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.

Focus

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.

Infrastructure

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).

Knowledge

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.

Resources

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.

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

Five Alternative Ways To Get Paid From Venezuela

140729.1 Five Alternatives VenezuelaIn the collection business the aim is to collect as much of a debt as possible within as little of a time range as possible. In order to do so, one has to deal with all kinds of hurdles that are put up in the way towards success.

Debtors may not have money to pay, may not want to pay or simply your debt is not a priority to them. Or invoices are not paid because of a dispute over goods or products. These are circumstances caused within the individual case.

But what if the reason of the overdue is caused by issues outside the control of creditor and debtor? Foreign exchange restrictions, economic downfall, political unrest or social disruption, inflation and devaluation, ineffectiveness of legal systems; all potential factors that may hit you if you do business abroad. And if you are owed money or if you collect in Latin America.

In my first series of blogs I will talk about these topics. I will start with one of the main issues we have been running into from the moment we started the collection business in Latin America: foreign currency exchange restrictions.

Take Venezuela. A country ruled by a self-proclaimed socialist government, the “Republica Bolivariana de Venezuela”. As of 2003 the country is subject to one of the world’s severest foreign currency exchange restrictions, introduced by the Chavez government. Not only has it had a major impact on Venezuela’s society and economy (with a scarcity in products and goods available in an economy that produces and exports only a few things itself, one of them being oil). It has also made it virtually impossible for residents to wire money out of the country, and therefore for foreign business to get paid for services and goods.

A short background. Let’s for our purposes focus on private businesses and individuals. In principle all payments in foreign currencies by individuals or businesses have to be run through CADIVI (Comision de Administracion de Divisas), a government body. CADIVI basically regulates how much money in foreign currencies residents may buy and who is allowed to buy. Approval procedures are lengthy (it may take up to between 9 or 12 months before a payment is approved, if at all) and lack transparency (it is unclear as to what documentation accompanies a request). But what makes the system unpredictable is the fact that there are annual, accumulative quotas (which are national) on the amounts of foreign currencies, which means that even if documentation meets approval the request may simply be rejected because it exceeds the quotas.

This makes Venezuela an extremely complicated case in terms of collections. How can one still successfully collect monies owed from companies or individuals based in Venezuela?

Naturally, it pushes businesses and collection agencies to look for alternatives to wire transfers from Venezuela. Possibilities depend on the circumstances and alternatives may also not be straightforward. However, there are alternatives:

Payments from reserves held abroad: Those companies or individuals who have a bank account outside Venezuela can pay from abroad. Accounts in the US and Spain are especially popular; we have successfully collected in Venezuela in several cases because of this alternative. Downside is that the group of companies and individuals that do have an account with reserves abroad is limited.

Credit card payment or Paypal: An alternative for a wire transfer is a payment by creditcard or Paypal. However, also creditcard payments are subject to government restrictions. Approval from CADIVI is needed and it can take up to 2-3 months to get permission, if granted at all. Range of amounts permitted is US$300-US$3,000 per person on an annual basis, subject to amongst others reason and destination. As in the case of bank accounts abroad, some businesses and people have foreign credit cards and may escape from being subject to CADIVI;

Payment with Western Union: This seems to be an alternative for payment to family members abroad or for educational purposes, like universities;

Payment by check: There is thepossibility of sending checks in abroad (there seem to be banks that accept that in Venezuela). However, also check payments are subject to CADIVI and generally a maximum allowance is mentioned of between US$500-US$700;

Acceptance of payment in bolivars: Although this alternatives sounds only hypothetical, there are actually webpages in Venezuela dedicated to this;

Digital currencies: Although I do not have any experience in practice, Bitcoins may certainly be worth investigating. It all depends however if creditors accept payments in Bitcoin. Downside is the instability of the value of Bitcoins. Furthermore, it is to be seen if how long government will hold off restricting Bitcoin. Regional neighbor Bolivia for example has as first country in Latin America prohibited the use of Bitcoin.

Drawing to a conclusion. Wire transfer payment from Venezuela are subject to approval from and quotas set by CADIVI. Most feasible ways to collect monies due from Venezuela are still to circumvent the system by looking for less conventional payment methods or by having the transaction take place outside Venezuela. Five alternatives may be payment by the party in Venezuela from reserves held outside Venezuela, payment by creditcard (or Paypal), payment by check, payment through Western Union, payment in Bolivar and payment in digital money (Bitcoin). These alternatives may however depend on access to alternative payment methods, or they may still be subject to CADIVI’s rules and regulations or may in practice turn out to be only hypothetical options.

Since Nicolas Maduro took over presidency in Venezuela, there have been signs that the foreign currency exchange restrictions may be softened. In practice the impact still has to be seen. Only time will tell.

If you are interested in learning more on the subjects of collections in Venezuela, foreign currency exchange restrictions, CADIVI, or collections in Latin America please leave us a message, or 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.

