Anyone here have any experience of Debt Collection from Italy?

[spencergate]

A client of mine is owed quite a sum by a business customer in Italy. The invoices date back to January, and my client feels that his customer is struggling with Cashflow, but is still trading.

My client's view is that the italian system is too difficult to negotiate, and he may as well write off the debt now .

I'm a believer in getting your money if at all possible, as long as you don't have to throw good money after bad.

Anyone here got any experience or advice?

 

[cmcp]

A few clients of mine won't even send things to Italy based on it's retail reputation, but that would make me nervous about b2b too.

 

[spencergate]

No one else trades with Italy then?

 

[Shaun_Pearce]

Can I suggest Atradius - Europes leading debt management company.

 

[spencergate]

Thanks Shaun

 

[Moneyman]

in italy they are very very slow at paying. it is the norm. six months is nothing. dont for one minute think all of europe thinks the same as us.

 

[spencergate]

in italy they are very very slow at paying. it is the norm. six months is nothing. dont for one minute think all of europe thinks the same as us.

My client has been dealing with this customer for about 5 years, and generally they have paid within a couple of months (basically as a 'retainer' for his consultancy services).

Since January they have paid the expenses elements of his invoices, but not the consultancy fees.

Of course, now he has stopped offering them any services at all, so they aren't making any effort to offer payment.

 

[Moneyman]

horses head in bed.

 

[spencergate]

I have suggested it, but my client doesn't feel able to deal with the repercussions.

 

[frauke]

A company I used to work for had both Italian suppliers and customers. The suppliers insisted we paid them the day before shipping to us, and we insisted the Italian customs also paid us the day before shipment was due.

On the rare occassions the payment was late, (from the Italian customers) the shipment would also be delayed!

 

[RobertBruce]

I have firsthand debt collection experience from customers in Italy. Only in exceptional instances have Italian customers failed to pay at all. I always recovered the money.

The Italian customer must be engaged . Regular discussion will lead to your client offering a payplan to get the debt repaid within an agreed period. I normally only allowed 4 months. HAs regular contact by phone occured over the months the debt has remianed unpaid?

If the customer has not responded at all since January then you can almost assuredly conclude they have a cashflow problem. So a payplan may be just what they need to help ease their restricted cashflow problems.

Has your client provided for bad debt against it? Is there debt insurance cover? It might be wise to trade with EU countries with debt insurance in place.

Finally - if the payplan offer fails, hand the matter over to Interim Justicia, Atradius or local lawyers who will use co-respondents in Italy. But please try to avoid handing over. It can drive the customer to declare insolvency and then you can say goodbye to your money. Better to get a payplan in place and recover the debt over 4 months than to write it off to Bad Debt.

Better to get the debt paid on due date but this happens.

 

[Online&Offline Marketing]

Sometimes it is better to cut your losses and move on. The time spent chasing these people who have no intention of paying, is time better spent on working on your business.

I had a similar thing happen to me but the companies were based here in the Uk.

One went into liquidation and the other had to pay up because I employed a debt collector to chase the case for me. Within a month i got the money that was owed to me.

To your success

Claudia

A client of mine is owed quite a sum by a business customer in Italy. The invoices date back to January, and my client feels that his customer is struggling with Cashflow, but is still trading.

My client's view is that the italian system is too difficult to negotiate, and he may as well write off the debt now .

I'm a believer in getting your money if at all possible, as long as you don't have to throw good money after bad.

Anyone here got any experience or advice?

 

[Russ Hagger]

I worked in Italy as a one-man-band consultant for many years, and one of the reasons I'm back here is that I was owed in excess of 25000 euros, and very little chance of getting it.

The process is very slow, and not inexpensive.

1st rule with the Italians who have cash flow problems (and lets face it, it's quite a normality throughout Europe now) is that he who is the most important to future business gets paid 1st, then he who shouts loudest. So in any case, keep trying, and don't be afraid of constant contact (by phone - emails won't even be looked at)

How much is the debt?

 

[spencergate]

Sometimes it is better to cut your losses and move on. The time spent chasing these people who have no intention of paying, is time better spent on working on your business.

I had a similar thing happen to me but the companies were based here in the Uk.

One went into liquidation and the other had to pay up because I employed a debt collector to chase the case for me. Within a month i got the money that was owed to me.

To your success

Claudia

I agree with you Claudia. I have put my client on to the company I use for debt collection.

To me, it's well worth the 5% they charge (only on recovered monies), just to free up my time to get on dealing with those who do pay.

 

[spencergate]

I worked in Italy as a one-man-band consultant for many years, and one of the reasons I'm back here is that I was owed in excess of 25000 euros, and very little chance of getting it.

The process is very slow, and not inexpensive.

