Debt Collection in the Caribbean: Five Items for Your Checklist

2013-12-28 06.39.57The Caribbean is different in many ways. I am not (only) referring to its stunning vegetation, white sandy beaches and its beautiful blue and turquoise waters.

The majority of the nations in the Caribbean have cultural and economic ties with Europe, the US or Latin American mainland (like Mexico, Colombia, and Venezuela) but yet have their own social context, economy and lifestyle.

Also debt collection in the Caribbean has its own dynamics.

Here are five elements I would recommend you to keep on your checklist when you are in a situation where you are trying to collect a debt in the Caribbean.


There are almost as many languages in the Caribbean as there are nation states! I mention some of the main languages that are important from a business, professional and legal perspective: English, Spanish, French, Dutch, but also Papiamento and Creole languages.It is important to understand that depending on the island or the nation, one of these languages may apply and other might have little to no importance in daily affairs. Sometimes even on one island two languages apply but each in its respective section (an example is Saint Martin, which is divided in a French-speaking and a predominantly English and Dutch-speaking part).


Each of the nation states have their own jurisdiction. Some show similarities amongst each other – especially if they share a common historical background or if they are part of the same overseas nation or international organization (like the British Commonwealth). Others differ as much from each other as many of their (former) motherland countries do amongst each other. Some regions are fully independent and have their own jurisdiction; others are an integral part of (European) overseas nations (like Martinique which is a French overseas region and as such even part of the European Union; the British Virgin Islands which are a British overseas territory; or Bonaire which is a special municipality within the country of Netherlands, as opposed to Curaçao, which is an independent nation within the Kingdom of the Netherlands). The jurisdiction has its effect on legal systems and whether or not legal options might be a serious alternative for debt collection.

Possible offshore status

Several of the Caribbean nations are considered so-called Offshore Financial Centers (OFCs). Examples are the British Virgin Islands, Cayman Islands, Curaçao, Anguilla, Antigua and Barbuda, Aruba, Panama,and increasingly, Belize. This means that your claim may be on a company constituted in a Caribbean nation, whereby a trust company or fiduciary services provider manages that company, but whereby the actual decision makers or owners of the business are overseas. This has its impact on debt collection options and likelihood of success in claiming and enforcing payment, both amicably and legally.

Networking options

Networking in the Caribbean or working with local representatives, agents or lawyers is crucial and beneficial for you if you are looking to collect a debt in the Caribbean. Crucial because of the diversity between the Caribbean nations: as pointed out before, each nation has its own languages and jurisdiction. Beneficial because of the small size of the majority of the countries, which means that it can be relatively easy to reach your debtor quickly and directly (almost everybody knows each other or knows someone who knows…). Also, since Caribbean nations are generally small of size, and local business is heavily dependent on the outside world (financial services and tourism), service providers are international-minded which is helpful for you as an outsider.

Nature of your claim

As always, and the Caribbean is no exception, your chances of success are made or broken by the quality of your claim. Documentation much be in order, it should include signed contracts, order forms, invoices and filed correspondence. Also the size of the claim is important.

In order to successfully assess debt collection in the Caribbean you have to keep the following five elements on your checklist: languages, jurisdiction, possible offshore status, networking options and the nature of your claim.

If you are interested in learning more on the subject of debt collection in the Caribbean please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

Debt Collection in Mexico: Six Items on the Checklist for Foreigners

141206 Mexico Debt Collection 3Some foreigners who claim unpaid invoices or overdue debt in Mexico may see debt collection in Mexico as complicated, impractical or even impossible.

Others, on the other hand, may underestimate the challenges one may encounter as they compare to the relative easiness and straightforwardness of collecting in their own countries.

The truth lays, as so often, somewhere in the middle. It is perfectly possible to collect debt in Mexico, but it is fundamental to understand the country’s particular context and circumstances for debt collection.

Here is a checklist every foreigner should use as a framework when looking for debt collection in Mexico and to properly manage expectations.

Size of the claim

At the end of the day, it is all a numbers game. How much are you owed and what would be the costs of claiming and collecting it? Collections in Mexico can be expensive (especially if you go legal), time consuming, and from slow to very slow. Make sure you take a realistic approach – from an economic perspective – as to what you may expect financially from debt collection in Mexico, if time and money invested are worth it, and how far you will take it.

