According to leading credit insurers, India is the country with the worst payment practices in the world. According to Coface, 82 percent, and according to Atradius even 94,7 percent, of the companies surveyed complain about payment delays in India. Foreign companies in India wait an average of 43 days longer for the money than contractually agreed.

Delay is the rule!

Unfortunately, late payments and defaults are common practice in India. With 2,4 percent of bad debts that ultimately have to be written off completely, India is also at the top of this ranking.

Therefore, every export transaction with India should be secured by a bank or a specialized service provider, for example by means of a letter of credit.

Of course, all agreements with the customer should be recorded precisely and in writing. In addition, both parties must comply with the requirements of international payment transactions Foreign Exchange Management Act (FEMA) . note

Due to the recent changes in Indian insolvency law Secured creditors receive priority over other claims. This allows the creditor to take the debtor to insolvency court. However, mediation is always preferable to legal action.

Enforcement of payment claims in India

If there are delays in payment, the creditor should respond as early as possible with a reminder and announcement of further legal steps. This can be done through lawyers, Indian debt collection companies or other service providers. Ultimately, it is always about putting pressure on the debtor. For example, you can find a few suggestions on the topic here (Keyword: equality of arms, knowledge is power)

Also our Indian administrative content, which Dr. Wamser + Batra India Pvt. Ltd., deals with “dunning procedures” and “debt collection” in its day-to-day business. To a large extent, we also work based on success. With implementation rates of around 90 percent, collaboration pays off for everyone involved.

Our department head Karsten Echle will be happy to answer your questions about debt collection and receivables management.