Foreign Exchange Controls in Latin America

Several countries in Latin America have foreign exchange controls in place. Such foreign exchange controls often have an impact on the accounts receivable management of foreign businesses trying to collect.

What are foreign exchange controls?

150712 -2Foreign exchange controls are collectively a series of control mechanisms to which individuals and businesses are subject to when buying or selling foreign currencies. Governments use foreign exchange controls as a political instrument in an attempt to control and protect local economy.

Foreign exchange controls can include:

  • Prohibition of use of foreign currency within the national borders
  • Fixed change rates
  • Restrictions on the amount of a foreign currency that can be bought
  • Restrictions on the amount of national currency that can be sold
  • Making currency exchange subject to government-approval

 Which countries have foreign exchange controls?

Currently, the main countries in Latin America whose residents are subject, to a larger or lesser extent, to foreign exchange controls, include:

  • Venezuela
  • Argentina
  • Brazil
  • Cuba

What is the effect on collections?

150712 -4For foreign companies that are collecting on invoices in a country whose residents are subject to foreign exchange controls have to keep in mind that such foreign exchange control may impact several aspect of accounts receivable management: deteriorating payment behavior on your debtor’s side, increase of days of sales outstanding (DSO), increasing costs of credit insurances, decrease of success rate on (debt) collection, and, in the worst case scenario: not getting paid at all.

If you are interested in learning more about foreign exchange controls in Latin America let’s connect on Linked-In or follow me on Twitter.

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

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2 thoughts on “Foreign Exchange Controls in Latin America

  1. […] In some countries, debt recovery in South America can be challenged by foreign currency exchange controls. In some countries, like Brazil, international payments are subject to prior controls which can delay or obstruct payment. From other countries, notoriously Argentina and Venezuela (please see previous post about Venezuela),  it has become difficult or impossible to transfer monies out of the country. For more info on foreign currency exchange controls in South America, please click here. […]

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