Make Collecting Overseas Payments Easy By Avoiding Disputes

Giving your customer precise instructions about your requirements, and agreeing in advance with your customer’s proposals, can go a long way to avoiding any disputes arising. Checking on receipt that the contents of the letter of credit meet with the instructions of both parties, which should have been incorporated into the sales contract, will allow time for any amendments to be made prior to shipment of any orders. These actions will prevent a letter of credit failing to be paid. The examination of a letter of credit should confirm the following:

  • all documents are correct
  • they have been received from the various departments of your organisation
  • the dates for shipment and lodgement have been met

If by chance there is insufficient time to rectify any document, fax your customer with instructions to his bank to accept the documents to hand.

Collecting Overseas Debt

Collecting money due to you from export sales requires a methodical approach, and relies on following every deal through from initial order to final receipt. An exporter’s resources must be devoted to preventing late payment, especially with the larger debts, and on the same lines as at home. Legal action for overdue debts is very time-consuming and costly, and must be restricted only to extreme cases. Therefore it is better to ask for payment early in the collection cycle when your exports are on an open account basis.

Chasing for foreign payment

Using letters, even airmail, is a slow process and should be avoided. The only exception should be when documentation evidence is needed. Using a courier may be faster and more reliable, but it is an expensive alternative unless you have another delivery close by and your transport contractor is obliging. The fastest and certainly most efficient is email or fax, as demands and copy documents can be transmitted to your customer instantly.

1. Acknowledge all orders and confirm payment terms.

2. Establish credit sales.

3.Confirm currency regulation in country of delivery.

4. Inquire if import/export licence is required.

5. Check letter of credit (if applicable).

6.Re-check if customer is creditworthy.

7. Verify all export documentation is correct.

If possible

– appoint local agent

– send copies of all documents to agent

– chase banks for unpaid bills.

Overseas telephone collection

This is well worth trying providing you remember the time zones. If possible try using the customer’s native tongue, but don’t worry if you can’t: English is very widely used. However, avoid asking direct questions which can be answered with a ‘yes’, to be polite overseas buyers can’t help saying it. Preferably ask:

-Have you paid our invoice for  ?

– When did you remit the payment?

-How was it sent?

– Why have you not paid?

– Who did you complain to?

–  When did you write or telephone?

As with your UK debtors persistency is the key to successful collections, and each time you contact your customers, whether at home or overseas, you must press harder for the payment due to you.

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Other options

If you use an overseas sales agent to obtain your orders, make it part of their contract to collect your debts locally for you. Chambers of trade can be helpful, local or international debt collection agents would be another consideration. Using an export factor transfers the collection problem from you to them.

Finally personal visits can speed up collection; this may save you interest which can be used to off-set the cost of travel. The visit can also be arranged at the same time as a sales call or trade fair. Preparation for all overseas visits must be thorough; you cannot nip back to the office to collect forgotten documents. You or your representative will need to take the following documentation and information along with you:

-name and position of contact

-copy invoices

-copies of all export documentation

-full details of their account and how much they owe

-knowledge of the import country’s currency regulations

The member of staff making the trip must have authority to negotiate and to arrange an extended payment plan if necessary.

Transferring money by mail

Unless you are an able negotiator and can persuade your customers to pay the fees, all payments will be received by you ‘nett of charges’. The most common method of monetary transfer is the mail or airmail transfer; unfortunately it is a slow process and should be avoided in favour of speedier transfer systems whenever possible. Exact instructions must be given to your customer to prevent any extended delays; the full name and address of your bank, together with their correct sort code and your account number must be clearly stated. Having this information printed on all your export invoices and other documents could avoid payment going astray.

Telephonic or Transfer

These are sent by inter-bank cables, and generally referred to as TTs. Your customer is not put at a disadvantage using this method, his account will be debited the same day as with a mail transfer. Your preference for this method should always be stated because payment will reach you four or more days sooner. This method is used when the transferring banks are unable to use the next highly recommended method  computerised payment. Again your bank details will need to be communicated to your customer.

Credit Payment

Known as the SWIFT system, this offers an immense saving of time, as funds are transferred the same day. It also reduces the paperwork and prevents mistakes. However, both the customer’s bank and yours must be linked up to benefit. To make it easy for your customer to transfer cash from abroad, details of your banker’s name, address, sort code and your account number should be printed clearly on all your export invoices. It is in your interest to make the transfer of funds to pay for your goods or services as painless as possible for your customer.

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