Interview on the essentials of debt collection and the advantages to international trade

Nov. 7, 2011 - PRLog -- Dear Mr. van der Sande, I am please 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".
 

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".

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DAT-Consultancy is an international debt collection firm. Within our organization we can offer pre-legal and legal collection proceedings in over 50 countries worldwide. We have been assisting many companies worldwide with their overseas recoveries, thereby saving them lots of time, frustration, and above all financial loss. We have specialized and experienced agents who can handle both commercial as well as consumer debts. Our flexible and diplomatic approach during the mediation process has made us highly effective in the arrangement of debt settlements and restructuring of debt, irrespective of the complexity of the case.