Collecting international debts remains a complex task—Germany ranks highest

International business relationships offer enormous opportunities for companies. At the same time, however, the risks increase when invoices are not paid abroad. A recent study by Allianz Trade shows that collecting international receivables remains difficult—and is even particularly complex in many countries.

High Complexity of Debt Collection Worldwide

The Allianz Trade analysis titled“Trade Receivables in a Fragmented World: Navigating Collection Complexity”assesses how difficult it is for companies to collect outstanding receivables in different countries.

The result: According to Allianz Trade, the global complexity of international debt collection remains high. On a scale of 0 to 100, the so-called “Collection Complexity Score” currently stands at 47.2, which corresponds to a “High” rating.

A key reason for this is the persistently high number of corporate bankruptcies, geopolitical tensions, rising protectionism, and increasing digital risks in international trade.

Germany is one of the best countries for debt collection

Despite the global challenges, there are significant differences between individual countries. According to the study, Germany, the Netherlands, and Portugal are among the countries where it is comparatively easiest to enforce international claims.

At the other end of the spectrum, however, are countries such as Saudi Arabia, Mexico, and the United Arab Emirates. In those countries, debt collection is particularly difficult and involves significantly more legal, organizational, and cultural hurdles.

Noteworthy: According to the study, debt collection in particularly complex countries can be up to three times more difficult than in Germany, for example.

Nearly half of international receivables are in complex markets

Another key finding of the Allianz Trade analysis: About 48 percent of international trade receivables are located in countries with very high or even severe collection complexity.

As global trade grows, so does the financial scale of these risks. According to calculations by Allianz Trade, the corresponding claims now total approximately 1.1 trillion U.S. dollars.

For export-oriented companies, this means that professional accounts receivable management is becoming increasingly important—especially in international business.

Insolvency proceedings are the biggest driver of debt collection complexity

The study also shows that insolvencies are the most significant factor contributing to difficulties in collecting receivables worldwide.

On average, insolvency-related factors account for more than half of the overall complexity of debt collection.

Typical problems include, among others:

• Low chances of repayment for unsecured creditors
• complicated or inefficient bankruptcy proceedings
• Significant write-offs in debt restructuring
• Limited options for out-of-court settlements

Particularly when it comes to international receivables, insolvency proceedings in another country can quickly result in companies being able to collect only part of their outstanding invoices—or none at all.

Legal proceedings and payment practices also complicate debt collection

In addition to insolvencies, Allianz Trade cites two other major causes of debt collection complexity:

Legal Proceedings In many countries, legal proceedings are lengthy, expensive, or complicated by complex jurisdictional structures. Enforcing foreign judgments can also be problematic.

Local Payment Practices
Different payment cultures, long payment terms, or a lack of transparency regarding companies’ financial situations can further complicate the collection of receivables.

Even technological developments such as e-invoicing have not yet led to a noticeable simplification of international debt collection, as the systems are structured differently in many countries.

International debt collection requires local expertise

The results of the Allianz Trade study clearly show that companies doing business internationally must also think globally when it comes to receivables management.

Legal frameworks, insolvency proceedings, payment practices, and judicial enforcement options vary significantly from country to country. Without local expertise, it can therefore be difficult to efficiently collect outstanding receivables.

How GFL Can Help Companies with Debt Collection

When it comes to international claims in particular, it is important to work with the right debt collection partner. GFL helps companies find suitable debt collection service providers both domestically and abroad.

Thanks to its extensive network, GFL identifies debt collection agencies that meet a company’s specific needs. In doing so, it considers not only large providers but also specialized regional service providers with in-depth local market knowledge.

GFL analyzes offers, compares prices and services, and thus helps companies find a cost-effective solution for their accounts receivable management.

Through the international CREDEA network, we also maintain contacts with debt collection partners in numerous countries. This enables companies to rely on experienced partners—even for cross-border claims—who are familiar with the local legal and economic conditions and can assist in the collection of outstanding debts.

Do you have any further questions about “debt collection”? We answer these questions in our detailed Q&A.