Nature of the claim

Are you claiming from a company or an individual? Does your claim consist of overdue invoices based on a commercial transaction or are you looking for repayment of a loan? It can make a huge difference – speaking about chances for success – whether your debtor is a company or an individual, whether you are claiming payment of overdue invoices or an outstanding loan. Legal circumstances and financial situation of your debtor make or break potential success of your case.

Quality of the claim

Key for success of debt collection in Mexico is how “clean” or complete your file is. Contracts, order forms, order and delivery confirmations, invoices, (email) correspondence, contact details of your debtor, address details, age of the outstanding balance, it is all fundamental for the success rates of debt collection in Mexico. If you file is complete, it will no doubt increase likelihood of success. Be realistic in expectations management and as a rule of thumb, just do not waste your money and time on even considering going legal if your file lacks supporting documentation for the claim.


Use the leverage that you may have. If your debtor is a company who has taken products or services from you, and there might be a commercial interest to (eventually) continue buying your products or using your services, use that leverage to enforce an amicable solution, like a payment plan with monthly instalments, a settlement payment or otherwise monetary or material compensation. If your debtor is an individual, although probably using leverage might be less straightforward, he or she might want to come back and again buy products or continue education (colleges, universities), or will need a clean credit history. When using your leverage it is important that you show flexibility and approach the situation with a solution-minded attitude.


If you look for debt collection in Mexico, use your network. Directly, if you have your contacts at agencies, law firms or representatives, or indirectly, referrals from business relationships or companies that do business in Mexico, businesses that are operating in the same markets and may have run into similar issues. From personal experience, I cannot stress how important it is to work on the basis of referrals in Mexico, more than in many other countries I am familiar with.


And finally, the location. Mexico is a big country with highly developed urban areas (Mexico City, Monterrey, and Puebla, for example) and on the opposite, professionally speaking, highly remote places. And unfortunately, some areas of Mexico have been hit heavily by political or societal instability. In principle there should be no problems to pursue your debt collection case in Mexico’s urban areas. Trying to collect in more remote areas may be challenging or in worst case, practically impossible. And sadly enough, be aware that some of your debtors (or clients) might be hit by the issues the country is nowadays facing.

When looking for debt collection in Mexico foreigner should have the following on their checklist: size of the claim, nature of the claim, quality of the claim, leverage, network and location.

These aspects determine the chances for succes and are the basis for proper expectation management.

If you are interested in learning more on the subject of debt collection in Mexico please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

Debt Collection for Trust & Fiduciary Services: Five Aspects to Prevent Overdue Accounts

140827 blog amicable collections 7Collecting in trust and fiduciary services can be a complicated matter. Mobility of clients, liability issues, contracts management, and impact of jurisdictions are amongst the reasons.

Below I point out five aspects to focus on, which will help prevent overdue accounts in the trust and fiduciary services sector and will eventually decrease write offs.

Due diligence and compliance

Make sure that it is clear to you, as the service provider, who the ultimate beneficial owner (“UBO”) of the client company actually is. Which are his or her commercial and legal records, what is his or her domestic business about, and what is the size of the business.

Contract management

Make sure that the management agreement (in combination with possibly a letter of indemnity) for the company is clear on liability on the UBO’s side for overdue invoices and costs, and that it is set out that you will charge interest and collection fees to the beneficial owner as guarantor.

Relationship management

In the commercial relationship, you should make your interest matter. At all times build up a personal relationship with the client directly, even if the deal is brought to you by an intermediary. You should know contact details like domicile, email, telephone, cell phone and Skype. Update contact info constantly.

Receivables management

Don’t wait too long with taking action if a client company stops paying invoices. Experience has learned it will only get worse. If a client shows bad payment behavior, ask if and were possible for a costs and expenses advance before carrying out further work for the client company and its UBO.


Please be aware of the jurisdiction your client is in and adjust your contract management and receivables management accordingly. There can be huge differences between countries as to the effectiveness of a contract. In addition, some countries may be subject to foreign currency exchange rate restrictions which may complicate payments. Other countries have laws that differ substantially for countries which typically host trust and fiduciary services providers.

While acknowledging the difficulties in collecting in the trust and fiduciary services sector, if the focus is on, and one combines efforts on, due diligence and compliance, contract management, relationship management, receivables management and jurisdiction, the trust and fiduciary services provider may prevent as much as possible overdue accounts, and at the long run decrease write offs.

