Other ways to secure the contract

However, in markets where charging interest is more common, we recommend discussing the option of charging interest when you negotiate the contract. Include interest in your quotation, order confirmation and invoice. The interest rate matters and should be high enough to encourage your customer to prioritise paying your invoice.

Remember to refer to the 'Late Payment Directive' when exporting to the EU.

Late payments are very common when you sell on open credit. Whatever the reason for the delay, you need effective monitoring and debt collection procedures that encourage buyers to pay on time. To achieve this without disrupting your customer relationships, you should understand local practices in each country. We recommend maintaining close contact with a debt collection agency that has a proven network and knowledge of the market in which your customer operates.

If payment demands and debt collection measures do not produce results, you will need to take legal action. This normally takes place in the courts where your customer is based, with the aim of obtaining a judgment that holds the customer liable and requires them to pay. If the customer does not pay voluntarily, the judgment may, in certain circumstances, be enforced by the authorities in the buyer's country.

If the legislation in the importer's country allows it, you can include a retention of title clause in the contract. You can find out whether this is possible in the country you plan to export to on the Sats Internasjonalt pages. If so, include the following sentence in the contract: 'the goods shall remain the property of the seller until complete payment of the price'.

The advantages of using a debt collection agency often include access to a local network and the fact that these agencies tend to be taken more seriously. They understand the local market, including the laws and regulations governing debt recovery, and know what does and does not work. If necessary, they also have the financial resources to pursue a case through the courts.

The main disadvantage or limitation is often the fee charged by the debt collection agency. The agency also assumes no risk on your behalf, particularly country or currency risk. Effective debt collection often requires a well-drafted contract, including, for example, retention-of-title clauses, agreed late-payment interest and dispute resolution mechanisms. If the debt collection agency does not have a strong local network, you as the exporter may sometimes have a better local presence and be better placed to follow up payment.

After a certain period, depending on the market and the choice of law in the contract, your right to recover a debt will expire. Check the relevant provisions for your market under Market Insights on 'Go International'.