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Leaving the Gaulish Village – Successfully Managing International Debt Collection

The charming adventures of Asterix and Obelix have been winning the hearts of people of all ages and nationalities for around six decades. Likewise, I always enjoyed how the brave fellows from Gaul defend their village against the Roman conquerors. Today, I’m even more fascinated about the fact that the main characters regularly leave their village to go on adventures around the world. In this respect, you could say we share the same professional focus: Getting to know the differences of various countries and their inhabitants, and handling them with success!

To ensure growth, and sometimes even to survive, it’s nowadays vital for many companies to expand business operations to international markets. But internationalization usually comes with huge challenges – also in the sector of receivables management and debt collection. According to FENCA*, debt collection service providers recover between 45 and 55 billion euros of receivables back into the European economy every year. To prevent that bad debt losses cast a cloud over promising business cases, companies need to think about receivables management in an international context.

“These Romans are crazy” is not an option

In most countries, debt collection is a regulated business that can require local licenses and registrations. It should therefore be handled within the country itself. Communication is also a vital factor when it comes to local debt recovery. With all the specific national conditions, behavior patterns and linguistic considerations, Obelix would probably say: “These Romans are crazy!” But all these aspects need to be taken into account when communicating with customers. Only then can receivables management and debt collection lead to success – both in terms of recovery rates as well as customer retention.

When companies are positioned globally and have suitable staff and qualifications on hand, local receivables management can be handled in house. However, it often makes sense to bring in an external partner.

Choosing a partner: No magic potion is needed, just the right questions

If the decision is made to outsource international debt collection, there are some general questions that companies should ask themselves and their potential partners:

  1. How much capacity do I have to manage collection agencies?
    This question addresses whether a company wishes to involve a single or multiple debt collection partners for each country. The alternative is a central partner that ensures outstanding receivables are processed locally in the relevant countries. A central partner always has a competitive edge when it comes to the costs of selection, communication, and management. But it also increases dependency! It’s much harder to switch in this case than replacing a local partner.
  2. Is my potential debt collection provider reputable?
    There are bad apples in any industry and debt collection is generally a sensitive topic. That’s why the reputation of debt collection providers suffers particularly from the dubious schemes of some “outliers”. The local debt collection associations can be a good starting point – such as the BDIU (Germany), DIB (Denmark) and NVI (Netherlands) which ensure the credibility of their members.
  3. How secure and simple are the processes?
    This primarily concerns the security of data exchange. It goes without saying that all credible providers comply with national and European regulations on data handling. So, this question explores how fast and effectively data exchange can be implemented, as well as user-friendliness. Lots of interfaces, slow transfers or cumbersome uploads can result in considerable costs in the IT department or accounting. In this case, far more resources are needed than originally planned.
  4. How do keep an overview of open receivables and successful recoveries?
    Naturally, outsourcing means that companies hand over a significant part of their business operations. After all, around 20% of all receivables on average are not paid on time. Companies can only maintain an overview of the financial situation and successful recoveries when clear and consistent reporting is available. In the case of many partners, however, this level of consistency can only be secured with extensive coordination as well as both partners’ willingness to cooperate.

In my experience, exploring these questions thoroughly can prevent any (nasty) surprises during implementation and over the long-term collaboration with one or more debt collection providers.

The die is cast

At Arvato Financial Solutions, you could say that we have already ventured outside the Gaulish village for our customers. Thanks to our own branches and carefully selected partners, we provide credible, customer-oriented and legally compliant local debt collection services. And to simplify the complex processes and communication, we offer a unique approach called CrossCollect that combines central coordination as well as fast and secure management of all cases on an innovative platform. When it comes to successful international debt collection, I would say “Alea iacta est” or “The die is cast!”

Over the coming weeks and months, I will give you further insight into the specific regional and national requirements in international debt collection. If you have any questions, please don’t hesitate to contact us.

*Federation of European National Collection Associations

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