Interview On The Essentials Of Debt Collection And Its Advantages To International Trade

Dear Mr. van der Sande, I am pleased to have you for this interview. As you are most

probably aware there are many issues unclear about the activities of debt collection companies. I would be happy to hear your answers on the following questions:

Why would any company at all assign a debt collections firm for its international receivables?

"Many companies do not want to waste too many valuable resources on sending notifications, reminders and regular collection calls. Next to this, we have the resources to engage a debtor in its mother tongue by someone actually understanding certain cultural sensitivities to be taken into account. Also, mangeres want to take distance from the frustrations and prevent too much emotional involvement to harm a client relationship".

What are the concrete benefits of pre-legal debt collection?

"You lower financial risk by not paying high advance lawyer fees without having any guarantee on a successful solution. In case a pre-legal solution is reached, you will have saved substantial time on lengthy legal proceedings. Also, by assigning a collections firm you do not necessarily jeopardize your client relationship. By a tailored approach and exerting solely soft pressure you can prevent enraging your client.

An ofter overlooked benefit is that within the pre-legal process, result or no result,you will you will gain information on whether or not legal proceeding would at all be instrumental, thereby preventing spending money on a costly but eventually aimless lawsuit".

What is the most common reason a debtor does not pay its debt?

"It is not easy to put debtors in boxes. Especially in the beginning of a debt conflict it remains guess-work to reveal the debtors real intentions. In most cases the debtor is simply not able to pay its outstanding bills. This goes in particular for trading companies as some of them they purchase their products on the basis of mere speculation. If they have sufficient funds to pay their bills, it most often means they were able to sell their products. They subsequently would not risk not paying their suppliers as the supplier will simply cease supplying, endagering the debtor's future profits.

But there are also those companies which willingly delay payment. They make a profit on the accrued interest and just hope for a foreign creditor not to take further steps against them. These companies are highly sophisticated and know exactly how far they can stretch the process. We are signaling this behavior in an early stage and have apt strategies in place to counter these.

The most problematic group however consists of those companies/individuals who had bad intentions at forehand and never intended to pay for what they had purchased. In this group we often see companies which are on the verge of bankruptcy, and knew they were not going to be able to pay for the goods or services delivered to then. But also we have seen individuals with vague whereabouts and disputable backgrounds".

How can DAT-Consultancy help in case a debtor is untraceable?

"When we receive a debt collection case the client normally provides us with the contact details of the debtor. One of the most frequently seen reasons at the basis of an overdue account is a creditor company not managing to reach debtor anymore. In case debtor is a private person, there are many things that could have gone wrong in order for an invoice not to get paid. The invoice could be addressed to an incorrect, or sometimes non-existing address, or the debtor simply could have moved to another address without properly informing the creditor.

We have now for example some years experience with tracing the whereabouts of debtors in for example Turkey be it a company, or a private person. We succeed in tracing over 75% of untraceable debtors via for example our contacts within different governmental institutions or by making smart use of web 2.0. Our skiptracing service can trace any Turkish citizen with a Turkish passport merely on the basis of the surname plus date of birth, passport number, or personal identity number".

How long does it take on average to solve a debt file?

"From the moment we receive a debt claim onwards, until the very moment the debtor signs a payment contract, we need on average an approximate 6-8 weeks. It happens nevertheless that debtors act immediately and effect the overdue payment immediately after the receiving of our First Demand.

In case this does not happen but a debtor has shown its willingness to start paying off his debt, negotiations for a debt settlement start. This can be sometimes be a lengthy process. We are however aware of these tactics, and attempt to intensify contact at this stage. After agreement is found it is only a matter of days after which we let both parties sign an agreement so payments can start.

It does of course occur that a settlement can not be negotiated with a debtor, after which we will have to decide to take a case legal. We are aware of the fact that patience is important in order to persuade a debtor, but at the same time we are realistic and we would know when to cease negotiations and file for legal proceedings. After a case is brought to the Court, expectations should be considerably lowered. Depending on the judicial system within the country where the debtor resides, it can take up to 1-4 years before any Ruling".

What is your success rate for solving a case pre-legally?

"Our current succes rate is approximately 70%. We define succes as the achievement to make a debtor pay that amount of money which sufficiently satisfies the creditor, or the arranging of a debt settlement or a repayment schedule to which both debtor and creditor have agreed".

