Collecting in Difficult Territories

This week, Baker Ing's Director, Lisa Baker, takes some time out to share her thoughts on collecting in difficult territories:


Trading in ‘difficult territories’ is a topical subject for senior credit professionals. Competitive business environments mean companies must challenge their appetite for risk by expanding into emerging markets. Preparing your Risk Strategy and Credit Policy for these new and challenging markets requires a robust process, as it often necessitates innovative ways of trading.


Baker Ing International have seen an increase in Latin American cases passed to us for debt collection and mediation. It is a common frustration for clients that, due to currency control, debtors cannot pay invoices as a result of bank restrictions. However, although this is quite possibly true in some genuine cases, very often it is merely used as a convenient excuse.


How do you resolve these issues, and how can you ensure your Credit Policy is strength tested to account for such factors?


We recommend you take the following proactive measures when trading in countries with volatile sovereign risk and restricted currency controls:


  1. Analyse country risk by obtaining a Country Risk Report from Dun & Bradstreet and ‘deep dive’ into the economic factors that cause country risk.


Understand how your services and products relate directly, if at all, to the country’s problems, e.g. you would be unlikely to accept the risk of setting up a financial services company in Venezuela. However, if you provide vital chemicals to assist in their most significant exports (e.g. Crude Petroleum, Refined Petroleum), then the country factors contribute more positively to your risk assessment.


Dow Jones, Thomson Reuters, Moodys & Fitch are expert information providers to refer to when analysing country risk.


  1. Understand what Trade Bodies and Professional Associations, both in your vertical and the broader credit industry, have to say about trading in your countries of interest.


Investigate your competitors’ stance and financial position in these regions. The Economist ‘Country Risk Model’ is an interactive tool for analysing state and sovereign risk. It is a great resource for facts and projections to help you assess your company’s situation.


  1. Strength-test your Credit Risk Algorithm against potential loss, and project best-and-worst case scenarios on bad debt and default segments.


Know precisely the profit and loss on your services, and ensure you put benchmarking exercises in your Credit Policy to test risk vs. reward.


Factor into your Credit Policy the real cost of the risk of trading in challenging countries, e.g. cost of Days Sales Outstanding (DSO), Days Beyond Term (DBT) and Debt Recovery/ Litigation Costs.


  1. Source the best Credit Reference Agency (CRA) for your country of interest and ensure the CRA is a ‘primary’ data supplier in that country.


The CRA world is quite incestuous in that most buy and sell to one another. The key differentiator is the level of detail and amount of information they provide on companies in each country, e.g., a reseller of a prime data source in the country will often have a Level 2-3 of information available. In contrast, the original data supplier will have a maximum level of maybe 4-5 as the data digitiser and true owner.


Investigate what official financial information you need to file according to local law - is a great resource for this.


Ask your tendering CRA’s to confirm, in writing, how they source their data and if they can disclose who their data partners are along with their exact level of coverage.


In difficult territories where financial filing laws are relaxed, it is advisable to have more than one data provider so you can source more support. Fresh investigation reports are often required because financial information is not readily available.


Factor into your client onboarding/sales process the delay you will have in running your risk assessment; ensure all company stakeholders understand the restrictions you have.


In addition to traditional information used in risk assessment, e.g. credit reports, innovation is key in trading with difficult countries. Be prepared to investigate companies via social media and industry trade publications. This information can provide a far more accurate assessment of their ‘live’ credit status than historic filed accounts.


  1. Protection and preparation for the worst, is vital when trading in difficult territories.


Review and consider all ‘tools of the trade’ in your AR process, especially ones that you wouldn’t require or use in more accessible countries.


Factoring and Invoice Discounting may be an attractive route if you can accommodate the increased cost of sale. Banking may be risk-averse, so not offer this service in countries with high Sovereign Risk. You may find local in-country commercial finance companies that would take the risk however. Refer to local Chambers of Commerce and the International Monetary Fund to find local Financial Institutions (


  1. Credit Insurance is an obvious route to explore when you increase your business trading risk. However, you need to ensure you explore all products and services.


Underwriters offer products which protect your revenue. Retractable cover in an unknown territory, and high-risk market for you, would be disastrous! Work with a global broker who has experience in your vertical; they will be best placed to advise you and you can reference their experience and client satisfaction.


There are new and particular underwriters that cater for high risk and difficult territories. Traditional service providers may have high exposure in your country/industry of interest but, another more ‘niche’ underwriter may be open to taking a risk that others will not.


  1. AR Documents and increased due diligence are required when working in some countries.


It is imperative that your client terms and conditions adhere to local law and that they are not merely a translated version of your UK terms that are drafted according to UK law.


Trying to enforce contracts in local courts that are not consistent with local legislation and terminology is a minefield. Have your contracts drawn up by local lawyers who have proven expertise in legal debt recovery and, preferably, ones who have extensive experience in your industry vertical.


  1. Letters of Credit are a great tool to use in your Credit Policy.


There are five types of Letter of Credit and you need to ensure two essential elements are present when you utilise them:


    • The bank is approved and part of the International Monetary Fund (
    • The Letter of Credit suits your business and trading transaction. Ensure you fully understand and monitor your due diligence.


