In the Nordic region, we are used to getting paid relatively fast. And when we don’t, most people are not afraid to collect the debt.
– Companies here view collection as a natural part of the cash flow process, says Stefan Lindberg, who works with international collection at Intrum Justitia.
However, many companies are less willing to use the same stringency towards customers in other countries. Collecting debts often comes in much later in the process. This is true also within the EU, although there is a binding EU directive effective since 2002, which demands that the member states have a national set of rules to protect creditors. The demands are similar to the Swedish system. Clear and open claims must be handled in a simplified way through a summary procedure, and you have the right to receive interest for arrears as well as fair compensation for litigation costs.
Good preparation– Actually, there are no concrete reasons to place lower demands on a customer abroad than in Sweden. At the same time, behaviour and business cultures differ. Therefore, you must prepare yourself well by finding out what is customary in the specific market.
You have to be able to answer questions like: What are the customary terms of payment? What should you do if you don’t get paid? How many chasers should be sent before the debt goes on to a collection agency? Does it matter which language the invoice is in? What can I find out about my customers?
– In Southern Europe, for example, it is much more common with longer payment terms. In France, you have a better chance of getting paid on time if your invoice is in French. For each country, you should have a clear strategy and a specific credit policy that takes the local framework into account, but then is just as stringent as in Sweden, is Stefan Lindberg’s advice.
If you don’t hold your own when dealing with customers who are not paying on time, you easily end up last in line if they run into problems with liquidity – and then those problems can become contagious. Delays when handling your arrears deteriorates your cash flow and, at the same time, becomes a hidden financing of your customers’ operations
– It is all based on realism about what could happen. Giving someone credit is always a business risk and, in general, it is true that the further away from Sweden you get, the worse are the consequences.
At
www.europeanpayment.com you can find out about Intrum Justitia’s recurring survey of payments in the different countries of Europe. A new survey is due in May 2008.