International Debt collection

In an increasingly globalized economic context, a well-known problem for companies with an International dimension is the Risk of insolvency.

Studies related to the payments of 2018, have made public the data regarding prompt payments of companies in 32 countries in the world, of which 22 are European.

As regard the EU, Denmark is at the top of the list because it is the most virtuous Country with 88.4% of companies paying on time. To complete the first three positions – Poland follows with 75.5% and the Netherlands with 66.3%.

On the opposite, the Portuguese companies are at the bottom of the European ranking with only 16.1% of punctuality in payments.  Bulgaria also recorded negative performance with 22.7%, in addition to Finland and Ireland, both with 27.3%.

Within the 22 European countries analyzed, Il Belpaese is at 14-th place with a percentage of virtuous payments of 37.3%.  Also with regards to the trend of serious delays, Italy is positioned in the lower part of the ranking with a share of 10.5%.

Below we summarize the data related to payment habits in Asia:

TAIWAN 69% Taiwan has stood out throughout the region for the highest percentage of timely payers with 69%. 
THE PHILIPPINES 29% The Philippines showed a significant improvement in terms of spot payments, reaching 29% compared to 17% in the previous year.
THAILAND  45,4% Positive trend also for Thailand, which recorded an improvement of 23.9% compared to the previous year. 

Looking at the payment habits of North America we have highlighted the trend of these countries:

  • The United States and Canada are in an intermediate position, with respectively 56.4% and 42% of payers on maturity.
  • In particular, the United States recorded a 2.6% increase in this payment class compared to the previous year.
  • Mexico reported a positive payment performance with 56.1% of timely payers.

The last analysis concerns the countries of Southern Europe. Also in this case we have reported the main evidence regarding payments.

From the latest available data it appears that:

  • In 2017, Spain stood out for its highest percentage of timely payers with 55.5%.
  • Portugal and Bulgaria, on the other hand, register less than 23% in the payment class at maturity.
  • Romania shows improvements in payment habits compared to 2016, with an increase in timely payers and a reduction in serious latecomers.

Referring to the EU, in case of non-payment, there are several ways to follow in order to be able to assert your rights.  A first step is represented by the request of an issue of an order for payment  (or the so called EPOEuropean Payment Order ). To be able to issue such an injunction it is necessary that the debtor has the nationality or the seat in the European Union.

For example, if the debtor is Polish (and Poland  is part of the EU) then you can request the issuance of the Payment Order. The times are different depending on the Country but in principle in all 28 EU countries you can ask and you can issue the EPO.

The steps to follow are the following:

1) In the extra-judicial phase, the recovery of credits abroad and the  formal notice takes place after a complex phase of research of information (the so-called Investigations) useful for assessing the debtor’s solvency. Without this phase, it becomes not only difficult but also improbable a correct approach to recovery. Once this first phase of investigations is completed, the practice will be ready to be activated against the insolvent debtor.

The mandate consists of sending a formal letter to the Debtor in his original language. After the waiting time mentioned on the warning (normally 15 days), the debtor is contacted by phone to verify the reasons for impeding non-payment.

The phone contact is always a first attempt to recover outstanding claims, and helps the lawyer to collect a series of information and impressions that will be useful to carry out the following phases.

2) If the first phase is not conclusive, before proceeding with the judicial phase, a direct approach is attempted by visiting the counterpart.In the event that not even the meeting with the debtor gives results, we will proceed with the judicial phase. At this stage, debt collection becomes more concrete. Our legal collaborators, having jurisdiction in the state where the credit must be collected, will start the case according to the procedures and rules in force in the state where the credit is recovered.

If the debtor continues not to pay even at this stage, then it proceeds with the execution, coming up to the foreclosure of all the property of the debtor or all the necessary assets to meet the needs of the creditor.

The situation is different – for example – if the debtor is Swiss. The latter is yes in Europe but has not joined the European Union so the order for payment, in this case, is not applied. So, in order to recover a credit in Switzerland, you need to know the laws thoroughly to see if it is better to proceed with the judicial or extrajudicial procedure.


The same principle is applied  to the Western Balkans (Albania, Bosnia Herzegovina, Serbia, Montenegro, Kosovo and the Republic of Macedonia).

To conclude, we can say that when it comes to the recovery of foreign credits, there are two things to consider.

  • The first is to contextualise each case and understand if the EPO is applied or not.
  • Then choose the approach with which you want to act, judicial or extrajudicial.

A final consideration, which is taken for granted but which is of fundamental importance because it applies to all countries (Europeans, Asians, etc.) is the Country Judicial Risk Analysis (so-called Judicial Country Risk).

The analysis of the c.d. Judicial Country Risk allows to understand the degree of performance and fairness of a court and allows, therefore, to hypothesize the chances of success or failure of a lawsuit in that Country.

Invenium, with twenty years of experience in the field of Debt collection and its massive presence in 105 countries, is able to handle conflict situations between debtors and foreign creditors thanks to its wide network of legal collaborators.

For further information contact us or visit our website.