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(No) Misunderstandings in International Debt Collection

“Give me a phone!” says your new Swiss business partner. You’re baffled and instinctively clutch your new smartphone a little tighter. In this article, I’ll explain what’s really happening here and which linguistic and legal peculiarities influence debt collection in Germany, Austria and Switzerland.

But first, let’s go back to the strange request for a telephone. Unlike in other languages, your Swiss colleague isn’t asking for a physical device with this expression, but rather a call. A request we’re usually quite happy to fulfill. This anecdote is just one of the local peculiarities that can complicate business relationships generally – and international debt collection in particular. This affects cross-border business between Germany, Austria and Switzerland, as well as companies from other countries that wish to conduct business here.

Linguistic characteristics in debt collection

There are not only linguistic challenges between the three countries in terms of how people speak. The technical vocabulary can also vary. In Switzerland, only judicial collection is referred to as “Betreibung” and the relevant authorities as “Betreibungsämter”. While in Germany, “Beitreibung” encompasses the entire debt collection process. In Austria, collection field staff are called “Inkassanten” – a term hardly recognized in the neighboring countries, even by debt collection experts.

In other words, what people say when planning collection processes can sometime differ considerably from what is actually understood. This can lead to diverging processes, incorrect approaches and “irritations” in practice.

But Switzerland already has its own even greater linguistic challenges within the country. After all, three languages – German, French and Italian – have to be covered there. Fortunately, address directories make it possible to determine which language should be used when communicating with a customer. Having said that, the preferred language isn’t always the same as the official language of the relevant canton, further complicating matters.

In Austria, while there is just one official national language, great importance is attached to titles. These include unconventional salutations like Commerce Councilor or Court Actress, as well as more common forms such as Mr. Director – to name just a few of the list of around 900 titles. What’s more, the spouse always has to be addressed with the same title as the actual title holder, for example Mrs. Director. For customer retention reasons, it’s therefore essential to always use the correct title throughout the dunning and debt collection process.

How comprehensive is local consumer protection?

Anyone who assumes handling debt collection for the entire German-speaking region from one of the three countries is simple, will also be mistaken in terms of the regulation. Both the individual countries as well as the EU are increasingly focused on the topic of consumer protection. While consistent EU directives may simplify international debt collection, laws and regulations within each country can often involve certain pitfalls.

In all three countries, it’s generally possible to pass on the default costs incurred to the merchant due to non-payment to the party responsible, i.e. the consumer. But the amount of the collection fees is subject to intense discussion. In Germany, for instance, more and more attention is being devoted to consumer protection. Here, legislation against dubious business practices has resulted in customers being provided with all the information they need to recall what they ordered when from whom in the collection letter.

Caution should also be exercised with dunning fees in Germany, since these are also subject to consumer protection: Only the costs of letters and postage actually incurred can be charged. By contrast, high dunning fees are permitted in Switzerland and even accepted by consumers. In Austria, the first payment reminder is usually free, while a fee is typically charged for the second and third reminder. For small invoice amounts, these costs can be disproportionately high.

But to send dunning or collection letters in Austria in the first place, a completely different minefield has to be navigated. Mail delivery is actually an issue here, since the addresses themselves and the address suffixes in particular are highly complex. This is compounded by the fact that no names are normally shown on the letter boxes for data privacy reasons. It’s therefore all the more important to correctly gather address suffixes in the address field in advance, allowing them to be used in the event of debt collection.

International debt collection made easy – give us a phone!

No matter whether you need debt collection services in one of the above countries or another region, or if you wish to sell local receivables portfolios. At Arvato Financial Solutions, we have the necessary expertise as well as local resources, central services and innovative technology platform combined in a special package for international debt collection. This helps your company simplify complex processes and minimize bad debt losses. If you would like to find out more about our services, “give us a phone” or discover further details about our CrossCollect solution here.


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