How to Chase Overdue Invoices from International Clients

Recovering money from an international debtor is more complex than a UK claim, but it is far from impossible.

The process involves formal written demands, engagement of a local specialist agent in the debtor’s country, and, where necessary, local legal proceedings.

This guide explains your options step by step. As experienced international debt collection experts, this is something we deal with every week, and we can help you understand the process so you can successfully reclaim what you’re owed.

What Is an Export Client?

An export client is essentially an international client that you do work for. We sometimes use this term to describe a customer located in a different country who purchases goods or services from you.

How Difficult Is It to Recover Debts From an International Client?

Many debts racked up by overseas clients are recoverable, but recovering debts across borders is challenging if you try to do it yourself.

That’s why we use a network of debt collection agents in each of the countries we recover debts from.

When you work with someone who knows the local language, business culture, and law, you will be in a much stronger position.

You don’t necessarily need to be owed a lot of money to take advantage of international debt collection services. You just need to be able to provide evidence of the amount, and also prove the fact that the debt is not disputed.

UK Laws on Business Debts

You have rights to compensation if your customer doesn’t pay their invoices within a reasonable time.

The UK legislation is called the Late Payment of Commercial Debts Act and is fairly well-known. If your client is in the UK, you can charge interest and penalties. For small invoices, the law allows you to append a £40 fixed fee plus a certain amount of interest.

You can use our late payment and interest calculator to work out what you’re owed right now – and for free.

EU Laws on Business Debts

Many UK entrepreneurs don’t realise that they have rights under EU law as well.

If your client is in the EU and you’re in the UK, the law is very similar to the law that applies to UK-UK client relationships.

The law that applies here is the Late Payment Directive, 2011/7/EU. This replaced Directive 2000/35/EC in March 2013.

Under the new directive, businesses can charge a fixed late fee of €40 plus interest.

Debts from International Clients Outside the EU

Many collection companies can also chase debts when international clients are outside the EU, although you don’t have the same right to charge interest and fees.

Even without interest and fees, it’s your right to be paid, and collection is often successful. So we strongly recommend that you contact us for a free review of your claim.

Pursuing overseas debts is more difficult, but it’s not impossible. If nothing else, taking action shows your client that you’re not a soft touch and you’re serious about being paid for your time.

We work with agents in different countries who can put pressure on your client to pay. In some cases they can take the matter to court, if you want to proceed with legal action.

What Legal Action Can I Take Against an Overseas Client Who Won’t Pay?

Your legal options against an international debtor depend on:

• Where the debtor is based. Each country has its own debt recovery procedures, limitation periods, and court systems
• Whether you have a written contract and critically, which country’s law governs it
• The value of the debt. Smaller debts may not be economically viable to pursue through local courts given translation, travel, and legal costs

In practice, the most effective route for most UK businesses with international debtors is:

1. A formal demand letter from a local agent or law firm in the debtor’s country
2. Pre-legal collection by a local specialist
3. Local court proceedings
4. Statutory demand equivalent — many countries have equivalent mechanisms to a UK statutory demand or winding-up petition for company debtors.

Can I Recover International Debt Without Going to Court?

Yes. Many international debt claims are resolved without court involvement. A formal demand from a specialist local agent in the debtor’s country is often sufficient to prompt payment, particularly where the debtor is a trading company that values its commercial reputation.

Court action is typically considered only when:

• The debtor explicitly refuses to pay
• The debt is large enough to justify local legal costs
• The debtor is known to be solvent and has assets worth pursuing

Preventing Late Payments From Export Clients

Dealing with new clients is always risky. With export clients, you need to be more careful because collection is more challenging.

We recommend toughening up payment terms when clients are based overseas.

Here are a few ideas.

• Set a minimum credit limit. You might have decided on the maximum balance you’ll let a customer run up, but have you set a minimum as well? Don’t let clients run up tiny invoices that you can’t realistically chase.
• Get clients to agree to a contract. Specifying your payment terms in black and white puts you in a more powerful position if your client refuses to pay.
• Ask for payment in advance. You might want to do this the first time you work with a client, or arrange an ongoing advance payment schedule.
• Get a deposit. Deposits are a great screening technique; if a client won’t pay you to secure your time, they probably won’t want to pay you once you’ve completed the work either.

Depending on the nature of your business and the products or services you provide, some of these strategies may not work for you.

If you find yourself in a situation where an overseas client owes you money, it’s always worth getting a free claim review before writing that money off as a bad debt.

With the expertise of a professional, and the power of the law, getting paid might be easier than you ever expected.

See full details about our European debt collection services and contact us if you need more advice.