Factoring Companies Guidebook
Export Sales Ledger Administration
Definition
The administration and control of a sales ledger composed of export debtors
See also: - "Export Shipping Terms, Currency Invoices"
Concerns
Both we and the Client must be able to understand the negotiations, transactions and dispute details, surrounding any export sales, particularly if there is cause to resort to legal action for collection in the debtor's country.
Onerous terms of purchase required by export debtors, such as ban on assignment, appear more frequently in some European countries.
Where overseas debtors require supporting documentation and it is not supplied, the customs authorities in the debtor's country may seize goods, or the debtor may be unable to use the goods and consequently the invoices will be disputed.
Overseas agents may simply be responsible for generating sales leads for the Client and the debtor may place orders directly with the agent rather than the Client. However, in some countries and trades, agents may also become involved in the collection of debts from customers and the funds may be received by the Client, from the agents not the customers.
Export sales may be agreed on extended terms, in which case the Client's aged debt reports should be able to reflect the appropriate number of aged columns and trading terms, especially if they are to carry out the credit control. We must always be able to identify debts with extended terms or overdue debt.
Identification
Review the Client's and customer's terms and conditions of sale and purchase.
Make enquiries of the Client to determine:
What languages are used for negotiating contracts, correspondence and invoicing?
Are there any language difficulties involved in resolving disputes?
Do any purchase orders or contractual terms exist with the export debtors?
Does the client comply with all purchase order requirements e.g. certificates of conformity?
Are overseas agents used and if so to what extent?
How many ageing columns are produced on the Client's ageing reports?
What Shipping Terms are used and are they shown on the invoice?
Is shipping documentation available to support invoices assigned?
Treatment
Where language barriers exist the International Department should be contacted to assist with review of contracts, correspondence and terms and conditions.
Where goods or countries are identified requiring a Certificate of Conformity those invoices should not be funded until it has been confirmed that the goods and labeling conform to the importing country's or debtors specifications
Inco terms should be reviewed when undertaking a shipping test to ensure invoice assignment is in line with the passing of title to the debt.
