The three most common misconceptions about collecting receivables abroad — and why they cost you money

When a company is faced with an unpaid receivable from a foreign client, the usual pattern is predictable: a few reminders, then perhaps a lawyer, and finally a write-off. In many cases, that happens not because the receivable is truly uncollectable, but because the decision is based on assumptions that are not accurate.

From a Collections Director's perspective, that is where the real cost begins. Incorrect assumptions do not just delay action — they often reduce recovery before the case has been properly assessed.

In this article, I want to address three of the most common misconceptions about collecting receivables abroad, and explain why they can cost companies far more than they expect.

Misconception 1: Foreign debtors can hide more easily

For many companies, the first reaction is that a foreign debtor is simply "far away" and therefore harder to reach. At first glance, that sounds reasonable: different country, different language, different legal system, different business culture.

In practice, however, distance is not usually the main issue.

Companies that operate internationally often have more to lose from non-payment than purely local businesses. Their reputation is visible across markets, among suppliers, customers and partners. That visibility often creates more room for conversation than people assume.

What usually makes collection harder is not the debtor's location. It is the wrong approach. When communication is limited to automated reminders sent to the same address, without any real understanding of the business context, the process rarely moves forward. Not because the debtor cannot pay, but because the communication strategy is not built to reach a solution.

What this means for you: distance is not a reason to give up. But reminders alone are not a strategy either. To recover the receivable, you need to understand the relationship, the background and the circumstances around the non-payment.

Misconception 2: Collection abroad is more expensive than at home

The second common assumption is that international debt collection must be expensive. Lawyers, court costs, translations, travel — all of that can sound costly, and in legal proceedings it often is.

But what is often left out of the calculation is the cost of doing nothing.

If a company writes off a receivable of €30,000, the loss is not limited to the invoice itself. It also includes:

• money already earned through the transaction
• time invested in the client relationship
• resources used for production, delivery or service
• the often unfavourable tax impact of the write-off

Once those factors are included, a write-off is rarely the cheapest option.

By contrast, a commercial collection approach — one that focuses on direct communication and negotiation rather than court proceedings — is often more affordable than companies assume. A fee structure linked to the amount actually recovered means the company is not taking on heavy upfront costs for a result that may never come.

What this means for you: collection costs should be measured against the cost of a write-off, not against the invoice alone. When you compare those two outcomes properly, the picture often changes completely.

Misconception 3: You have to hire an agency in the debtor's country

Another widespread belief is that receivables can only be collected effectively by someone physically based in the debtor's country. Taken literally, that would mean appointing a different agency in every market — which is expensive, time-consuming and often unnecessary.

The real issue is not where the collector is located. It is how the case is handled.

International B2B collection does not depend on geography alone. It depends on understanding the commercial relationship, identifying the real obstacle to payment and using a method that creates room for a solution. Those things rely on experience, process and judgement — not on a local office address.

What this means for you: you do not need a separate collection partner in every country. But you do need a partner who understands how to work cross-border, how to read the situation and how to move the conversation beyond standard reminders.

What all three misconceptions have in common

All three misconceptions come from the same place: the assumption that the problem lies in the circumstances, rather than in the approach.

When companies decide too early that a receivable cannot be collected, they usually have not tested the full range of options. They have not properly assessed the commercial relationship, measured the real cost of a write-off or used a collection approach designed to move the case forward.

That does not mean every receivable can be recovered. Some cannot. But there is a crucial difference between a receivable that is truly uncollectable and one that was never approached the right way.

In practice, that difference often determines whether a company recovers money — or writes it off.

What you can do next

If you have a receivable of €20,000 or more and standard collection attempts have not worked, it may be worth taking a step that most companies do not try.

That step is not the legal route. It is not mass collection. It is an individual approach that starts with analysis, not with another reminder.

If you'd like to learn more about how we approach cases like these, visit alterclaim.rs/en or contact us at info@alterclaim.rs.