Collecting international B2B claims in Latin America is in many ways not comparable local collections. The nature of the claims, as well as the collection options available, are essentially different.
Focus should be om amicable collections
Due to the complexity of cross boarder documentation and procedures, and differences in legislation between the jurisdictions of creditor and debtor, generally speaking, legal enforcement of international B2B claims is unattractive, unpracticable and often, impossible. This means that the focus of collection of international B2B claims, also in Latin America and the Caribbean, will be on finding amicable solutions.
Amicable solutions: full payment, payment plan or settlement?
With an amicable approach to collection of an international B2B claim in Latin America, the objective is still to achieve payment for the creditor, as soon as possible. In looking for an amicable solution, it is important to be prepared to negotiate with the debtor. If full and immediate payment cannot be achieved, provided there are no disputes, counter claims or insolvencies, the alternatives are to negotiate a payment plan with the debtor (which entails a more long-term approach) or to look for a partial payment as full and final settlement (if the creditor prefers a short-term solution).
How to deal with disputes in international B2B claims?
If the debtor disputes the claim, it is important to determine the reason. If feasible, the dispute should be dealt with and if the issue (whether service or product related) cannot be fixed, then the most convenient approach would be to negotiate a settlement and look for partial payment. From a commercial point of view, the creditor should try to solve the dispute, especially if creditor and debtor have the intention to continue working together and doing business.
What to do if a company is insolvent
If a company in Latin America is insolvent, whether in bankruptcy or administration, or any similar or comparable situation, then the likelihood that the creditor will be paid is limited. For each country, the formal procedures differ, and also international B2B claims can be included in insolvency procedures. However, as these usually are very long lasting and hence come with potentially relatively high (legal) costs, it might not be attractive for foreign creditors to further pursue if a debtor in Latin America is insolvent.
As legal enforcement of international B2B claims in Latin America is unattractive, unpractical and often, impossible, the focus for debt collection should at all times be on amicable collections. Amicable solutions include the objective to look for full payment, to negotiate a payment plan with the debtor, or to otherwise look for a settlement (leading to partial payment). From a commercial perspective, it is important for a creditor to try to solve disputes with debtors and to look for a settlement, if possible. If a debtor company in Latin America, however, is insolvent, usually there is little that can be done on behalf of the creditor, to achieve payment.
If you are doing international business in Latin America and you are interested in learning more on collecting international B2B claims, please reach out to Cobroamericas, on Linked-In or follow us on Twitter.
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