By Max Clarke

Leading credit management and collection company Daniels Silverman has seen a 600% increase in the value of cross-border debt enquiries as companies experience problems chasing late payments abroad.

The value of foreign debts handled by Daniels Silverman has increased from £7.25 million in 2009 to over £45 million in 2010.

Carole Hughes, managing director, Daniels Silverman, says: “We have seen a huge increase in the value of debts from businesses that import, export or have branches overseas that are struggling with late payments. We are also getting a lot of enquiries from businesses overseas particularly from the emerging Asian markets who have supplied goods and services to companies in the UK and are unable to secure payment, as well as from businesses exporting to these markets.

“A more global market place and the internet has created new opportunities but has also added new complexities. The worldwide economic downturn has meant payments are being delayed and debts have increased and many of our clients are unprepared to deal with the challenges of chasing these debts across borders because of language barriers, cultural differences and different legal processes. It is important to put in place solid credit and payment management procedures at the start of any contract.”

Tips to avoid cross-border debt:

1. Research your market thoroughly; understand the cultural differences and ways of doing business.

2. Be aware of tax issues and the peculiarities in the legal system. Businesses should have basic awareness of the legal possibilities should it all go wrong and whether their contracts are enforceable in the country.

3. Always perform credit checks to ensure you know your customer. It is much harder to locate a business contact if they disappear overseas.

4. Wherever possible obtain a personal guarantee from company directors.

5. Agree which language will be used for communications. It is much easier to chase late payments in your mother tongue.

6. Ensure your terms and conditions are accepted and stipulate that the law in England and Wales governs the contract.

7. Make sure your terms and conditions allow you to charge overdue interest and compensation for late payment and that you can pass on charges to the debtor.