Collection of receivables is an important and often difficult task. If your company internationally and operate your customers in other countries around the globe, collections can be a nightmare.
Distance, time zones and different legal and cultural differences can your efforts to collect international claims hamstring. Perfect collections over the long term have no business, but there are seven smart tactics that can help you manage the financial risk of international claims:
To know before you go: Often, as in the sport, the best defense is a great offense. Take the offensive by knowing who your customers are. Many domestic companies do thorough credit checks on customers but then accept orders from unknown entities abroad. To prevent the risk of non-payment, you are subject to even more control than domestic accounts your international customers. Start you with a credit report by COFACE or other reputable suppliers. A small investment in advance (less than $200) can prevent a known fraudster, gangster, or deadbeat invoicing. International credit checks often show much more than you would expect including the names of Directors and investors, revenue and market cap values and financial connections to related companies. To get it on paper: Not all industries or countries work on paper contracts. Not can be, discourage the basic concepts on paper, from getting. A fixed contract reviewed by a competent lawyer domestic, you should help now and later. In the short term, a treaty should precisely define expectations such as price and payment terms; in the long run if you face non-payment, a contract something you are, to present a US Court. Multiple relationships to build: Even the best contracts are not value the paper, which you posted on when they are alien between completely. Only good personal relations to ensure smooth transactions between companies who do not share a homeland. The best relationships are top-to-top, but forget not accountants accountants and seller to the buyer. If it may be time to speed up payments or disputes, with a well-connected staff make a big difference. And if you wait until there is a problem before your people speak their people, it is probably already too late. Use the phone: Payments from an international customers start to slide, you will get on the phone. Hide not themselves behind E-mail; Use the personal relationships that you have created to make right to the heart of the matter. The adage "seek first to understand and then to understand" is particularly important in this situation. Call you your contacts to foreign companies, and ready be patiently to hear. You pull the plug if necessary: International customers use (or your sloppy accounting procedures) may be your good nature rather than most. If you have an account that is piped in default, shy you consider not the plug on further orders. Stop the service, hold further items, or move to advance payment required. Keep open communication channels, but let's not get a bad situation worse by feeding it from. Often only the threat of a work stoppage is enough, get moving its payments Department, but be ready with your threats or demands to follow through. Dogs release: A number of companies help you to collect your international calls. These services range from simple calling services to private detectives to international lawyers. Some work for fees, others on commissions. COFACE, which offers the same company, the credit reports, has an international collections Department, which operates on contingency. Sue: A lawsuit should your last resort to collecting debt, but you know that it is necessary, if the customer simply tells you that they never pay you. International customers often believe that their laws and the thousands of miles between them, will protect them prior to using. You are likely to be very wrong in this respect, and get green light to their admission to bring an action file. Submission is neither difficult nor expensive (a long way with a contingency-based law firm for a few thousand dollars), but it requires strategy. May you choose in your State, another State, Federal Court or the courts of the customers file. Good legal advice is required, a heaping dose of patience. Take complaints.Ignore not the financial risk that comes from the sale of international. Only careful planning and a willingness to act to help you collect international demands.
David Worrell writes the Money Matters blog on AllBusiness.com.
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