Debt collection in Spain
The Spanish economy is expected to grow by 2.7% in 2018, however the fact that the signs of the crisis have slowed down and the economy is on the rise, does not mean that there are no significant payment difficulties on the part of debtors
The Spanish economy is expected to grow by 2.7% in 2018, unchanged from last month’s estimate and 2.3% in 2019 thanks to strong employment growth and low inflation that should continue to push private consumption. However, the economy faces mounting headwinds in the short- to-medium term. Moreover, given Spain’s high energy import dependence, rising oil prices should exert upward pressure on the import bill, likely dragging on growth going forward.
In terms of imports, these increased by 17% on an annual basis, which amounted to $3.91 billion compared to the same period of the previous year.
The most imported products from Spain in 2018 are capital goods (13% of total imports); chemical products (18,8%); energy products (19,1%); automotive sector (13%); consumer goods (12%); food, beverages and tobacco (12%) and non-chemical semi semi-manufactured products (7%).
The following product groups represent the highest dollar value in Spain’s import purchases during the last year. Also shown is the percentage share each product category represents in terms of overall imports into Spain.
- Vehicles: US $45.9 billion (1% of total imports)
- Mineral fuels including oil: $45.7 billion (13%)
- Machinery: $34.6 billion (9%)
- Electonic equipment: $26.6 billion (6%)
- Pharmaceuticals: $14.4 billion (4.1%)
- Plastics: $12.3 billion (5%)
- Clothing, accessories (not knit or crochet): $10.1 billion (9%)
- Organic chemicals: $10.1 billion (9%)
- Iron, steel: $9.9 billion (8%)
- Medical, technical equipment: $8.7 billion (5%)
Spain’s top imports accounted for 62.3% of the overall value of its product purchases from other countries. Among the main trading partners, imports rose above all from Germany (5.8%); France (7.5 %); China (4.5 %) and Italy (6.7 %).
Hence, the first Country from which Spain imported is Germany; In fact Germany’s exports to Spain amounted to $49.7 billion and cover these sectors of goods: vehicles ($13 billion); machinery ($8.4 billion); electronic equipment ($4 billion); plastics ($2.3 billion); pharmaceuticals ($2,1 billion): organic chemicals ($1.4 billion) and tobacco ($902, 9 million).
After the German primacy, other important partners for Spain are France, China, Italy, Netherlands, UK, US, Portugal and Belgium.
In the last year, France’s export to Spain amounted to $41.6 billion and concerns these products: vehicles ($9,6 billion): machinery ($3.8 billion); electronic equipment ( $2,7 billion); iron and steel ($2 billion); plastics ($1.7 billion); perfumes and cosmetics ($1,3 billion); pharmaceuticals ($1,1 billion); aircraft and organic chemicals ($1,1 billion).
China follows in order of importance and exports to Spain above all electric equipment ( 2,9 billion), machinery ($ 2,9 billion), clothing ($1,8 billion), toys ($1.6 billion),knit or crochet clothing ($1,5 billion), furniture and lightning ($1,2 billion), organic chemicals ($1 billion), footwear ($956.1 million), plastics ($756.7 million) and last but not least leather articles ($733.6 million).
As regards debt collection, the Spanish procedure has some features that make it more linear, quick and cheap compared to that of many other EU countries. The Spanish legislation allows anyone who wants to assert their reasons, to see satisfied the claim advanced, especially in the cases in which the credit does not exceed a certain amount.
The holders of a credit, benefit from a wide discretion in assessing whether it is appropriate to be assisted by a lawyer or to proceed independently and then decide later to involve a qualified defense or in case of significant problems.
These circumstances allow not only to contain significant costs but also provide the opportunity to evaluate the strategies to be adopted and the timing of implementation.
The cost/benefit option of a legal action is also assessed on the basis of the real advantage for the credit holder, and not only in relation to the difficulty of recovering the amount of the debt and the procedural rules to be followed.
Specifically, the Spanish legislation is divided into 2 phases based on the amount of the debt:
- If the capital is less than 3,000 euros, an attorney representing the creditor is expected to appear before the Court only if the counterpart opposes it.
- Instead, if the capital exceeds 3,000 euros and there is opposition, the Court grants 30 days to proceed with an ordinary appeal.
Compared to the Italian injunction, the limitations on the amount of credits lead us to think that the Spanish legislation is a tool designed for small amounts of capital. In summary, the Spanish legislation provides that a creditor can obtain a full satisfaction of its own reasons without having to rely on a lawyer or can give rise to a request (petition) by addressing directly to a Court of first instance who may consider the request legitimate or unfounded.
If legitimate, the Judge will notify the debtor of an order for payment which will subsequently become an enforceable title.
Obviously , the creditor is obliged to prove the existence of the credit (by invoice, delivery documents, etc.) and if the Court finds the request well founded, it will instruct the defendant to pay, or to oppose within 20 days (the debtor is granted the possibility of proposing defenses, making sure that the proceeding continues in the ordinary process or, in the event that it does not oppose or fulfill the obligation, an executive order will be issued immediately).
Therefore, the ordinary procedure provides an audencia previa – a procedure that aims to reach an agreement to reconcile the parties.Failure to reach this agreement is the prerequisite for the trial phase and will lead to the ordinary procedure that lasts around 14 months.
But how does Invenium intervene on debt collection in Spain?
From this point of view, Spain is considered more virtuous to other EU countries, as stated by Mr. Mombelli – expert in the field of debt collection.
“The times of justice are faster, the costs are lower and the need to be assisted by a lawyer is provided only for certain amounts and in the face of particularly complex situations”.
“Interesting then the request of the so-called petition and very advantageous the audencia that represents a sort of ADR “.
Invenium, in Spain, has a team of consultants and collaborators trying to put pressure on the debtor to get the payment faster. Sometimes this happens with a transaction or through a repayment plan.
If there is any impediment within two weeks, Invenium intervenes requesting the issuance of a payment order which acts as a negotiating lever.
In conclusion, the fact that the signs of the crisis have slowed down and the economy is on the rise, does not mean that there are no significant payment difficulties on the part of debtors.
After all, Spain has never distinguished itself for its capacity and timeliness of payments.
For further information and to talk to one of our experts, contact us.