If you are interested in learning more on the subject of debt collection for the fiduciary service sector please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America and the Caribbean please join the Linked-In Group Debt Collection Latin America.

Ten Reasons Why to Focus on Amicable Debt Collection in Latin America and the Caribbean

140827 blog amicable collections 9This post is about why creditors should not only think twice, but three times before evening considering legal proceedings in Latin America or the Caribbean in order to enforce a claim. Commercial and consumer debts alike.

Here are ten reasons why.

1. Different speed

In Latin America and the Caribbean, things can be slow. Really slow. Patience is essential. Give an amicable solution a chance, even if it can take (a lot) longer than what you would accept back home. And legal is not the solution if you want things to go faster – legal proceedings may even slow things further down, and can take forever (years).

2. Another socio-economic reality

Socio-economic reality is for many people different in Latin America. Yes, in some countries like for example Brazil, Mexico, Colombia and Peru, economy has grown and continues growing. And yes, there is an ever growing middle class all over the continent, which means substantial groups of people have started to earn more money and thus have more spending power. However, the reality for the majority of the people is still: no access to proper education, difficulties finding a job, and jobs are generally not well paid. A large part of the population still has a lot less to spend than people in a comparable social class in Europe or North America. It means that payment plans are longer and monthly pay off installments may be (substantially) lower. Legal proceedings do not change this reality.

3. High costs

Legal proceedings are generally expensive in Latin America and the Caribbean. Legal costs can increase substantially as legal proceedings go on. Often it is economically not worth it to go legal as costs and expenses can easily supersede whatever the claim is or what can eventually be collected. And if at the end of the road debtor cannot pay, the costs are for the creditor.

4. Inefficient legal systems

An overall problem is the inefficiency of legal systems in Latin America and the Caribbean. It causes that legal procedures can take very long (years) before a verdict is reached, the outcome is often unpredictable, and requirements to (successfully) proceed may be unrealistic. For these reasons legal proceedings may require a considerable investment in terms of time and resources which may not justify what can eventually be collected.

5. Informal economies

Many businesses and employees are active in the so called “informal economy”. Companies that are not or hardly officially registered, people that do business without invoicing or maintaining a proper administration, employees that receive salaries which officially do not exist. As for consumers, they may in practice not live where they are registered, or they are not registered at all. Registration at a chamber of commerce is often not mandatory, and / or registration is not up to date. It is virtually impossible to legally claim anything from a company or person that or whose business or salary does officially not exist.

6. Political situation

Several countries or regions within Latin America deal to a larger or lesser extent with political issues. Foreign trade-unfriendly regimes, social unrest, or safety issues, these may in practice all lead or contribute to a nonfunctional legal system and hence enforceability of claims in legal proceedings. There may be no possibility of enforcing anything legally at a local court because there is no court available or functioning, or there may be no bailiff who can or wants to execute an enforcement order if a verdict is obtained.

7. Remoteness

Often your business partners are probably based in the major cities, like Mexico City, Buenos Aires, or Sao Paulo. But what if your debtor is based in the countryside of Oaxaca? Or your debtor is a food production company based far inside the Amazons? Or the Andes? In reality it means that serious legal options may be as remote as the area your debtor is in. The infrastructure is simply not there. And no bailiff or lawyer would go there!

8. Limited access to information

Some of the countries in Latin America, like for example financial offshore centers, have laws protecting business information. This makes it very hard to assess whether it makes sense to go legal, if a company has any assets, who is actually running the company, and so forth. And essentially without knowing your debtor it might be too risky financially to start legal proceedings.

9. Incompetent courts

If the debt was incurred outside the country debtor is residing in, and the nature of the debt (product or service, the corresponding paperwork, the language in which the contract or deal was closed, the socio-economic circumstances in which the debt came in to existence in the first place) is considerably different from the reality in debtor’s country, a local court may turn out to be incompetent – not in a position to rule. This means that effectively legal proceedings may not lead to any verdict at all.

10. Strict requirements for law suits

Some of the countries in Latin America and the Caribbean have strict requirements as to administration held, invoicing, and contracts to be able to legally enforce a claim. Sometimes, the lack of an official stamp on an invoice, or a certified follow up letter, means that an invoice is not officially recognized or may well be expired already by law, making legal proceedings practically impossible.

Different speed, another socio-economic reality, high costs, inefficient legal systems, informal economies, political situation, remoteness, limited access to information, incompetent courts, and strict requirements for law suits are reasons for creditors to avoid legal proceedings to enforce claims in Latin America and the Caribbean as much as possible.

