If you are planning to expand your business and sell your products around the world, you will want to make sure your customers will pay the invoices on term. While in some countries this is not at all a problem, others have notable debt collection issues.
Debt Collection in Spain
Spain is known for poor payment behavior as is evidenced by the many Spanish companies. On average, payments occur in 70 or 80 days and are often late 15 to 20 days. Usually, large companies have the longest payment terms.
The slow process especially applies to the legal aspect so any other alternative debt collection action is preferable to the legal actions. A significantly problematic situation occurs when the debtor becomes insolvent. In this case, collecting the debt is exceedingly complicated and even impossible for unsecured creditors.
Debt collection is usually done by amicable action and creditors only pursue legal action as a last resort.
Debt Collection in Australia
Although the general payment behavior is good, there are increasing delays and currently payment occurs at 56.4 days. For debt collectors in Sydney, negotiation seems the only viable solution to do on your own as the court system is very complex and offers no solutions to un-disputable claims in a timely manner.
Before starting any legal proceedings, it is very important to assess the assets to make sure the company is still active and that there are any real recovery chances. If the debtor has initiated an insolvency procedure, recovering the debt becomes nearly impossible.
Debt Collection in Sweden
The payment behavior in Sweden is generally good and the legal process is quick and efficient. However, negotiation is clearly the preferred method.
Debt collection is impossible if the debtor becomes insolvent. The country has debt renegotiation schemes implemented and they allow for three-quarters of the debt to be written off thus it is very unlikely that any of the unsecured creditors will recover any of their money.
In Sweden, payment usually takes place in 30 days for domestic companies and a much higher 54 days for listed companies. Delays in payment are extremely rare.
Debt Collection in Italy
The payment behavior of the local companies is very poor and although the country has constraining regulations on late payment, it doesn’t improve the situation. While the law stipulates that the maximum term for payment is 30 days, the actual payment is done at 85 days on average, but it is a slight improvement over the previous year.
As procedural costs are high and enforcing the court decisions is challenging, pursuing legal action is not advisable. While the regulations in terms of insolvency are very clear and straightforward, they are rarely applied, thus making the collection of debt very unlikely.
Debt Collection in China
In China, payment terms fluctuate greatly, from 30 to 120 days, with a shorter term used in high-tech industry. Delays in payment are often due to financial difficulties that the debtor’s customers face. In practice, however, delays represent a cash management method and many Chinese companies push for a longer 120 to 180 payment term.
Conclusion
The payment behavior of local companies from debt collection in Melbourne to collection in Shanghai varies greatly from country to country. While in some cases a 30-days term is applied, other countries have an effective payment term of almost 100 days. Regardless, when late payments are concerned, amical reconciliation and negotiation is always preferred to a costly and sometimes ineffective legal action.
