Recovering a debt in Panama? Read this.

We regularly collect overdue invoices in Panama, on behalf of collection agencies, international financial institutions and export companies.

Panama is in several ways different from surrounding countries in Latin America, because of the particular nature of Panama’s economy. It is an open economy, dollarized (which means that the dollar is the official currency), with a favorable tax climate for foreign investors, and a well-functioning professional infrastructure.

However, often, collecting an outstanding debt or overdue invoices in Panama is a challenge. Here is why.

Protective privacy laws: how to get info on a debtor?

panama collecting debtFirst of all, it is extremely difficult to obtain official information about companies incorporated in Panama. Privacy laws are strict and very protective of companies and individuals doing business in Panama. When collecting a debt, without proper information it might be difficult to locate a debtor, or obtain contact details or up-to-date financial information on a debtor company or individual.

Location: the Panama-based debtor company vs the beneficial owners

Secondly, as Panama is a very populair offshore location, debt collection panamawith many businesses incorporating companies in Panama for privacy protection or tax reasons, the actual beneficial owners of a your Panama-based debtor company may in reality be located outside Panama. This means that although you are looking in Panama to collect a debt, and address your letters and notices of default, or other formal debt collection notifications to the debtor company in Panama, in reality you will have to find ways to contact the beneficial owners of the debtor company and try to negotiate amicably, as legal proceedings against an offshore company in Panama is often not feasible or economically attractive.

The registered agent: buffer between creditor and beneficial owner

panama debtorsThirdly, when you contact the debtor company in Panama in an attempt to collect a debt, you will often find yourself communicating with a so called “registered agent” in Panama (often a law firm) with (very) limited powers and who cannot and will not provide any substantial information or answers. The registered agent will pass the information and notices on to the beneficial owners of the Panama-based debtor company, and they will and often cannot do anything more. On the other hand, they will and cannot provide you (under Panama’s privacy laws) with names and contact details of the beneficial owners.

Protective privacy laws, the actual location of the beneficial owners as opposed to the Panama-based debtor company, and the involvement of a registered agents may make it challenging to collecting a debt in Panama. However, understanding Panama’s economy and corporate structures, having professionals locally and having the relationships with local law firms and registered agents can make the difference. We have succesfully collected in Panama and would be happy to assist you as well.

If you are interested in learning more or discussing issues that rise when attempting to collect an international debt in Panama, or in general you would like to know more about debt collection in Latin America & the Caribbean, please connect with Cobroamericas on Linked-In or follow us on Twitter.

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

Collecting Offshore in the Caribbean and Central America

150614 Offshore 1It is not uncommon companies decide to run (part of) their business from an offshore location. The reasons can be tax-related, for asset protection, or can have a commercial or servicing background.

The businesses on offshore locations are often run by a trust company, a fiduciary services provider that acts as the local managing director and keeps the company in good standing.

So it can be that you closed your commercial deal in Europe, North America or South America, but you paper the deal with a company in Panama, Belize, or from a nation on a Caribbean island like the British Virgin Islands, Curacao, Cayman Islands, Antigua & Barbuda or the Bahamas. You will subsequently also invoice the company at the offshore location.

When the invoices become overdue, legally you will need to do your collection efforts at the location your contract partner is formally established, which is consequently also Panama, Belize, or the Caribbean nation.

Collecting from offshore locations in the Caribbean or Central America often cause serious difficulties:

  1. The location may be remote from the creditor’s perspective;
  2. The ultimate decision takers on the debtor’s side or not based at the location;
  3. Legal systems at the offshore location are unknown to the creditor;
  4. Information available on financial status, assets, and people involved is often limited or unavailable;
  5. All communication goes through a third party, the trust company, who only has limited responsibilities and obligations.

How can you optimize your collections and minimize overdue collections and eventual write offs in offshore locations in the Caribbean or Central America?

  1. Your paperwork should be in excellent shape. You know where your contract party is based, so make sure beforehand that the contracts, order forms, and invoicing complies with local standards so that, in case necessary, you have solid file for enforcement of claims;
  2. If legally possible in accordance with the laws and regulations of the jurisdictions involved, make sure that at least one of the beneficial owners or related companies who are not at the offshore location signs as guarantor in case of default on the side of your offshore-based client. It will give you the possibility to claim from several parties who may be in much more favorable jurisdictions to enforce overdue payments;
  3. The trust company, as the trusted third party who manages the offshore company, is the gatekeeper and a good and continuous relationship with the trust company is essential. If you do not manage to collect yourself then turn to a third party account receivables provider who does have the relationships in the trust business, as this often makes it easier to get through and get outstanding invoices paid.
  4. As a general rule, do not wait too long if you see payment behavior or communication is deteriorating. The longer you wait, the more difficult it becomes to collect. Sometimes trust company have even stepped down as managing director or companies are dissolved. International and local law give little to no legal options when that happens to claim the unpaid invoices from anyone else and then usually it becomes impossible to still collect.

For several reasons it can be a challenge to collect on your (overdue) invoices from companies that are based on offshore locations in the Caribbean or Central America. To optimize your collections and minimize overdue collections and eventual write offs you should make sure your paperwork is in excellent shape, that a guarantor signs off on payment obligations in case of default on the side of the offshore-based company, you have and maintain a good and continuous relationship with the trust company that manages the offshore company, and you do not wait too long with taking action if payment behavior and communication deteriorates.

If you are interested in learning more on the subject of debt collection in offshore locations in the Caribbean and Central-America (like Panama and Belize) 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.

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.