Amicable collections are the way to go; negotiations where necessary, using leverage where possible, and always keeping in mind the balance between what can possibly be achieved and collected, and what would be the price one pays for that.

This post represents the opinion of the author and is an attempt to give a general impression. Circumstances and reality may different substantially from country to country.

If you are interested in learning more about amicable debt collection or legal proceedings in Latin America and the Caribbean please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

Legal Proceedings: Enforcing US Judgments in Mexico

140915 Enforcing Foreign Legal Ruling in Mexico 2This article focuses on legal judgments obtained in the US for which enforcement is sought in Mexico. Although the situation is specific there may be similarities with other countries in the region or anywhere else in the world.

I have got the question a couple of times over the last few weeks. Are judgments obtained in the US enforceable in Mexico?

Well, not directly. But yes, if confirmed by a Mexican court, in principle US legal judgments can be enforced and executed in Mexico.

Mexican law provides for Mexican courts to recognize and enforce US judgments in Mexico (based on the North American Free Trade Agreement). However, there is no treaty in place between the US and Mexico as to establish the legal situation of judgments between the two countries. This means that the claimant in that respect fully depends on Mexican law. Mexican courts can recognize US judgments but, legally spoken, they are not obliged to do so.

In order to enforce a US judgment in Mexico the applicable court in the US will have to issue a rogatory letter to the applicable court in the Mexican state (or the Federal District, as applicable) in which debtor resides. The letter must rule out appeal. Also, the debtor must have been personally served with the summon and complaint according to US law. Then the domestication proceedings start, in which the file will need to be translated to Spanish, and then the case is officially filed with the Mexican court. Provided that the Mexican court indeed recognizes the US judgment, all possibilities of enforcements as would otherwise apply to a full Mexican case will apply.

Subsequently, the success of, and decision to proceed to, enforcement and execution of the judgment in Mexico depends heavily on the circumstances: the size of the claim, does debtor have income or assets and will he or she be able to pay; and the location and background of the debtor (which may determine the willingness or not of a bailiff to execute the judgment).

If you are interested in learning more on topics about legal proceedings in international debt collection connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

How to be successful in international debt collection

140915 International Debt Collection 4International debt collection has its whole own field of expertise. Collecting from foreign debtors can be challenging.

Once a claim is border crossing the circumstances that determine your chances for success can differ substantially from country to country. Your may even have to work with one or more intermediaries to collect locally from your foreign debtor.

Collecting internationally obviously means trying to cash your or your client’s money, but it also means guiding your organization or your client through the entire process of international debt collection.

What are the characteristics of a successful international debt collector? Below are twelve characteristics of what I believe a successful international debt collector should have.

1. Patience

Be patient. Things may take more time than back home. It may be harder to get a grip on debtor’s environment and socio-economic circumstances. Procedures, institutes and bureaucracy may slow things down. Culturally, life in general may be of another pace. you will lose out if you try to push too far.

2. Be prepared to negotiate and settle

No box-thinking please. Don’t just follow procedures or protocols. Be flexible. In some cultures business may be a lot more informal and negotiations may be a professional life style. If a settlement is possible or debtor is seriously willing to negotiate, go for it. Even if that means that sometimes not the full amount can be recovered. There may be no alternatives.

3. Go networking

It is an illusion to think you can be successful on your own. Often you will have to use third parties that have specific knowledge or expertise. Whether that is amicably or legally, or for collections or to locate companies or people. Third parties can be representatives or intermediaries, (other) debt collection agencies or law firms. Make sure though you work with the right people. Go for referrals and not for a fancy website. Ask around. Ask clients or colleagues. Build up an international network of trusted third parties and business partners.

4. Sense of reality

Be realistic. Focus on what can be achieved, and drop the lost cases. Make selections, recoverable versus not recoverable, disputed versus non disputed, direct payment or payment plan, legal possibilities or only amicable, traceable or impossible to locate.

5. Results over emotions

It sounds difficult, but don’t get emotionally involved. Stay focused on the results. That is the only thing that matters.

6. Empathy

Try to understand your client’s needs (also if your “client” is another department within the same organization), ways of working, procedures. And make an effort to understand the debtor’s circumstances as well. They may differ substantially from your own reality and it will help you to make the right decisions.

