QUESTIONS? 844.937.3268


International Claims Demystified

Originally published: June 2012

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 do differ somewhat among countries, they are similar enough to allow for effective disposition. The key, however, is having the international collection knowledge you need to proceed.

Most companies do not have the resources in-house to collect past due claims outside of their home country. They also lack the capacity to effectively manage relationships with foreign collection agencies or attorneys. As a result, many delinquent international accounts are placed with commercial collections firms located in the creditor’s country. Assuming the selected agency has expertise in international debt collection, along with the appropriate foreign contacts, the process they follow will likely be similar to that which they use to collect domestic debts.

Documents That Will Increase Your Success in Collecting Delinquent Foreign Accounts

  1. Completed Placement Form (or Placement Letter). The international placement form provides the collector vital information regarding the transaction, as well as the authority to collect the debt.  Because of the unscrupulous collection tactics used in many countries, collection agents are sometimes viewed as thugs or gangsters. Sending the debtor a copy of a formal placement form, signed by the creditor, assures the foreign debtor that the person attempting to collect the claim actually represents you, the creditor. This document can literally open doors to collection.

  2. 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.

  3. Contract. Submitting a copy of the completed, signed contract to the collection agency together with the agreed terms and conditions, provides 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.

  4. 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, thus forestalling many spurious disputes the debtor might make.

  5. Purchase Order. A copy of the purchase order, particularly when there is no written contract available, provides valuable, specific details of the sale and proves that the debtor did indeed authorize the purchase.

  6. 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.

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

  8. Correspondence, including 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 affect the merits of legal action, which is sometimes required to collect. In some jurisdictions emails and faxes are treated as original documents.

Setting 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: 

  • Statement of Account

  • Placement form or a letter appointing the collection firm as your agent

  • Contact information for your company and that of the debtor. Debtor information should include:

    • Name of contact

    • Legal name of the company (not a dba or tradestyle)

    • Complete address

    • Telephone number

    • Fax number

    • Email address

After the account has been placed, pull together all of the other documentation and forward copies to the international collector.

Mystery Solved

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 collection firm with international experience and provide it with the information it needs to effectively handle your claim.