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Exporters should expect to deal with overseas debt Lovetts warns businesses as Government delivers export boost

British exporters must prepare for late payment from overseas buyers to increase their chances of successful debt recovery warns Lovetts, the commercial debt recovery solicitors. In the March Budget, the Government set a target for UK exports to reach £1 trillion by 2020 and for 100,000 more companies to be exporting by 2020. Lovetts has seen the number of overseas debt recovery cases it is handling double in the past year.

Michael Higgins, Commercial Litigation Manager (Solicitor) at Lovetts said “The Government’s initiatives to boost exports should be applauded but this needs to go hand in hand with some sound advice on reducing the risks of trading overseas, in particular, non-payment of invoices and bad debt. While the Government has announced that loans available to foreign buyers to purchase goods and services from UK exporters will be increased and rates cut, British businesses still remain vulnerable to unpaid debt. Mr Osborne said “We’re not going to have a secure economic future if Britain doesn’t earn its way in the world.” I support that view but businesses need to know how to trade overseas securely first.”

To help control risk when dealing with companies based overseas, Lovetts advises the starting point has to be the use of the common sense solid credit management procedures:

Make sure you know who you are dealing with by checking the true identity of your client and ensuring they are creditworthy through a credit check. There is an increased risk when dealing with a customer not based in the UK. Obtain acceptance of your Terms & Conditions in England & Wales. For overseas contracts this will ensure contract formation within home jurisdiction Make sure your paperwork is accurate and timely, leave no room for error Resolve any queries promptly Consider credit insurance cover

It’s also critical that businesses protect themselves against bad debt through a set of robust terms and conditions:

Ensure your Terms and conditions allow you to charge overdue interest and compensation for late payment

Consider including a clause so that you can claim immediate payment on invoices not yet due Where you need third party assistance in recovering the debt make sure you can pass on the charges to the debtor Make sure your terms give you the right to suspend on-going shipments when default occurs Stipulate clearly that the law in England & Wales governs the contract

Of course the additional challenge for exporters is to ensure rigorous processes are in place to tackle late payment when the debtor may be on the other side of the world and operates in a completely different language. Agreeing which language will be used for the contract and subsequent communications is therefore a crucial starting point.

It’s also worth remembering that if businesses litigate, documents may need to be translated and personally served on the debtor.

Michael Higgins concludes: “While all this groundwork won’t protect businesses from the risk of late payment it will put creditors on firm ground for any legal action necessary.”

This was posted in Bdaily's Members' News section by Charles Wilson .