7. File knowledge

Get familiar with the file. The business client and debtor are in. Show your client you know what you are talking about. He or she should know that the case is in good hands. Also, let the debtor know that you have done your homework and leave a professional impression. Debtor needs to understand you are serious.

8. Know your cards

Scan the situation and possibilities as soon as you get on board. How far is client prepared to go? What is factually possible? Are parties prepared to negotiate or settle? Would legal proceedings be an option or not? What is your mandate, a payment plan, short or long term plan allowed? It will help you determine what fits your client’s needs best.

9. Stay up-to-date with technology

Forget formal letters as a means of communication. See it as a formality to comply with any legal requirements. Use e-mail, Skype, Social Media, WhatsApp, SMS in addition to the good old phone; as phone calls, in my view, are still the main key to success. However, whatever can be done by email, do it by email, in order to be efficient and to make sure that agreements and payment plans are put on paper.

10. Communication

Frequent, efficient and proper communication with all parties involved is key. First of all with your client. Keep the client informed about progress, issues and what is possible and not possible (expectation management is very important!). But also with debtor, keep the pressure on. And with third party intermediaries so that everybody stays focused on your case.

11. Time and resources management

Spend your time and resources well for the benefit of your clients and yourself. Try to find the best balance between what can be achieved and what the cost would be.

12. Be present online and be reachable

Be present online. Your website and / or Social Media profile(s) should be functional. And make sure you are reachable, by clients as well as debtors. By email, Skype, Social Media and phone. Your phone numbers should be easily accesible, consider even making lines available in countries you frequently collect in. The burden to contact you should be as low as possible.

The following are twelve of my favorite characteristics of a successful international debtor collector: having patience, being prepared to negotiate and settle, focused on networking, with a sense of reality, putting results over emotions, with empathy, and file knowledge, knowing his or her cards, staying up-to-date, great in communication, considering time and resources management, and being present online and reachable.

If you are interested in learning more on topics about international debt collection please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

Four Advantages of a Third Party International Collection Specialist

140823 Third Party Collector 3For many debt collection agencies, cross border collection cases cause an issue. Often agencies do not really know what to do with them, as they are outside the scope of their regular work field. Some collection agencies set up their own international divisions or hire people in house to deal with international cases. Sometimes they join an international debt collection network. Although some of these solutions may work, they may also bring up other questions like how to make an international division actually profitable, do all members of the international debt collection network have the servicing quality standards the agency requires, and is in house personnel justifiable if international is not the company’s core business?

It may be much more beneficial on the long run for debt collection agencies to engage third party international collection specialist for international cases. These specialists can be a debt collection agency whose core business is international collections, a foreign agency or law firm that can assist locally, or individual collectors acting as independent contractors or representatives. They can be contracted to fulfill a specific job: collect in a certain territory that is outside the scope of the agency’s day-to-day collections, work on cases in other time zones or languages not spoken within the agency, or for local field work – for example as negotiator, mediator or legal representative with a mandate to close a deal or settle specific cases with foreign debtors or their representatives.

Below I describe four of what I believe are the main advantages for a debt collection agency of engaging a third party international collection specialist.


The majority of debt collection agencies are focused on domestic or regional collections, or sometimes they even primarily focus on one city or community. Their clients generally come from the same region, state or country and international collections are not their core business or just not substantial enough for a separate strategy. If such agencies engage a external third party international collection specialist who does focus on international collections or work together locally in the country the debtor is based, generally for a project-based or contingency based compensation, a win-win situation is created.


Often debt collection agencies do not have the infrastructure to collect internationally, whether that is amicably or legally. Different time zones, other languages, the need for local presence or local attorneys. By hiring an external third party international collection specialist who does have the infrastructure the agency needs in order to successfully perform, they do have the possibility to expand their infrastructure beyond their own limitations, and fine tune in accordance with their specific needs (as mentioned, by territory, time zone, language or local representation).


The external third party international collection specialist may have the experience, knowledge and expertise that makes a difference and truly contributes to the agency’s servicing of and performance towards its clients. The knowledge can be languages spoken, or knowledge about territories or legal systems required to collect successfully and to advise creditors properly about chances, procedures, costs and valuable debtor or country-specific information.


Using a external third party international collection specialist means that the debt collection agency avoids investing money and other resources in operations that may not be or will never become part of their core business. The focus, infrastructure and available knowledge of the third party means the agency does not run operational (and therewith financial) risks it would otherwise run if it expanded and invested its own resources. Such resources can be used for other ends more suitable to the agency’s core business.

