Distance, cultural differences, and another language: collecting outstanding debt in Mexico can be a real challenge for foreign companies.
What should you take into account when you try to collect a commercial debt in Mexico? Here are a couple of elements.
Speaking the language of the debtor
It is important that you can communicate with the debtor in his own language. In Mexico that means speaking Spanish. Although the level of English has increased over time, there are still many people who prefer Spanish or struggle with English. Speaking Spanish means that you can have full understanding in negotiations and working out agreements.
Understanding the debtor’s business culture
The way people do business differs per country. In Mexico, speaking by phone and even better, face-to-face meetings, are still to a large extent the norm. Virtual meetings can be a great alternative. However, trying to achieve communication and to be effective in negotiations and collections by email or worse, by regular mail, can be a waste of time and resources. It is all about the human connection.
Understanding the legal side in Mexico
Now it is of utter importance to understand the legal options in Mexico, as legal is often considered an alternative if amicable collections and negotiations are ineffective. Mexico has a complicated legal system, which makes it very difficult and often impractical, to collect a foreign claim through legal proceedings. This means that legally enforcing payment of a commercial debt may only be a theorical option, but not desirable or even impossible in practice. This means that the perception of leverage changes, as effectively the only feasible way is finding an amicable solution.
Understanding the local circumstances for the debtor in Mexico
The debtor may well be willing to pay, but due to local circumstances, is not able to do so. The local circumstances in Mexico can include economic landscape, currency fluctuations, or even political context can be of influence and can affect the stability of his or her business. It is essential to understand these circumstances and that you show empathy. Willingness to discuss settlements, payment plans, return of products or a combination may well be helpful for creditor and debtor to find an amicable solution.
Conclusion
For yourself as creditor, when collecting a debt in Mexico, it is important to literally speak the language of the debtor (Spanish), to understanding the local business culture, to be aware of the complexities of the legal system in Mexico, and to consider the local circumstances your debtor may be subject to in Mexico.
If you want to know more about commercial debt collection in Mexico, feel free to contact us via Cobroamericas, on Linked-In or follow us on Twitter.
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Debt Collection Latin America & the Caribbean 