Debt Collection Period in Turkey
In this content, we are going to talk about debt collection period in Turkey. Time is money! And we are not able to take the time back. That’s why, as an international debt collection agency in Turkey, we know its value very well both for us and for our clients. Nobody can create an extra time but we can save it.
It is a clear fact that ‘sales’ is completed after the money is paid. Debt Collection Period (DCP) means the average time to collect the debts after the sales take place. DCP enables companies to compare the real collection period with the agreed credit time-span.
Debtor Collection Period = (Average Debtors / Credit Sales) x 365
A long debt collection period indicates late payments by debtors and a weak cash flow. Monitoring DCP monthly, allows companies to increase their competitiveness and maintain sustainability. Plus, the shorter the DCP, the stronger the cash flow is at any company.
The Relation between DCP and a Debt Collection Agency
DCP can be shortened with a regular monitoring to all customers with a dedicated team. Companies can either do this via a separate collection department within their organization or outsourcing these actives to a debt collection agency. Dedication is the key here. A debt collection agency is already organized to create the best team for it, together with its software, hardware and structure. Therefore involvement of a debt collection agency is more effective and less costly during the dunning process.
Saving time and money for our international clients, matters for us. Thus, our clients benefit from our experiences and investments, while their debt collection period is shortened.
ARS Consultancy is not a law firm, but rather a debt collection company aiming at debt recovery before legal action. We are specialized in international cases and we are truly global because;
%50 of our clients are from Turkey and we collect their debts in 155 countries
%50 of our clients are from other countries and we collect their debts in Turkey
If a debt collection case goes to legal via a Turkish attorney, debt collection period takes min 6 months and it may go up to 4-5 years depending on the nature of the claim (disputed or undisputed) and also depending on the evidences. This is quite a long time indeed.
Therefore, we manage debt collection period in Turkey in the best way possible. We pay attention to solve cases before legal action in an amicable manner. Prelegal debt recovery period in Turkey is around 2 months at our agency. If the case is younger, it is very likely to manage the first payment within even 7 days. There are many factors which enables us to collect debts in a shorter time period. No matter what, one of the main secrets of our high recovery rates lies under our professional approach and organizational structure concerning our debt collection steps in Turkey.
Our Prelegal Debt Recovery Steps
When our clients assign new debt collection files at our agency, we prioritize the following debt recovery steps in order save time and increase efficiency:
1)We analyze the case details and documents within 48 hours. The more documents we have (invoice, contract between the creditor and Turkish debtor etc..), the stronger we can build the case.
2)We investigate the Turkish debtor company / person within 48 hours. We also obtain additional contact information about the debtors in Turkey. Sometimes we do skip-tracing about the Turkish citizen because of lacking complete id information. About Turkish companies, we search their status at the Turkish Trade Registry and if the debtor is located in Istanbul, we also the company status from Istanbul Chamber of Commerce.
3)We prepare and send case specific demand letters within 48 hours. Each debt collection case is unique and our tailor-made approach is critical. We send demand letters to Turkish debtors both by emails, post and fax if available.
4)We start collection calls within 5 working days. When we reach debtors, we both inform them about the debt details and request an immediate payment to our clients bank account. If there is dispute we try to convince Turkish debtors with all available evidences and negotiate for the best payment plan in line with our clients approval.
5)We monitor the payment process until the full agreed payment is made. It is not enough to agree on a payment plan. It is equally important to make sure Turkish debtors to complete the payment.
Considering all these steps of our debt collection period in Turkey , average day of the first debt collection, occurs within approximately 20 days. The younger the debt, the shorter the DCP (debt collection period) .
Our Assignment Date Matters
Age of debt is calculated from the date of invoice until our assignment of a debt case. In Turkey, we have around %78 success rate in debt recovery for cases younger than 1 year. For the cases younger than 180 days, the debt collection period is around 20 days. For the cases younger than 60 days, the debt collection period may go down to 1 week. Therefore, our assignment date is highly critical to recover debts from Turkish debtors in a shorter time.
Remembering the Importance of Money at all Companies
The main reason of your company’s survival is money. You may have great products, you may have hundreds customers but if you are not a good collector and if you can not control your main income & outcome process, bankruptcy is unfortunately waiting you in the end of the way.
Your amazing goods or services would have no mean if you can not recover their fees on time. Receivables management will give meaning to them. Your cash flow is highly correlated with your debt collection capabilities.
Credit Sales Might be Indispensable
Everybody knows that the best payment method is cash in advance. You are so lucky. If you can sell your products by getting the full payment in advance. Also you can do this in cash. Not all companies are so lucky to have this. That’s why ‘credit sale’ is among the most popular sales methods even for International trade. This is sometimes indispensable in certain sectors. Such as textile or food or automotive spare parts. These sectors are among the highest import and export items of Turkish companies.
Sometimes, a partial upfront payment is taken. But still, there is a credit sales method for the remaining balance. Meanwhile cash-against-goods or documents-against-goods can also be an option. In case you are working with your Turkish customers. Both of them are under the bank guarantee to a certain extent. Also for example there is a fiduciary relationship between your Turkish clients. In this situation you may release the goods from customs without collecting the remaining balance. Hence, you may be in need of debt collection for the outstanding balance. Shortly you need this from your Turkish clients.
ARS Consultancy is just one phone call away to provide you the assistance you need. Call us now +90 212 296 9147 to get a free consultation. We are here to collect your receivables in Turkey and ready to offer best commission offers for our prelegal debt recovery which is NO RECOVERY NO FEE. As we said in the beginning, time is money and leave the debt collection period in Turkey process to the experts to save both time and money.
Ayse Burcu Arslan Demirtas
Founder & Managing Director | ARS Consultancy