There are four advantages for debt collection agencies in working together with third party international collection specialists for their debt collection cases abroad. The specialist may have the focus, infrastructure, knowledge and resources that the agency does not have and may not be looking for to establish within their own company.

If you are interested in learning more on international debt collection topics, or collections in Latin America please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

Tres Herramientas En Línea Para Cobranzas

140729.3 4 Three Online Tools - Tres Herramientas en LineaLos tiempos que enviar una carta y hacer llamadas de teléfono para dar seguimiento ya quedaron atrás. Aun nos comunicamos por teléfono pero la papelería ha sido remplazada casi por completo por la vía digital. El Internet se ha convertido en una fuerte de información poderosa, también en cobranzas.

Pero como podemos usar de forma efectiva el Internet para cobranzas?

Hay dos razones para usar el Internet para cobranzas: 1. para crear un perfil del deudor el cual nos dará una indicación de las posibilidades económicas y con eso el potencial de recibir pagos, y 2. para obtener más datos de contacto posibles del deudor, como correos electrónicos, números de teléfono, contactos de Skype y enlaces de los Medios Sociales.

Podemos distinguir tres categorías básicas – vamos a llamarlos “herramientas en línea” – para lograr la creación de un perfil del deudor y para obtener información de contacto.

  1. Google

Para empezar, googlea a tu deudor. Usa toda la información que tengas para crear combinaciones de búsqueda únicas para que sea más probable que salgan resultados útiles. Las combinaciones de búsqueda pueden incluir nombres, apellidos, sobrenombres, ubicación actual, una ubicación anterior, fecha de nacimiento, profesión o industria en que tu deudor trabaja; prácticamente cualquier información disponible. Muchas veces una búsqueda inicial te genera información adicional la cual puedes usar para especificar aún más tu búsqueda en Google.

  1. Los Medios Sociales

Usa el poder que tienen los Medios Sociales. Facebook, Linked-In, Twitter, Google+, Pinterest; hoy en día la mayoría de la gente y de las empresas tienen perfiles en línea.

  1. Bases de datos en línea

Bases de datos públicas y privadas pueden proporcionarte mucha información. Bases de datos públicas son por ejemplo Cameras de Comercio, registros públicos de la propiedad y directorios industriales. Ejemplos de bases de datos privadas son las Páginas Amarillas y Páginas Blancas, directorios de empresas, también pueden ser directorios industriales, asociaciones; para mencionar algunas.

Crear un perfil de tu deudor y obtener datos de contacto son las razones para usar el Internet para cobranzas. Hay tres herramientas en línea básicas para ayudarte a obtener información útil: Google, los Medios Sociales y Bases de datos en línea.

Si te interesa saber más sobre el tema del Internet y cobranzas o si en general te interesa cobranza en América Latina por favor conéctate conmigo por Linked-In o sígueme en Twitter.

Para participar en las conversaciones sobre cobranza en América Latina por favor agrégate al grupo de Linked-In: Debt Collection Latin America.

Three Online Tools for Debt Collection

140729.3 4 Three Online Tools - Tres Herramientas en LineaThe times that sending a letter and doing telephone follow ups with debtors is long gone. We still get on the phone but the paperwork is almost completely replaced by digital. Internet has become a powerful source of information, also for debt collection.

But how to effectively use the Internet for debt collection?

The reasons for using the Internet for debt collection are twofold: 1. to create a profile of your debtor which gives an indication of its financial possibilities and therewith its “pay back potential”, and 2. to obtain as much contact details as possible, like e-mails, telephone numbers, Skype contacts and Social Media links.

We can distinguish three basic categories – let’s call them “online tools” – to accomplish the creation of a profile of your debtor and obtain contact info.

  1. Google

As a start, “google” your debtor. Use all the info you have to create search combinations as unique as possible so that the likelihood of useful results increases. The search combinations may include first name, last name, nickname, location, former location, country, date of birth, profession or industry your debtor is active in; basically any information available. Often an initial search gives additional info which can be used to narrow the Google search further.

  1. Social Media

Use the power of Social Media. Facebook, Linked-In, Twitter, Google+, Pinterest; nowadays, the majority of people and companies have online profiles.

  1. Online Databases

Publicly and privately run databases can provide a lot information. Public ones are for example Chambers of Commerce, public registers of properties and industry directories. Privately run databases can be yellow and white pages, company directories, also industry directories, associations; to mention a few.

