The Rewards and Pitfalls of International Collections

For a collections company looking to expand their business and horizons, international debt collections is a viable option to put your company on the track to more money and more clients.  In an increasingly global marketplace, companies are doing business with third-party contractors from other countries who might offer great prices at the beginning of a business enterprise but end up failing to pay. 

As this situation becomes more common, these companies and small businesses will be looking for collections agencies and collection attorneys who specialize in this unique form of collections.  Since few collections agencies offer international collections, your company would have a lucrative advantage in a specialized area that is too often under-represented in the United States. 

While the advantages and rewards are immediately apparent, there are several pitfalls along the path of international collections that should be considered before you branch out into this arena.  Below are some issues to further research before making the decision to accept international collections tasks from your clients. 

1. Different legal requirements—branching out into international collections means facing an entirely new set of legal requirements for collections practices, depending on the country where the debtor resides and operates.  These legal requirements can create hoops that are tricky to jump through and must be thoroughly researched before taking on a case. 
2. Foreign language ability—language obstacles present a significant hurdle to debt collections, and might require the use of translators to effectively communicate with the debtor and with the necessary legal agencies in the debtor’s country of residence and business operations.  This presents an added cost to your base operating expenses that is not always necessary in collections within the United States. 
3. Time zone differences—since you will be on a vastly different time zone than the debtor, this obstacle might present challenges for communicating with him or her.  In addition, as there are US laws regarding the times in which a collector can communicate with a debtor during the nighttime hours, these laws are also present in other countries, increasing the challenge. 

Important Questions to Ask Before Taking on International Collections

Outsourcing has moved businesses into a global arena but along with the perks of this comes a very real downside – collecting on unpaid international debts.  In the wake of an economic downturn that has forced many businesses to cut costs by using overseas labor or products, international collections as a viable collections activity has increased.  But is the hassle of dealing with international laws worth the money gained?  

The simple answer is “yes” but that answer comes with a caveat: you have to ask the right questions to determine if international collections will be worth the time and effort you put into these accounts.  And since the laws relating to international debt collection vary from country to country and can often be affected by international treaties, it’s important to be as specific and up-to-date as possible when obtaining the answers to these questions. 

1. What does the original contract say about jurisdiction? Specifically, will courts uphold your contractual jurisdiction clause?
2. Will the court in your home country have jurisdiction over the company in another country?
3. If the court in your home country has jurisdiction over the foreign company, what is the process of serving your complaint on that foreign company, how difficult will the process be, and how long will the process take?
4. If you are able to achieve a judgment in your favor in your home country, how will you collect from the foreign company?  Will the home-based judgment stand in the country of the foreign company or do you need to bring a new lawsuit in that particular country?
5. Would it be easier to just file the lawsuit in the country of the foreign company?
6. Will you be able to seize assets of a company in a foreign country?  What is the process for doing so and will the courts require a bond?  Also, is there a way that the company can claim false seizure and how successful would that claim be if it did?  

International Debt Collections: How Can I Collect?

When you think of debt collection, you don’t necessarily think of international debt collection.  However, the need of debt collections internationally is on the rise as more and more companies do business online rather than face-to-face in the business office.  While the internet provides an immense number of opportunities for businesses to succeed, it also opens the door to being ripped off by international customers as well as local customers.

Unfortunately, international debt collections aren’t as easy as they are in your country.  An invoice or letter simply is not going to do the trick.  Debt collection agencies are knowledgeable in what needs to be done to obtain payment for the debt that is owed.  However, there are certain things that need to be kept in mind when debt collection agencies work to obtain the international collection.  Consider the following:



1. International customers have the same rights as local customers in regards to the time in which they can be called.  It is helpful for a debt collection agency to be well aware of all time zones and ensure that there are employees working during the time international customers can be reached.  If you simply work within local time zones, international customers will never be at the other end of the line.

2. It is also helpful if there are employees that can speak fluently in other languages.  Otherwise, you may get a hold of an international debtor, but without being able to communicate with them regarding the debt that they owe, collection won’t come for the creditor.

3. Ensure that the international country’s laws are up-to-date and you are familiar with them.  Otherwise, this could cause a wide range of problems for not only the debt collection agency but also the creditor.

It isn’t the easiest task to collect debt from an international customer, as there are certain laws that must be followed.  However, it can be done – even without litigation.  Keep in mind, though, that a lawsuit may be filed in your home country or it may be required that it is filed in the debtor’s home country.