Hardest places in the world to collect debts

international debt recovery places to collect debt from

According to new research from Euler Hermes, Saudi Arabia and the United Arab Emirates ranked the hardest places in the world to collect unpaid debts.

The results from the trade credit insurer who analyse debt collection processes around the world found that China, Russia, Malaysia and South Africa also scored badly, appearing in the “severe” category in terms of the complexity of debt collection. Western European Countries were found to be the best with Sweden at the top, followed by Germany, Ireland, Finland and the Netherlands.

As part of the process, Euler Hermes will insure its clients against the risk that their debtors are unable to pay what they owe, and collect debts on their behalf. The research was based on the experience of those collectors in 50 countries, representing 90 % of global gross domestic product.

The head of collections Euler Hermes, Jennifer Baert stated: “The difficulties come from three areas — payment terms, court practices, and insolvency regulations.” “In the UAE, Russia and Saudi Arabia, payment terms are quite long. In the UAE it is over 60 days . . . In UAE we were expecting a lot from the new insolvency law in 2016, but it hasn’t yet delivered on its promise to make debt collection easier.”

“In Saudi Arabia payment tends to occur after 90 days and court proceedings are extremely long and uncertain. They are also costly and difficult to enforce,” Ms Baert added.

“There are lots of provinces and languages, each with a different system, which gets in the way of collecting debts quickly.” The US came towards the middle of the pack, scoring worse than countries such as Senegal, Colombia and Brazil. According to Ms Baert, the US “is far from being straightforward” as the court system is particularly complex and insolvency procedures are relatively pro-debtor.

Eight of the top 10 countries were in the EU. The EU regulations helped the member states to attain fairly high scores. Ms Baert said many of those countries also have efficient court systems with fast-track procedures that can ease collection.

The research stated that, “Insolvency-related complexity is definitely more of a challenge in the Middle East than in Western Europe. The most frequent issue, mentioned for almost all countries, is the low probability to recover a debt in practice when the insolvency proceedings have commenced.”


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