The reasons for using the Internet for debt collection are to create a profile of your debtor and to obtain contact details. There are three basic online tools to help you obtain useful information: Google, Social Media and Online Databases.

If you are interested in learning more on the subjects of legal proceedings or collections in general in Latin America please connect on Linked-In or follow me on Twitter.

To participate in the conversation about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

Six Challenges For Starting Legal Proceedings in Latin America

140729.2 Six Challenges Legal Proceedings LATAMIn a globalizing world we do more international business than ever before. Economic growth takes place in what we used to call the developing countries.

Focusing on Latin America, countries like Brazil and Mexico, but in the last few years certainly also for example Colombia, Peru, Chile and Panama, have gone through significant growth periods attracting foreign businesses and investments.

But what if you are based in North America or Europe and you do volume business in one of these countries, or you closed a very important business deal, and your client is not paying? What if the deal is not covered under your credit insurance, your client passed through all internal due diligence and compliance procedures and know your client policies, and amicable debt collection and interferences of a debt collection agency, local representatives, or even a law firm do not result in payment of the outstanding debt?

Naturally the next step would be considering legal proceedings to rightfully enforce payment of the goods you delivered or the services you rendered.

You have to be aware though that legal proceedings in connection with debt collection in Latin America can be challenging.

Although each country has its own legal system and very particular local circumstances, and countries differ considerably one from another, I have defined what I feel can generally be considered as the Six Challenges For Starting Legal Proceedings in Latin America in connection with debt collection.

  1. Unknown territory

First of al, for many people outside Latin America, the territory is unknown. People do not know how the legal systems actually work. You may also not know where to start if you want to legally force your client to pay, and which company or firm to contract. Latin America sounds far away, your do not speak the language and you may not even know where you client is exactly based.

  1. Complicated legal systems

But even if you are familiar with the territory, often the legal systems are complicated enough to make legal proceedings far from straightforward. There can be various types of proceedings, several courts and local jurisdictions, and various stages and appeal procedures within legal proceedings.

  1. Substantial legal costs

Often legal proceedings are expensive. Minimum amounts for which it makes sense economically in the first place to start legal proceedings may be a lot higher than “back home” (although I realize here there is a big difference between for example the United States en many countries in Europe). And there may be certain costs you incur which you cannot claim back from the debtor.

  1. Inefficient legal system

Apart from complicated, legal systems tend to be, to say it in a politically correct way, inefficient. Although the law may be on your side, the way the “system” works in practice because of political or social reasons (I mention corruption, social disruption and foreign currency exchange restrictions as some obvious examples), can still make it a complicated job to actually enforce your rights to receive payment.

  1. Incompatibility

This is one we may not immediately think of, but which in practice often cause unpleasant surprises. The way you put together paperwork with your client, the way you invoiced or the jurisdiction your business deal is subject to, may not work legally in the country of your client and therefore turn out to be irrelevant. Or your invoices are by law expired and cannot be legally claimed anymore. You can have a brilliant lawyer on the case, but if your claim is incompatible with the system, there is little chance for success.

  1. Verdict may be unenforceable

Let’s say you decide to go legal, and you “survive” all five previous challenges. Then you might have to face a sixth hurdle. Because of the high level of “informality” in business (a lot of small companies with limited liability), no formally established company, businesses not properly registered or set up locally, inaccessibility of areas, untraceable business owners, lack of infrastructure, or no assets, the verdict you just obtained may in practice turn out to be unenforceable after all.

Summarizing, there are challenges for companies for starting legal proceedings in Latin America in connection with debt collection. I defined unknown territory, complicated legal systems, substantial legal costs, inefficient legal system, incompatibility and enforceability as the six main challenges.

It does not mean you should not start legal proceedings if the deal involved is economically worth it, and your files are up-to-date, and you have a budget available for proceedings; and, you are aware that patience is of the utmost importance. There are excellent lawyers who know the systems inside out, who can do a great job representing you and who can successfully collect your outstanding debts.

This post is just to give a very broad outline of the challenges foreign companies may face when they consider legal proceedings and it is not meant to generalize or simplify. I am aware that the challenges mentioned could also apply anywhere else in the world.

If you are interested in learning more on the subjects of legal proceedings or collections in general in Latin America please connect on Linked-In or follow me on Twitter.

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