Doing business internationally can be exciting and profitable, but it can also come with its challenges—especially when payments aren’t made on time. For many international exporters, shipping goods to the United States involves a great deal of trust. You trust that your buyers will honor their side of the agreement and pay for the products you’ve worked hard to deliver. But what happens when that trust is broken and a U.S. buyer doesn’t pay? Fortunately, there are steps you can take to recover unpaid invoices, even from outside the United States.
At Ayala Law, we work with many exporters from around the world, specifically South America, who face these exact challenges. In this blog, we’ll walk you through a clear, step-by-step approach to help you recover unpaid invoices from U.S. buyers.
1. Reach Out to the Buyer Directly
Sometimes, a conversation can resolve the issue. Reach out to the buyer directly to discuss the dispute. It could be that they are experiencing temporary cash flow issues, or they may have missed the invoice due to an oversight. Make sure to:
- Stay Professional: Approach the conversation in a calm and professional manner. Express your concern and your desire to resolve the matter amicably.
- Document Everything: Keep a record of all communications. Emails, written letters, and even call logs can serve as valuable evidence if the dispute escalates.
- Offer Payment Plans: If the buyer is genuinely interested in paying but is experiencing financial difficulties, consider negotiating a payment plan that works for both parties.
If the buyer is unwilling to cooperate or doesn’t respond, it may be time to consider stronger legal actions.
2. Contact an Attorney Experienced in International Business Litigation
Once it becomes apparent that you are not able to resolve this dispute amicably, you should contact a business litigation attorney with experience dealing with international importing/exporting disputes.
This attorney can help you review the terms of your agreement, and can evaluate the following:
- Payment Terms: What was the agreed-upon payment schedule? Were there specific deadlines, and have these deadlines clearly passed?
- Delivery Terms: Ensure that you fulfilled your end of the deal by delivering the goods as agreed.
- Jurisdiction Clause: Some contracts specify which country’s laws will govern in the case of a dispute. If the contract specifies a particular jurisdiction, it will affect how you proceed legally.
- Dispute Resolution Methods: Many contracts include clauses on dispute resolution, such as arbitration or mediation. It’s important to determine if these methods were specified, as they could be the first step before pursuing formal legal action.
By carefully reviewing your agreement, you’ll have a clear understanding of your legal standing. This can help you determine if a formal claim is justified and what steps to take next.
3. File a Lawsuit for Breach of Contract
When filing a lawsuit for breach of an international import/export agreement, it is important to consider the following:
- Choosing the Right Jurisdiction: You may be able to file the lawsuit in the U.S., but this will depend on your contract’s jurisdiction clause. If the contract allows, filing in the buyer’s state may increase your chances of a favorable outcome.
- Hiring a U.S.-Based Attorney: Working with a qualified attorney familiar with cross-border litigation is essential. A knowledgeable lawyer will understand the nuances of U.S. contract law and can help guide you through the legal process.
- Providing Evidence: Be prepared to present detailed documentation of the agreement, your delivery records, and any communications with the buyer regarding payment. This will strengthen your case in court.
Keep in mind that lawsuits can take time and may incur legal fees, however depending on the terms of your contract, this may be recoverable through a lawsuit.
4. Seek Assistance Through PACA (for Perishable Goods)
If you’re an exporter of perishable agricultural products, the Perishable Agricultural Commodities Act (PACA) can offer additional protection. PACAis a U.S. federal law that protects suppliers of fresh and frozen fruits and vegetables when buyers don’t fulfill their payment obligations. Here’s how it works:
- File a PACA Complaint: By filing a complaint with the U.S. Department of Agriculture (USDA) under PACA, you can place the buyer’s assets in a trust, which could increase your chances of being paid.
- Enforcement: PACA has specific enforcement mechanisms, making it more effective for recovering debts related to perishable goods. This can be an efficient route for South American exporters who are owed money for shipments of fruits, vegetables, and other perishables.
It’s worth noting that PACA protections are limited to specific goods, so if you export non-perishable items, you’ll need to pursue other avenues for recovery.
5. Prevent Future Non-Payment Issues
Dealing with unpaid invoices is stressful and time-consuming, so it’s important to take preventative measures for future transactions. Here are some ways to minimize risk:
- Require Upfront Payments or Deposits: Consider asking for a portion of the payment upfront before shipping goods.
- Use Letters of Credit: This is a financial instrument that ensures payment, as funds are held by a bank and only released when specific conditions are met.
- Strengthen Your Contracts: Work with a legal expert to draft clear, enforceable contracts with well-defined payment terms, penalties for late payments, and dispute resolution clauses.
Implementing these strategies can reduce the likelihood of encountering non-payment issues in the future.
For more details on this topic, be sure to watch our video here.
Get Professional Help to Recover Your Payments
At Ayala Law PA, we specialize in business litigation, including international importer/exporter disputes.
If you’re facing non-payment issues with a U.S. buyer, contact one of our experienced attorneys at 305-570-2208. You can also email our founding partner Eduardo Maura directly at eduardo@ayalalawpa.com.
We at Ayala Law PA, are passionate about helping those in legal need, so please don’t hesitate to schedule a case evaluation with us online here.