There are people which are unfamiliar with the term 'no cure no fee', or 'no win no fee'. Why do most collection firms actually act upon the basis of no win no fee?

"Its meaning is actually quite straightforward as it refers to the arrangement between us and our client that the latter does not pay any procedural or legal fees for as long as we have not yet recovered their money.

The attractiveness for our clients to assign their debt files to us on the basis of no win no fee lays in the simple fact that it minimizes risk. If a lawyer had to be assigned, an advance payment of at least 5-10% of the total sum would be asked in order just to commence proceedings. In contrast DAT-Consultancy is only asking a small one-off admin fee of less than 50 Euros. In this way collection procedures become more accessible to companies with limited financial resources".

How and on what basis do you start a debt collections case?

"Clients assign us either by email, or via a 'claim submit' form on our website. They fill out all details and attach some basic documents corroborating their claim as e.g. invoices, agreements, and copies of correspondence with debtor. After submission of the form we will send them a confirmation of reception and a Service Agreement. Only after we have received a signed copy of this Agreement, we will commence collection proceedings, and the commission fee stipulated in it becomes binding".

People often distrust collection firms for any hidden fees or receiving unexpected invoices with unanticipated procedural fees. What do you say to that?

"For incidental files from new clients, we ask a small one-off administration fee. However, with most of our clients we entered into a durable relationship and they send us regular files for which no administration fees are due. In certain rare circumstances and incase of a complex debt file we may ask for an additional handling fee proportionate to the age and complexity of the debt. However, during the collection process there are absolutely no further fees. This is something like a sin in the debt collection world".

In which countries can you collect?

"We do currently collect in over 50 countries worldwide. Through our staff we can communicate in 12 different languages, and we have demand letters and notifications available in all these languages. We first attempt to achieve some result through our own notifications and collection calls. However if we fail to be successful, we instantly assign our partner office in the country of the debtor, which will take over".

Are you acting fully independent or are you a member of any professional umbrella organization?

"We are member of the ACA International, the main international organization for Credit & Collection Professionals. Through our membership we abide by their Ethical Guidelines, and the internationally recognized FDCPA. In the event of a debtor perceiving of any wrongdoing from our side, any complaints against us can be filed at the ACA, where an ethical committee will analyze the legitimacy of the complaint with possible penalties or us losing our membership."

Do you only engage in pre-legal debt collection or do you also arrange for legal proceedings? If so, how does this work?

"We do not arrange for legal proceedings ourselves, but facilitate them together with our legal partner in the country of debtor. When we feel that we have exhausted all pre-legal options, we advise our clients likewise. We provide our clients with all the details on legal procedures in that particular country. Legal proceedings are not everywhere the same and per country can vary to a large extent in terms of administrative necessities and the required legal costs. In cooperation with our partner we always attempt to keep the legal fees as low as possible and keep the process simple and accessible.

In some countries we can offer contingency-based (no win no fee) proceedings, but in others the creditor (often by law) has to cover for the legal expenses. However, the Agreement we enter in with our lawyers always strives to avoid payment of any advance fees. It is a hard guarantee that none of our lawyers works upon high hourly rates".

How do you establish your commission rates?

"Our commission rate depends on three important factors, namely the age of the debt, the height of the claim, and the location of the debtor. Simply put: the older a debt, the harder its collection, the higher the commission. The higher the claim, the harder its collection, the higher the commission. The less developed an economy, the lower the reliability of the judicial system, the lower debtor discipline, the higher the commission".

by: Brian Jones

POST COMMENT

Important Information About Online University And Distance Learning Led Light Wash Tube And Led Lights For The Club Benefits Offered By Distance Learning Course And Associate Degrees How Mba And Online Degree Can Help In Strengthening Ones Career You Need To Know Why The Grief And Pain Are Very, Very Different Home School And Also Arrogance What Is A Codec? And How Do They Work? Do You Know The Symptoms, Causes And Treatments Of Schizophrenia Lasik Surgery In India : Pros And Cons Astrology Palmistry And Horoscope Reading Used Rampantly For 2011 And 2012 Horoscope Design Your Office Interiors For The Best Of Appeals And Works What Is A Pbx And How Does It Work? Global Lubricant Market By Type, Region And Applications 2016