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Debt Collection in Indonesia 

Debt Collection in Indonesia 

Debt collection in Indonesia becomes necessary when a business has unpaid invoices and a reduced cash flow as a result thereof. Investors who set up a company in Indonesia are directly interested in collecting any undue payments as soon as possible in order to avoid the disruption of their business. Our team offers debt collection services to those who have pending outstanding payments.

What are the steps for debt collection in Indonesia?

The Indonesian payment terms for invoices average around 30 days. Past this date, companies can commence the collecting process. This usually starts with a negotiation phase as legal action is known to be lengthier.

Two phases are available to those interested in collecting overdue payments:

  1. Amicable action: This takes place through negotiation and an amicable settlement can be reached, one that will benefit both parties;
  2. Legal actions: Through the commencement of ordinary proceedings, followed by an appeal, if necessary. Legal action is lengthier and most investors who open a company in Indonesia will prefer using the amicable option.

What are the main considerations in the case of legal action for debt collection?

The first step is to lodge the demand letter which includes information about the nature of the payment obligation, the due amount, and other details. The creditor files the claim with the District Court.

The following timeline should be considered for the purpose of debt collection in Indonesia:

  • The time limitations for certain types of claims must be taken into account (for example, these can be 6 months for bad cheques);
  • A dispute is usually examined within 180 calendar days, however, this can vary;
  • An appeal can be lodged within 14 days following the receipt of the decision;
  • The debt collection process can take 6 months to 1 year.

Our lawyers in Indonesia can give you more information about the timeline for enforcing court decisions upon request.

When should I commence the debt collection process?

The simplest answer to this question is that you should start the debt collection as soon as possible once invoices become overdue. The sooner you notify the debtor, the sooner you can get paid, even if this means working out a payment schedule.

Using an effective strategy is recommended, especially in those cases in which preserving the business relationship is a priority.

Our team can help you not only with company incorporation in Indonesia, but also with navigating common business issues that arise during the lifecycle of a company – such as debt collection in Indonesia.

What are the available dispute resolution methods?

Like in other countries, mediation and arbitration are available in Indonesia and are increasingly preferred for solving debt collection cases. In fact, alternative dispute resolution methods can be preferred when foreign companies are involved and in the case of large international contracts.

The Indonesian National Mediation Centre is the certified body in the country that offers mediation training, effectively encouraging the use of this alternative dispute resolution method.

During mediation, an Indonesian mediator will assist the parties in reaching a compromise. This solution can be enforced through a settlement agreement, however, the mediator does not have the power to force the parties to reach an agreement and cannot decide on their behalf.

Other services offered by our team

Our team can assist you if you are looking for solutions in the case of debt collection in Indonesia, however, our specialists are also able to answer questions in other areas of interest. If you already have a company in the country, our accountants in Indonesia can provide tailored solutions. Additionally, our immigration lawyers in Indonesia can help you if you have questions about immigration to Indonesia.

Contact us for more information about our services.