1st rule with the Italians who have cash flow problems (and lets face it, it's quite a normality throughout Europe now) is that he who is the most important to future business gets paid 1st, then he who shouts loudest. So in any case, keep trying, and don't be afraid of constant contact (by phone - emails won't even be looked at)

How much is the debt?

Hi Russ. The debt amounts to about £14000. Problem is these guys were my client's only customer, so he continued working for them for 4 or 5 months after the payments stopped coming.....

Fortunately he has now found another customer, but is licking his wounds over the 14K.
I have given him the lecture in the past about putting all his eggs in one basket.

 

[Russ Hagger]

Not peanuts!

I would suggest that he books a flight and goes to see the 'Amministratore Delegato' as soon as possible, and doesn't leave until there is some satisfaction.

My money was spread over many companies, so was worse from a collection point of view.

The sum is, I believe, worth going for legally as well. Try the following;

www dot intrum dot co dot uk - they are Europes largest credit management agency

Good luck, and I happy he's found another client

 

[spencergate]

Thanks Russ

 

[Geoff T]

Hi,

I've worked with both Intrum Justicia + Atradius in the past, and they're both good - so if you're choosing between the two, then the difference is purely about price IMHO...

 

[KarlS]

I work for a UK company that trades mainly with overseas suppliers so we use international debt recovery agencies and solicitors quite often.

For Italy, we frequently use Giambrone Law for all our debt collection matters as they appear to be the only firm of solicitors that offer no win no fee agreements for debt recovery all over Italy. They are very good and efficient so I would have no hesitation in recommending them.

We pay a fixed % if the debt is recovered out of court and a small higher % is they serve the equivalent to a statutory demand to the debtor companies. Their processes are very streamlined as most of the work/updates are done online, so I would definitely recommend them to collect debts in Italy.

When we refer a new matter, we receive a due diligence report on the debtor in 48 hours (which tells is if the company is still trading and a review of their accounts published at companies house), then they send a pre-action letter and try to negotiate immediate with the debtor or offer a payment plan if the debtor has a cashflow problem.

Our collection rate in Italy at the moment is over 85% much better than other European countries. Bulgarian debtors are the worse to pay on time

Contact details: (+44) 0870 111 4802 OR via the website giambronelaw.co.uk

 

[Steve Thornbury]

Can I help at all?

 

[Cheruk]

We - too - use Giambrone Law to chase Italian debtors and usually we are able to get paid without need to issue court proceedings. Italy is a funny country, debtors try to put it off for as long as they can, especially when they know that you are based abroad and (they think) you don't know the system

the fact that the Italian justice is also notoriously slow doesnt help either...in any event, I have no hesitation in recommending Giambrone Law, they offer a professional service on a no win no fee basis and only get paid if they manage to collect the debts.

 

[termsandconditions]

Borders mean less and less nowadays so try a UK debt collection agency who can chase in Italian. In my former life as a debt collector with EC Credit Control, I didn't even bother translating and was fairly successful at collecting all sorts; can recall a Russian lingerie company debtor and an American model photographer in Paris as the client. The Russian wasn't best pleased but still paid in instalments.

Don't forget to add Late Payment Interest which is covered by European-wide legislation. For Italy, add 8% p.a. above the European Central Bank reference rate. Send a VAT-free invoice for this now and monthly until the b#gger pays.

Best Regards

 

[Cheruk]

I agree with your post but I thought that you needed a specific clause in the contract with the debtor to be able to charge as high as 8% above base rate?

having proper documentation will be essential as it will make it easier if you need to go legal.

I have used debt collection agencies before but - IMO - sometimes it's better to hand over the debt to an Italian solicitor right away because the threat of legal action normally puts the debtor in the conrner.

Threat of bankrupcy in Italy is still seen with a social stigma so the injunctive decree (similar to our stat demand) usually gets its result quickly as the debtor only has 40 days to pay up! after then, it's winding up petition and disqualification for the directors of the debtor company

if both lawyers and debt collectors act on a no win no fee basis and charge only a % of the actual recovered money, I'd recommend to go legal to cut the chase and obtain a faster result.....

 

[termsandconditions]

I agree with your post but I thought that you needed a specific clause in the contract with the debtor to be able to charge as high as 8% above base rate?

having proper documentation will be essential as it will make it easier if you need to go legal....

No you don't need such a clause, Cheruk, it's your statutory right.

Every business in the EU is entitled to charge late payment interest of 8% + base rate per annum and the scalable admin fee for commercial transactions within Europe where the invoice hasn't been paid after the pre-agreed payment period (30 calendar days is the default), whether it's in their terms or not.

Nevertheless, you often see the clause included within terms and conditions to avoid any squabbles later. Some don't stop there and up the rate of late payment interest to 2.5% per month. This type of clause can help lift internal credit management efforts no end; to the extent that the debt rarely has to go legal or to a debt collector. We like prevention better than cure.

