When you work with a company in the same country, you have a common legal framework that links you, and it’s a relatively simple process to track down errant debtors if payment problems occur.
Dealing with clients overseas is more hazardous, and the risks can catch out many small businesses.
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Here are some practical tips for UK businesses that can prevent significant problems when dealing with overseas clients.
Table of Contents
1. Do Some Research on New Clients
Always research new clients before agreeing to supply them with goods or services. The investment of time can pay dividends.
- Connect with them via social media
- Check their LinkedIn profile. Do the details add up? Do you see signs of AI-generated images or profiles for people who do not exist? It is not uncommon for fraudsters to use names almost identical to the names of legitimate and long standing companies in the hope of catching out the unwary.
- Check the website. Are contact details listed? A bad client will not make it easy for people to contact them.
Pull a credit report and make sure you are 100% satisfied that the potential client is a genuine company. Credit reports can reveal all kinds of information that you might not know about. Here’s a guide to reading business credit reports.
2. Get Their Contact Information at the Start
Your customer isn’t going to volunteer their phone number once an invoice goes unpaid.
You need to make sure that you have all the pertinent information in advance.
- Have a policy of collecting an office number, cell/ mobile phone number, and a contact number for their accounts department before any work begins.
- Have details for more than one person so that an individual being off sick does not hold up the payment process.
- Make sure you know where to send letters: sometimes, following up phone calls or emails with a printed letter is necessary.
3. Be Cautious When Providing Credit
Be more cautious when extending credit to overseas clients. Draw up stricter terms than you would for clients in the UK.
Ask for payment upfront at least the first time you work with them, or collect a deposit of 50% and agree on staged payments tied to key points to minimise your risk.
If the client is genuine, they will understand and respect the request. If they aren’t, then it is better to find out long before you complete the work and raise the invoice.
4. Get a Contract
Your overseas client is subject to different laws in a different jurisdiction, but sending them a contract is always a smart move.
Not only does it show the client that you take your business seriously, but it will help you enforce any rights you hold in the event of non-payment.
If you don’t issue a contract, your client cannot be held to your terms and you lose any leverage you may have over the goods or services supplied.
5. Invoice in the Agreed Currency
Where possible, invoice in the client’s local currency. Invoicing in the local currency means less hassle for your client and no fluctuations in exchange rate to worry about.
Then offer as many options to make payment as are practical. Look at requesting funds via Wise or similar payment services. If you’re a freelancer, contractor, or SME, services like Wise can be cheaper than a foreign currency account because you pay per transaction.
For ease, PayPal is recognised in many countries. It generally has lower fees than an international bank transfer.
6. Invoice Accurately and On Time
Accurate and timely invoicing is crucial when dealing with overseas customers. If you wait to invoice or issue an invoice riddled with discrepancies, you are giving the client a ready-made reason to delay or withhold payment.
Make sure to include all payment details on every invoice, even if your client already has them. Include your IBAN and BIC or your PayPal, Wise, or card payment link.
Make all details and instructions explicit and clear from the outset. Don’t wait for them to ask.
7. Set a Maximum Credit Limit AND a Minimum Limit
Most business owners know that they should set a maximum credit limit, but have you also set a minimum amount that you’ll invoice for?
Specifying a minimum credit limit can save you from the pain of chasing low-value invoices overseas that are uneconomical to pursue.
If your export client owes you a minimal amount of money, chances are you’ll write it off rather than chase it via a foreign court. Your client knows this, so don’t give them the chance to make you work for free.
8. Take Prompt Action to Recover Unpaid Invoices
With our network of international debt collection agents, we can chase unpaid invoices anywhere in the world, but don’t wait to take action.
Statistically, the sooner an unpaid invoice is escalated to collection, the better the chance you have of a successful recovery. This is especially true if your invoice is of a moderate to low value.
9. Get a Free Claim Review
Safe Collections works with debt collection companies all over the world and has more than three decades of experience in recovering unpaid invoices from export clients.
If you’ve got a problem debtor overseas and you’re not sure how to recover what you’re owed, we can help.
With no upfront fees, and no fees if the invoice is unpaid, our international debt collection service is a risk-free option for you.
Contact us today to find out how we can help you recover what is owed.
