There seems to be a mystique that surrounds international accounts. They're perceived as being difficult to collect and more complicated to handle than domestic claims. The fact is that while laws may differ somewhat among countries, for the most part they are similar enough to allow for effective disposition - if you know how to proceed.

Since most companies do not have the resources in-house to pursue collection of past due claims outside of their home country, most international claims are placed with commercial collections firms for handling. By providing your collection partner with the information and documents needed, you'll increase the success ratio for collecting international debt.

What Documents Does the Collection Firm Need?

Here's a checklist. A brief explanation of each item follows.

Completed Placement Form (or Placement Letter)
Contract Copy
Statement of Account
Purchase Order
Invoices
Credit Application and Credit Report
Defaulted notes and payment instruments
Correspondence, including emails

Placement Form. The placement form provides the international OCA with:

Capsulated vital information.
The authority to collect the debt.

Because of the unscrupulous collection tactics used in many countries, collection agents are viewed as thugs or gangsters in some areas of the world. As a result, overseas debtors tend to be more wary of "collectors" and feel obliged to protect themselves from international fraud. They require documentation that will assure them that the person attempting to collect the claim actually represents the creditor. Sending a copy of the placement form to the debtor can literally open doors.

Contract Copy. Submit the complete contract to the collection agency together with the terms and conditions. This outlines the legal basis for pursuing the claim and defines the precise entity that contracted with you for the sale. It will also provide valuable information as to the choice of law, forum, or venue for resolving disputes.

Purchase Order. A copy of the purchase order provides valuable, specific details of the sale.

Statement of Account. A clear statement of account, broken into principle and interest, will allow the collection agency to define precisely how you arrived at the figure you've placed for collection.

Invoice Copies. Invoice copies are a wealth of specific information concerning the sale. They contain:

Terms of the sale
To whom the goods were shipped
Who was billed for the goods
Description of the goods sold
Method of transport used

Credit Application. A well-crafted credit application will provide valuable information that can assist the collection agency in pursuing payment. In addition to important banking and reference information, it contains terms, conditions, and on occasion, a signed personal guarantee.

Credit Report. A commercial credit report has vital information on liens, judgments and other public filings that could effect recommendations about lawsuits or other courses of action.

Defaulted Notes and Payment Instruments. The existence of bad checks, promissory notes, and bills of exchange can alter the statute of limitations on the account and shorten the time needed for litigation. This can affect tactics the collection agency will use in its recovery efforts.

Correspondence and Emails. Reviewing previous correspondence gives the collector a sense of how things were going before the account was placed. This can have an impact on the tactics used to pursue collection. It may also effect the merits of the case. In some jurisdictions emails and faxes are treated as original documents.

Getting the Wheels in Motion

You don't need to wait until you have all of the above information before you submit an account for collection. As soon as the decision to place the claim is made, submit the following to your collection agency:

A statement of account
A placement form or a letter appointing the collection firm as your agent
Contact information for your company and that of the debtor. This should include:
- name of contact
- complete address
- telephone number
- fax number
- email address

Conclusion

So, there you are. Mystery solved. Dealing with bad debt on international accounts, as with domestic filings, is basically a matter of following sound A/R management principles. Choose a reputable, experienced collection firm and provide it with the information it needs to effectively handle your claim.

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David Greenberg works with a team of international commercial collection experts to manage collection cases in more than 200 countries around the world. His collection industry experience spans three decades. He has served on the Panel of Commercial Arbitrators of the American Arbitration Association and is a current member of the Commercial Law League of America and the Association of Executives in Finance, Credit and International Business. Dave has traveled the world, giving educational presentations in the areas of international arbitration, foreign documentation, and credit reporting management.

This information is provided by ABC-Amega Inc. -- providing 1st and 3rd party commercial collection services since 1929, and collecting in more than 200 countries worldwide. For further information, contact info@abc-amega.com.