We see China and Latin America as increased Countries of Trading Risk. You can access our Country Risk Reports on some of these Countries, for reference, and Factual information on the Countries’ Legal Systems, on our Resources page

New service: International Terms Review

We are happy to bring a new service to our clients - International Terms Review.


This service is for our clients that trade across borders and need to ensure they have adequate protection in place to ensure quick, simple and cost-effective action should the need arise.


We have introduced this service after a number of cases we've handled on behalf of our clients which have seen the need for international terms review.


Please read more about this service by downloading the brochure here:




Baker Ing's Director, Lisa Baker, was interviewed recently for 'De Credit Manager Magazine', in The Netherlands. We now republish the interview here for our client's convenience:

‘We see an objection from a prospect as an opportunity’

The market for Global Debt Collection companies is crowded. Few would believe that starting a new organization in this field could be successful. Yet, this is exactly what Lisa Baker and Sarah Ing have done. And successfully so. Off to a flying start, Baker Ing International has significantly exceeded even their own expectations. Credit Manager is talking to Lisa Baker about her passion for Credit Management and what motivates her to start a new venture.

How did you start working in Credit Management?

I had had several positions in the commercial departments of large companies in the Oil and Gas industry when I got the opportunity to join the UK operation of a Global Reference Bureau. The company pioneered the use of the emerging technology of the Internet to supply business information in real time. Originally, the company focused on providing services to smaller and medium sized businesses, but I found that large companies could be interested as well. I got the opportunity to start the Key Account Department. As the name suggests, we marketed to and looked after large clients. I rapidly won new customers and developed a Global Accounts role, travelling internationally and delivering Global data contracts.

Lisa Baker - Co-Director, Baker Ing

In 2013, I moved to an operational position at an International and commercial debt collection specialist. I literally moved from a role at the front of the process to a position at the back. At the reference agency, I had a client facing position responsible for services related to sales to our client’s customers. At the Debt Collection company, I worked with clients to recover debts when things had gone wrong.

Why did you decide to start your own business?

The Credit Agency changed the way of obtaining and distributing credit information. They disrupted the market. Firstly, by breaking down the cost of the service but also by giving the large companies the opportunity to build their own rating methodologies. I worked with many of my customers to move away from the traditional way of retrieval of information on individual companies to getting large amounts of data and to use this material to support their own objectives. As I supported my clients developing their own credit score, I effectively created the demand for our services.

I then started to build common score cards, based on the experience we had gained in customer specific projects. This allowed us to standardize the information we would get from different regions. Info from Eastern Europe, for example, is significantly different from the standards in Western European companies. We needed to have a template to make the different info sets comparable.

There was a massive uptake of the service. Technology became a common topic in my conversations. Companies wanted to automate the credit underwriting process. These organizations automated the credit underwriting process long before Artificial Intelligence was applied in collections.

And then, there was another trend that assisted us. Many large international companies moved from decentralized to centralized operations. And from centralized to captive or outsourced Shared Service Centers in Eastern Europe. Centralization and setting up Shared Services require standardization of processes. As there is now volume and a drive from the top, the new processes can be automated more easily. Hitachi was one of my customers who centralized their Accounts Receivables process to a center in the UK and later moved it on to Krakow in Poland.

My time at the Debt Collection Agency was different. Collection companies all act very much in the same way. Clients, large household brands, have issues with trust when they engage with a DCA. But no one offers anything to alleviate these concerns. The recruitment of the staff working in the DCA’s International call centers is focused on finding the right language skills, at the expense of finding the right experience and aptitude to handle complex collection cases. And then I found that, contrary to what happened at the credit information market, there is no one even trying to disrupt the status quo.

This is where I saw an opportunity. Across Europe, there is availability of know-how and talent as many experienced people have been made redundant due to the trend to set up Shared Service Centers. Large organizations need professionals to protect their brand, they were looking for reliable, efficient, partners. I developed the idea to build a European wide network of experienced credit managers/partners to handle cross border receivables. Each case is handled by a credit manager from the moment it is assigned to us until the resolution and the closing of the file. This approach also provides a solution for the common problem that there is a drop in communication when the case moves from DCA to legal. This idea gestated in 2015 but the company I worked for was acquired by another firm and the project never came off the ground.

Together with Sarah Ing, a colleague, we decided to put our money where our mouth is, as they say, and we started the business. We are thrilled with the results. The market likes the concept. We have set up a Global operation with Credit Manager’s employed across the world. We have significantly exceeded our first-year budget. Are we disruptive? We see ourselves as a DCA boutique with a way of working to go with it. We have this concept of local partners, who we also incentivize once the file has gone legal. We do not rely on automation, but we have introduced intelligent ways of working. As a matter of fact, we do best when prospects raise objections, because we always try to turn them into an opportunity.

You are based in the UK, but you spend a lot of time in The Netherlands. What can we in The Netherlands learn from the UK?

Oh, that is a question I would need to think about more and I will not talk about Brexit. I love The Netherlands and the way the people work. The Dutch are straight speaking, that is great, but they are also indecisive. The Brits are more spontaneous when making decisions. I would recommend that when Dutch people engage in business with British people, they can take advantage of our trait to want to ‘get it done’. You can often get the deal you want by being able to conclude the business quickly!