1. Challenges Facing Cross Border Credit Collection By Gareth Fawke
Director
Inksmoor Finance Group

2. Contents
Introduction
The deal is signed BUT…
The value of documentation
Do you know the Customer
Planning for debtor behaviour
The language Barrier
Cultural differences, The ease of doing business
Everyone deserves to get paid!?!
Using legal action – understanding how courts work
Inksmoor case study

3. Introduction
International businesses face a higher exposure to non payers than domestic business
Due to many reasons, discussed in this presentation
The aim is to identify these reasons to help remedy resolution Before they become an issue
Starting in a chronological order within the sales & order process
Ending with an “if all else fails” approach

4. The Deal is Signed BUT… The Value of Documentation
In any order and sales process documentation is the key to “getting paid”
From initial contract, order and fulfilment being diligent in presenting the client with the correct documentation is a must
Contracts of supply (products, services etc)
Purchase orders
Gaining sign off at the correct time
All before the invoice is raised
Think in stages
The value of this documentation although extremely important to each stage within the supply will hopefully never been seen
BUT… if it is it will be in a recovery situation

5. The Deal is Signed BUT… Do You Know The Customer?
Ask questions around the following; these should be answered upfront before the completion of the sale
Do you know the company your dealing with?
You know the main order contact but who is the purchase ledger contact?
The person ordering communicates in your language but does the person paying you?
Is the company credit worthy?
What will your debtor require to pay you, can you satisfy these needs
Are there any other additional barriers that apply to dealing with this country that don’t to domestic business
What will possibly delay payments?
Do your homework before, knowing after is too late

6. Planning for Debtor Behaviour – The language Barrier
The most common form of payment and collection issues for cross border transactions relate to a lack of communication and language skills involved with the invoicing process
Your customer has placed the order and communicated well possibly in your native language
Supply has taken place
The credit control process begins
Who will you be speaking to, to ensure you get paid?
The order was place in English but the purchase ledger don’t speak English
A very common problem
The problem also persists with global businesses with centralised operations
Sales in one country and operations in another
Multi lingual credit controllers are a must for supplying cross border or for centralised operational staff

7. Planning for Debtor Behaviour – Cultural Differences, The Ease of Doing Business
Cultural differences must be planned for to;
Save offending the customer
Wasting time
Understand when you will get paid
Examples are;
Italy – closes for almost all holidays especially a 6 week period in the summer
Spain – July and August is ran on skeleton staff with very few senior people available to authorise payments; however the Spanish are usually good payers
UAE – Poor payers, likely to default on debt
Switzerland – good payers who hate being chased for monies
Belgium, Denmark, France, Germany, and Holland are generally good payers

8. Planning for Debtor Behaviour – Cultural Differences, The Ease of Doing Business
Source Euhler Hermies – Economic Outlook

9. Planning for Debtor Behaviour – Cultural Differences, The Ease of Doing Business
Source World Bank Survey;
1 being best
189 being worst
Taking into account sales process
Through to collection & recovery

10. Planning for Debtor Behaviour – Cultural Differences, The Ease of Doing Business
Average payment terms and realistic collection rates per countries as issued by Nexus Ciffs
Belgium – Average payment terms issued 35
Average days outstanding 50
Denmark – Average payment terms issued 7-30
Average days outstanding 30
France – Average payment terms issued 30-60
Average days outstanding 70
Germany – Average payment terms issued 30
Average days outstanding 45
Italy – Average payment terms issued 30
Average days outstanding 95
Spain – Average payment terms issued 60
Average days outstanding 70-80
Switzerland – Average payment terms issued 30
Average days outstanding 49
UAE – Average payment terms issued 30-60
Average days outstanding 105

11. Everyone deserves to get paid
Everyone deserves to get paid!?! -Using legal action – understanding how courts work
In a recovery situation you need to understand your options
The contract should say where i.e. under the judicial system of England & Wales it is to be enforced
Once enforced how will you transfer collection to the host country of your client
Using local lawyers with local knowledge
Before all of this you have to understand is it worth perusing in the clients country and what directive the for recovery
Common directive listed below for for a selection of countries
Late Payment Act 2000/35/EC Belgium Law – Belgium
Late Payment Act Recast Directive 2011/7/EU – Germany, France, Italy, Spain,
Late Payment Act Article 73 and 104 of the Federal Act on the Amendment of the Swiss Civil Code
Late Payment Act The UAE Codes of Commercial Practices

12. Inksmoor Case Study
Media company operating in the majority of countries in the world
Centralised operations covering the European countries
1 credit controller for 500 debtors covering 8 languages
Most collections operated by due to language barriers
Inksmoor contracted to take over the credit control by replacing internal staff
Credit control changed to predominantly telephone action supported by
Inksmoor staff fluent in particular languages needed
Local knowledge of debtor behaviour understood
In the first two months debtor days reduced by 21%
Sales teams working with not against credit controllers