Why Negotiations are Essential in International B2B Collections

Negotiations are essential when you aim to collect an international commercial debt. 

Here are four reasons.

Settlement and or payment plan as a way out

When confronted with an international claim, often a settlement or a payment plan are a way out to solve the situation amicably without incurring legal fees or long term, potentially with multiple efforts without reward. In order to reach a deal, creditor and debtor will need to negotiate.

The claim may be disputed by the debtor

You may be in a situation where the debtor disputes a claim. The reason might be linked to quality of productions or services provided, or any other reason. Fact of the matter is that to enforce full payment of a disputed, international claim, is generally very complicated and may be practically impossible. To find an amicable solution, creditor may have no choice but to start negotiations to deal with the potential issue and at the same time, reach an agreement or partial payment or another sort of compensation.

Limited leverage on international claims

International claims means that there are two (or more) jurisdictions involved. Contracts may be subject to a particular country’s law, while each of creditor and debtor faces the reality of the legal system and obstacles of each other’s country. In many cases, going legal is economically not an attractive option because of potential costs involved. This means that leverage for collection of international debts may be limited. This pushes creditor and debtor to the negotiation table, to find an amicable solution for the claim.

Continuous Commercial relationship with debtor

It is not uncommon that creditor and debtor continue to have a commercial relationship, even if there is an existing debt. The international relationship is simply too important to break because of the commercial interests. If there is a continuous commercial relationship, then it is in the interest of both creditor and debtor to negotiate the most convenient solution for the outstanding debt rather than playing hard game on the collections side.

Conclusion: negotiations are essential

Negotiations in international B2B collections are essential. Often a settlement or a payment plan are the best way out, and this requires negotiations. Furthermore, the claim may be disputed, Creditor may have limited leverage on the legal side, and there may be a continuous commercial relationship which pushes creditor and debtor to opt for negotiations.

If you want to know more about negotiations in the case of international B2B collections, feel free to contact us via Cobroamericas, on Linked-In or follow us on Twitter.

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