Why is it more difficult and riskier to collect receivables from a foreign purchaser?

Expert Solution

Companies also find that, for a few reasons, obtaining receivables from overseas customers is far more risky and challenging. First, because international buyers are based in another world, there is a lack of touch. Foreign transactions are usually carried out electronically, whether it is email, fax, telephone and FaceTime, so there is no sense of connexion or the importer can not be evaluated. Second, since no personal contact exists, much less information on the creditworthiness and trustworthiness of the importer is available. With a lack of confidence, exporters may fear that they will not receive payments. Third, if the importer fails to pay, foreign collectors will now have to be employed by the exporter, which can be fairly costly and difficult. Finally, if the collector is unable to recover the revenue, civil proceedings may be taken, but there are no courts of international litigation authority and there are no reciprocal economic rules of foreign commerce.

Rahul Sunny answered 2 years ago

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