Five Alternative Ways To Get Paid From Venezuela

In the collection business the aim is to collect as much of a debt as possible within as little of a time range as possible. In order to do so, one has to deal with all kinds of hurdles that are put up in the way towards success.

Debtors may not have money to pay, may not want to pay or simply your debt is not a priority to them. Or invoices are not paid because of a dispute over goods or products. These are circumstances caused within the individual case.

But what if the reason of the overdue is caused by issues outside the control of creditor and debtor? Foreign exchange restrictions, economic downfall, political unrest or social disruption, inflation and devaluation, ineffectiveness of legal systems; all potential factors that may hit you if you do business abroad. And if you are owed money or if you collect in Latin America.

In my first series of blogs I will talk about these topics. I will start with one of the main issues we have been running into from the moment we started the collection business in Latin America: foreign currency exchange restrictions.

Take Venezuela. A country ruled by a self-proclaimed socialist government, the “Republica Bolivariana de Venezuela”. As of 2003 the country is subject to one of the world’s severest foreign currency exchange restrictions, introduced by the Chavez government. Not only has it had a major impact on Venezuela’s society and economy (with a scarcity in products and goods available in an economy that produces and exports only a few things itself, one of them being oil). It has also made it virtually impossible for residents to wire money out of the country, and therefore for foreign business to get paid for services and goods.

A short background. Let’s for our purposes focus on private businesses and individuals. In principle all payments in foreign currencies by individuals or businesses have to be run through CADIVI (Comision de Administracion de Divisas), a government body. CADIVI basically regulates how much money in foreign currencies residents may buy and who is allowed to buy. Approval procedures are lengthy (it may take up to between 9 or 12 months before a payment is approved, if at all) and lack transparency (it is unclear as to what documentation accompanies a request). But what makes the system unpredictable is the fact that there are annual, accumulative quotas (which are national) on the amounts of foreign currencies, which means that even if documentation meets approval the request may simply be rejected because it exceeds the quotas.

This makes Venezuela an extremely complicated case in terms of collections. How can one still successfully collect monies owed from companies or individuals based in Venezuela?

Naturally, it pushes businesses and collection agencies to look for alternatives to wire transfers from Venezuela. Possibilities depend on the circumstances and alternatives may also not be straightforward. However, there are alternatives:

Payments from reserves held abroad: Those companies or individuals who have a bank account outside Venezuela can pay from abroad. Accounts in the US and Spain are especially popular; we have successfully collected in Venezuela in several cases because of this alternative. Downside is that the group of companies and individuals that do have an account with reserves abroad is limited.

Credit card payment or Paypal: An alternative for a wire transfer is a payment by creditcard or Paypal. However, also creditcard payments are subject to government restrictions. Approval from CADIVI is needed and it can take up to 2-3 months to get permission, if granted at all. Range of amounts permitted is US$300-US$3,000 per person on an annual basis, subject to amongst others reason and destination. As in the case of bank accounts abroad, some businesses and people have foreign credit cards and may escape from being subject to CADIVI;

Payment with Western Union: This seems to be an alternative for payment to family members abroad or for educational purposes, like universities;

Payment by check: There is thepossibility of sending checks in abroad (there seem to be banks that accept that in Venezuela). However, also check payments are subject to CADIVI and generally a maximum allowance is mentioned of between US$500-US$700;

Acceptance of payment in bolivars: Although this alternatives sounds only hypothetical, there are actually webpages in Venezuela dedicated to this;

Digital currencies: Although I do not have any experience in practice, Bitcoins may certainly be worth investigating. It all depends however if creditors accept payments in Bitcoin. Downside is the instability of the value of Bitcoins. Furthermore, it is to be seen if how long government will hold off restricting Bitcoin. Regional neighbor Bolivia for example has as first country in Latin America prohibited the use of Bitcoin.

Drawing to a conclusion. Wire transfer payment from Venezuela are subject to approval from and quotas set by CADIVI. Most feasible ways to collect monies due from Venezuela are still to circumvent the system by looking for less conventional payment methods or by having the transaction take place outside Venezuela. Five alternatives may be payment by the party in Venezuela from reserves held outside Venezuela, payment by creditcard (or Paypal), payment by check, payment through Western Union, payment in Bolivar and payment in digital money (Bitcoin). These alternatives may however depend on access to alternative payment methods, or they may still be subject to CADIVI’s rules and regulations or may in practice turn out to be only hypothetical options.

Since Nicolas Maduro took over presidency in Venezuela, there have been signs that the foreign currency exchange restrictions may be softened. In practice the impact still has to be seen. Only time will tell.

If you are interested in learning more on the subjects of collections in Venezuela, foreign currency exchange restrictions, CADIVI, or collections in Latin America please leave us a message, or 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.