Introduction of the euro
With
the introduction of the euro, many companies believed that the presence
of their organisation in the form of a branch office in other countries
would be superfluous.
They have discovered, however, that this is
not the case, and that there is not only a reduction of turnover, but
significant delays in the receipt of payments are experienced.
Delays of payments Reminders
from abroad are taken less seriously, bank transfers or cheques are
filled in belatedly, and when reminders and warnings are sent by
foreign suppliers, the large number of intermediary banks involved in
international payment transactions can be blamed for the delay. It is,
therefore, not uncommon for the means of payment submitted to a
non-domestic bank by an exporter (e.g. cheques or bills of exchange) to
only be credited to the account 4 - 6 weeks after they are due. This
means that an interest rate of 8 - 12% p.a. must then be paid on the
necessary current account overdrafts.
Banks and their handling fees
The
vast majority of European banks refuse to discount bills of exchange on
their own account because they do not wish to face the risk and the
formal difficulties of debt collection abroad. Cheques
or bills of exchange are only accepted for collection, and for each
bill a handling fee is charged – irrespective of the amount to be
collected. The domestic banks
demand the same amount again from their customers for handling foreign
bank transfers, which means that bank charges are quite an issue.
Suppliers who do not calculate with a generous profit margin can easily
feel like they are only working for the bank! Throughout the handling
period of the payment, companies do not have the urgently needed
liquidity to finance production and other advance costs, so that they
are dependent on very high current account overdrafts. Small and
medium-sized businesses in Europe know from negative experience how
difficult it is to obtain overdrafts today.
Accounts receivable management by InterGest
On top of that, collecting
debts abroad often causes considerable difficulties, as the reluctant
debtors tend to believe that the creditor has insufficient knowledge of
the local legal framework or might not pursue the matter with the
necessary vigour.
This is where InterGest comes into play. Our
collection department often brings the desired success after only one
reminder letter. Even in more obstinate cases, our legal experts find
the right ways and means of persuading debtors to fulfil their
obligations.
Since
we have successfully managed receivable accounts for our clients for
decades and we have our local InterGest partners as experts for each
country, we are able to advise and support our clients in the best
possible way.
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