Payment from Brazil

Question

We have a huge, blue chip customer in Brazil who purchased some equipment from us. We sent them an invoice for installation and commissioning, which they requested to be split into two invoices – one for goods, the other for services (labour). I then had to have the ‘services’ invoice legalised by the Brazilian Consulate, and duly returned it to them earlier this year. They have not paid this particular invoice.

They claim that bureaucracy is holding up this payment, despite their promise to pay it back in June, within 30 days. Is there any recourse I can take, or any other reader of this forum who have experience of such an issue.

All help will be gratefully received.

Answer

Dear Julia,

Thank you for your question.

I have passed it onto my colleagues in the Commercial Section of the British Embassy in Sao Paulo. They are looking into it and will post a response in a couple of days.

Regards,

Jennie

Answer

Hi Julia,

It is not uncommon to have invoices held up by bureaucracy. However I’m assuming the unpaid invoice is for the services only and the equipment has been paid already.

Perhaps we can talk directly and see what the problem is. We’ll get in touch with you later today and find out what can be done.

Regards,

Esteban

Answer

Dear Julia
The splitting of the invoice could, and I emphasise "could", be a mechanism for local tax avoidance (import duty upon the value of goods). wonder: who decided, and upon what basis, was the invoice value split between the two? and was the split arbitrary?
You say the client is blue chip: I wonder have you exported/shipped to them before and whether they have always performed? Or is this your first dealings with them? If you have had past dealings, then follow up with the company and ask exactly what the problems are and when settlement may be expected etc. Accrued goodwill should be sufficient to resolve the issue. But if this is your first dealings with them, then I would not be too blinded by their reputation. You have provided equipment (and commissioning services, I understand), fulfilling your obligations under the contract. It is reasonable to expect to be paid; if not on time, then at least upon reasonable and transparent explanations and assurances as to when you shall be. If, as sometimes happens in these circumstances, big companies offer to smaller client companies the possibility of future business, I would politely decline it until paid under your first dealings – a precondition to future business is settlement of accrued outstandings.
I do not know what law and jurisdiction you have agreed in you sales contract. But, in future, I would recommend that try to ensure that you have English law and arbitration (arbitration, as the award will be easier and quicker to enforce in Brazil than an English High/County Court judgement).
If at all possible, avoid arbitration or litigation; a matter of last resort really. Try to negotiate a settlement of your outstanding invoice.
I think the services of the British Consulate could be very helpful -and Jennie’s assistance could be valuable.

William

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