a United States Court. Build multiple relationships: Even the best contracts not worth the penalty paper are written on if are among total strangers. Only good personal relations can ensure smooth transactions between companies who do not share a homeland. The best relationships are top upwards, but do not forget contable-contador and seller to the buyer. When it comes to speed up payments or resolve conflicts, have a well-connected staff can make a big difference. And if waiting until you have a problem rather than the people spoke to his people, probably already too late. Use the phone: If an international customer payments begin to slip, get on the phone. Do not hide behind email; Take advantage of personal relationships he has built to get right to the heart of the matter. The adage "seeks to first understand and then to be understood" is especially important in this situation. Call your contacts in the foreign company and be prepared to listen patiently. Pull the plug when necessary: International customers may be more likely to get most benefit from their nature (or careless accounting practices). If you have an account that is in arrears, don't be afraid to pull the plug with more orders. Stop providing the service, keep more shipments or move to a requirement of pre-payment. Keeping communication channels open, but do not let bad get worse by the food. The threat of a work stoppage is often enough to get your payments Department move, but be prepared to carry out their threats or demands. Release the dogs: A number of companies can help you to pick up his international credits. These services range from simple calling services to detectives private international lawyers. Some operate by fees, others on commissions. COFACE, the same company that provides credit reports, has a Collections Department international which operates on contingency. Sue a: A lawsuit should be a last resort to collect a debt, but you will know is required when the client simply tells him that they will never pay. International customers often believe that their laws and the thousands of miles between you, will be to protect them from resource. They are probably very badly in this regard, and membership gives green light to make a complaint. Presentation is neither difficult nor expensive (a few thousand dollars get a long way with a signature based on contingency), but requires strategy. You can choose the file to its State, another State, federal court or the courts of the country of the customer. Good lawyer is vital as a dose of patience. Lawsuits take time.Do not ignore the financial risk that comes from the sale at the international level. Only a careful planning and a willingness to act will help you to gather international accounts receivable.
David Worrell writes the money matters blog on AllBusiness.com.
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