International debt recovery

default
Helene Mueller
eCollect support team

International debt recovery is the process of collecting delinquent accounts outside creditor’s country of residence. Some global debt collection agencies offer international debt collection and their main objective is to attract potential clients who own different kinds of online business, e.g. exporting goods and services and delivering them from one country to another. International debt collection agencies engage in transnational debt recovery among multiple countries. Such DCAs (Debt Collection Agencies) target companies, which may have foreign debtors. Usually creditors prefer to benefit outsourced debt recovery, as it is less time- and funds- consuming.


Features of International debt recovery

  • Worldwide debt recovery agencies offer pre-legal and legal actions (like the standard debt recovery companies). They recommend legal actions to be taken, only where litigation is absolutely necessary, because it is a tome-consuming process not only for the debtor, but for the creditor as well; and because sometimes an agreement between the two parties (creditor and debtor) is more beneficial than the money and time-consuming legal proceedings. If the DCA is not able to recover the default amount using standard pre- legal actions, legal actions will take place;
  • These agencies’ actions are strictly regulated by different acts and laws, depending on the country, e.g. the FDCPA (Fair Debt Collection Practices Act in U.S.-
    http://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf
    ). Such practices and acts maintain the balance between creditors, debtors and third-party international debt recovery agencies (third-party DCAs are called so, because they are not involved in the contract signed by creditor and debtor); they also preserve debtors’ and agencies’ rights and prohibit unfair collection practices along with false information and misleading representations provided by recovery agencies;
  • Such external debt collection agencies comply with the specific laws in each country. They have a representative for the country they operate in to make sure their actions will not violate debtor’s rights;
  • An important feature for international debt recovery is the different limitation period for each country (e.g. in France- ten years, in Germany- two years);
  • If the debtor is not in the financial condition of paying the debt in full, the international debt recovery agency tries to arrange a convenient payment plan for the subject of debt. This plan usually consists of monthly payment of small amounts until the debt is settled of a one-off payment, where a percent of the full debt amount is paid.
  • As international debt collection agencies work on behalf of a creditor, they always aim to maintain their good reputation and company name for the sake of future business relations with their clients.

Advantages of International debt recovery agencies

International debt recovery agencies have the following advantages:

  • Multi-channel communication: International debt collectors use multiple channel communication in order to contact the subject of debt; and they successfully trace debtors by using the same multichannel communication methods. Such agencies maintain multi-lingual call centres in order to negotiate with the debtor in their own language, which makes the collection process easier.

  • Cost-effectiveness and minimisation of the negative cash flow in the creditor’s company: Nowadays more and more creditors prefer professional help of international debt collections agencies rather than dealing with such problems internally. If debt collection is processed within the creditor’s company and not with the help of DCAs, it can be a difficult, costly and time-consuming process.

International debt collections agencies offer either completely free or partly paid services for their clients (creditors). For example, only legal actions might require payment, or the debt recovery agency can work on the principle “no collection, no fee”, which means no payments in advance are to be maid, until the debt amount is recovered. It depends completely on the DCA’s policy and terms and conditions;

  • Risk reduction: They reduce risks of unsuccessful debt collection- it is proved that using a debt collection agency is more successful than using an internal department (part of creditor’s company). Worldwide debt recovery agencies are highly qualified and will recover the debt amount faster than an internal finance department of the creditor’s company.

  • Legal and ethical services: International debt collection agencies operate within the laws, relevant to the specific country. They make sure the collection process is established not only legally, but also ethically, as DCAs act on behalf of the creditors and their main aim is not only successful debt recovery but also preserving creditor’s good name and reputation;

  • Flexibility and variety of services: Worldwide DCAs are specialised in international debt recovery of consumer and commercial debts. They adept at collecting outside the country they are registered in. Furthermore they offer full package of litigation services.

  • Transparent process and information: International debt collection agencies make sure the debtor/creditor (depending on whom the DCA is charging for its services) is fully aware of the possible additional fees and taxes;

  • Preservation of creditor’s good name: Transnational debt recovery agencies retain the existing business relationships between the creditor and their debtors and protect creditor’s brand and good name.


Used literature & External links

http://www.federalmanagement.co.uk/news/tag/international-debt-collection/
 

http://www.creditcontrol.co.uk/features/analysis/00001.htm
 

http://www.ts-p.co.uk/uploaded/publications/information_sheets/Dispute_Resolution/foreign_debt_recovery.pdf
 

http://www.creditcontrol.co.uk/features/analysis/00001.htm