Industry: Commercial, B2B, Trade Credit Insurance

Location: Mexico

Results: Payment plan with previously unresponsive debtor

Background:

Credit insurance company covers $170,000+ in costs for timber purchase

A Canada-based timber company purchased trade credit insurance from our client to reduce the risk of extending credit to its international customers.

When a Mexican manufacturer purchased timber and failed to pay, the credit insurance company stepped in, covering over $170,000 in costs. The insurance company then needed to recover this balance from the manufacturing company.

The Challenge:

Lack of local reach in Mexico aged the account three years

On average, collection success rate drops 1% for each week past the due date.

Our client needed to recover the funds quickly or risk losing the large balance. However, they lacked local reach in Mexico, making it difficult to engage with the unresponsive business.

After over three years of unsuccessful internal collection attempts, the credit insurance company assigned the file to Cedar Financial for accredited commercial debt collection services.

How Cedar Financial Solved the Problem:

Despite the age of the account, Cedar Financial’s vetted network of international debt collection offices allowed us to quickly contact the debtor in Mexico and secure a payment plan.

Here’s how:

1) Face-to-face meeting in Mexico elicits fast response

Within just one month of placement, our local Mexico debt collection office arranged an in-person meeting with the business at their location. This allowed the local agent to verify the status of the business and apply the needed pressure to start payment negotiations, in the language of the debtor.

2) Fair, but firm financial hardship negotiations

With meaningful contact established, our debt collectors in Mexico learned that the business was experiencing significant financial hardship, resulting in non-payment.

After gentle pressure from our local office, the debtor sent a proposal for a repayment plan that would work for their budget. Acting as a liaison, we negotiated a monthly payment amount that was acceptable to both parties.

3) Regular follow up to ensure timely payment

A promise to pay doesn’t always result in payment.

To ensure the manufacturer kept its promises over time, Cedar Financial’s local debt collectors in Mexico followed up with monthly calls.

By keeping an open line of communication, we were able to keep the debtor on track with payments and provide regular updates to the client so they always knew when to expect their money.

The Takeaway:

Local debt collection = faster payment, even for challenging accounts

International business comes with increased credit risks. Unpredictable events can impact your customers over time, causing late payments that hurt your cash flow and make it nearly impossible to achieve your goals.

You need to recover what’s owed to you quickly or face the possibility of never seeing your funds.

While having credit insurance helps, sometimes you need some extra leverage to encourage your foreign debtor to pay.

With a powerful network of 300+ local offices in over 170 countries worldwide and top debt collection attorneys, Cedar Financial offers professional, on-the-ground representatives in your debtor’s location for faster resolution of your accounts.

As an International Association of Commercial Collectors (IACC) and ACA International accredited agency, our collectors understand the practices needed to support full recovery of your funds.