Best Regards

 

[Cheruk]

thanks for this helpful tips

does the fair administrative charge depend on the amount of the debt or is there a commonly accepted figure that courts in EU will uphold? did you say that it is prudent to issue a new invoice with the interest only and the admin fee in addition to the unpaid debt?!

or did i get that wrong??

 

[MarkRobson]

Very interesting thread, I'm also looking to hire a company to outsource my credit control functions for a relatively small business based in Brighton. We do quite a fair amount of business with Italians and recently we have noticed that a few companies do not pay us on time or at all. this creates a general cash flow problem which in turns affects our ability to pay our own suppliers and debts on time

Do you know if this firm of Italian lawyers acts on a no win no fee for everyone or only big invoices? Can anyone recommend a name or person to contact at Giambrone Law, as I have noticed on their website that they have quite a few offices?

Thanks for your help and any tips you can share on effective debt collection in Italy!

 

[termsandconditions]

thanks for this helpful tips

does the fair administrative charge depend on the amount of the debt or is there a commonly accepted figure that courts in EU will uphold? did you say that it is prudent to issue a new invoice with the interest only and the admin fee in addition to the unpaid debt?!

or did i get that wrong??

Cheruk

Apologies for not following this up earlier. Your first question about how the scalable late payment admin charge is calculated is covered within this link here:
https://payontime.co.uk/late-payment-legislation-interest-calculators

And yes, your business is perfectly entitled to issue a VAT-free invoice for both the late payment admin charge and also interest once your invoice becomes due under your agreed payment terms and conditions. If there's no payment terms extant then the default term of 30 days can be applied. Your invoice for late payment should be calculated from the date the invoice is due and not from the date of the invoice. Your business' statutory rights here are enshrined within the The late payment of commercial debts (interest) Act 1998 as amended by European Law (Late Payment of Commercial Debts Regulations 2002). BERR have a useful guide to help you through the law here:

http://www.berr.gov.uk/files/file37581.pdf

If more businesses leveraged their statutory rights as part of an integrated approach to credit management, the scourge of late payment would soon be less of a major business problem. Late payment is the number 2 major problem behind business cash flow problems and one quarter of all business failures are due to late payment ....so it's important.

Best Regards

 

[MarkRobson]

We - too - use Giambrone Law to chase Italian debtors and usually we are able to get paid without need to issue court proceedings. Italy is a funny country, debtors try to put it off for as long as they can, especially when they know that you are based abroad and (they think) you don't know the system

the fact that the Italian justice is also notoriously slow doesnt help either...in any event, I have no hesitation in recommending Giambrone Law, they offer a professional service on a no win no fee basis and only get paid if they manage to collect the debts.

Hi Guys,

just wanted to give you a quick update on my Italian debt recovery issues: after instructing Giambrone & Law solicitors, we have been able to recover 4 o/s invoices out of court (with interests and legal costs on top) and 2 other debtors refused to pay (approx €32,000) so the lawyers issued an injunction against them in September.

Out of the 2, one has negotiated a 3-months payment plan with 50% paid upfront, and it looks as if the second one is out of time to file a defence so we will now start enforcement and bankrupcy proceedings.

I must admit that these lawyers are very effective in collecting debts and their 20% collection fee is very reasonable because almost in every case they have managed to get their costs and interests on top of the debt so I haven't financiually lost out anything.

Thanks for the recommendation, Cheruk!

Mark

 

[Leonard_Hove]

Hi

This is a very interesting thread. I have been trying to collect a debt of £35.000 from an Italian supplier based in Tuscany and all our efforts so far have been useless. First we tried by ourselves, countless promises to pay in instalments were not honoured, then we passed the debt to a debt collection agency in England, this was too a waste of time.

After a few months, we contacted an Italian debt collection agency, we paid a management fee upfront and no results. We are now thinking to issue a claim?

Does anyone have experience of how much it is likely to cost us with lawyers costs and court fees? The debtor is solvent and they can afford to pay, they are simply buying time. They offered to do a contra deal by paying us with more work, but we don't trust them

If anyone can give some help or advice, that'd be really appreciated!

Thanks

Leonard

 

[Leonard_Hove]

Hi

This is a very interesting thread. I have been trying to collect a debt of £35.000 from an Italian supplier based in Tuscany and all our efforts so far have been useless. First we tried by ourselves, countless promises to pay in instalments were not honoured, then we passed the debt to a debt collection agency in England, this was too a waste of time.

After a few months, we contacted an Italian debt collection agency, we paid a management fee upfront and no results. We are now thinking to issue a claim?

Does anyone have experience of how much it is likely to cost us with lawyers costs and court fees? The debtor is solvent and they can afford to pay, they are simply buying time. They offered to do a contra deal by paying us with more work, but we don't trust them

If anyone can give some help or advice, that'd be really appreciated!

Thanks

Leonard