Debt Collection in Turkey | New Business Sector | No Cure No Fee
Debt Collection in Turkey | New Business Sector | No Cure No Fee
Debt Collection in Turkey is a relatively new business activity. Commercial actors in Turkey have not been very familiar with collection companies since recently. Payment issues were either being fought over in the Courtroom with lengthy procedures, or they were being solved on a personal note. As DAT-Consultancy we do however regularly receive positive feedback on our debt collection efforts with Turkish debtors. They are happy to 'finally being able to discuss the problem with someone from their own cultural background, speaking their language, and understanding the position of the debtor. This makes debt collection in Turkey a high potential sector.
Legislative Framework
In the field of commercial transactions the current legislation in place includes the 'Law on Obligations', the 'Commercial Code', the 'Law on Legal Interest and Default Interest', and the 'Enforcement and Bankruptcy Law'. These are all largely conform the "EU Council Directive on late payments(2005/35/EC, the 'late payments Directive'), butfurther alignment is still needed (EU Commission Screening Report 2008). Implementing coherent legislation is one step, but materialising it demands slightly more effort. Therefore, since the EU accession negotiations for Turkey had started in November 2005, various initiatives have been launched to raise awareness amongst business ownerson 'late payments'.
For example in November 2007, the European Commission organised a meeting in Ankara with as main aim to expose to Turkish enterprises and public authorities the direct effects of the EU's late payment Directive 2000/35 (EC/EP). This meeting informed Turkish actors on the effect of the Regulation on the competitiveness of companies and the relation to insolvencies in the European market. But also covered issues as the calculated default interest rate, cost of recovery, contractual abuses, retention of title etc.
As Turkey currently still ranks low in credit risk rankings, it is nevertheless expected that the rate of companies defaulting on their payment obligations will diminish gradually over the years.
How can DAT-Consultancy help to recover your overdue invoices?
DAT-Consultancy operates on the basis of NO CURE NO FEE, which means you only pay us a certain commission percentage as soon as we have succesfully let the debtor pay your invoice(s). We do not only offer commission-based amicable debt collection, but in case the debtor remains reluctant to pay, we can also bring your case to the Bailiff on WIN NO FEE basis. The latter makes us unique in the debt collection sector.
In our efforts to arrange an amicable debt settlement with the debtor we employ several different persuasion techniques. The first step is always an officially sent demand letter both over post and email. Continuously, when no reply comes within some days, we start contacting the debtor over the phone. If no solution within 5-6 weeks, we will inform the debtor that his case will be brought legal, and enforcement procedures will be initiated by our law firm.
Sending of a demand letter is standard the first initiative we take. Although we have a standard format we do not use standard content. Every demand letter is tailor-made and composed according to thespecificitiesof each single case. We shortly introduce our collection agency, concisely provide a summary of the debt issue, and indicate what is requested from the debtor. Also, the first demand letter will inform the debtor on the consequences of non-compliance and mentions our partner lawyer office.
Collection calls are the most important phase of the pre-legal collection process. It is during these calls that we have direct contact with the debtor and approach him in his own mother tongue. The first step is always to try to reach through to any financial director or the person responsible to approve of payments.The most common hurdle are secretaries which have been instructed or are unable to redirect a call to the person in charge of payments. However, we have different methods to persuade secretaries as to why a call has to be put through.
When finally talking to the responsible person, we often receive surprised reactions. It is not unrare that they show relief to be able to finally talk in their own language. Most often we hear that a conflict situation has gotten out of hand or reached a deadlock due to language problems and total misunderstanding from both sides. The result had been frustration which had locked the issue, and caused both debtor and creditor not to talk to eachother at all anymore.
It is of key importance in Turkey to gain trust and to build up an informal relationship with the debtor. Therefore we let the debtor elaborate on the debt issue, showing understanding for the predicament he allegedly is in, and thereby create an informal bond and a feeling of trust.
Within the six weeks before a case goes to Court, we gradually intensivate the calling of the debtor up on to a daily basis. This has proven to be ample time to arrange the settlement. In some complex cases which demand more time, we do schedule a meeting with the debtor in order to reach an agreement, often in the form of a payment schedule.
When the debtor remains reluctant to settle with us before the passing of the first six weeks, we arrive at the final stage of the pre-legal procedure, the final notification letter. This letter is sent again both by official post and ove email, however with one sole difference, it is signed now by our law firm, and the debtor is informed that legal procedures are to be initiated upon continued defaulting within 7 days.
ln case you currently have outstanding balances in Turkey feel free to contact us, or immediately file your debt collection claim here
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