Top-Rated Debt Collection Agency in Japan
Fast and reliable debt collection in Japan - no upfront costs, only pay for success. Request a FREE Consultation or upload your claim today.
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Recovering your debt in Japan is easiest through this method.
Debitura is a specialist in debt recovery in Japan. Our team of professionals with experience in Japan debt collection laws and regulations offers a comprehensive range of services that include accounts receivables management, debt collection notices, pre-legal and legal debt collection, and enforcement court proceedings. We provide efficient and effective solutions to help businesses recover outstanding debts.
We provide unwavering assistance throughout the entire process.
Tailored debt recovery approach.
We have a team of more than 500 professionals who specialize in international debt collection.
We have a 87% success rate with the lowest cost.
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The ultimate guide about debt collection in Japan
Are you searching for a way to reclaim financial losses incurred from business or customers in Japan? You have certainly come to the ideal place!
We've assisted hundreds of companies recover debt in Japan and can help you too. With our expertise, we are certain that you will be successful in obtaining your rightful recompense! Gathering a debt in Japan can seem like an impossible feat due to the language, cultural and legal differences as well as its distance from other countries. Navigating these obstacles requires skill and determination which isn't always easy. To make debt recovery easier and more efficient, a collection agency that is familiar with the laws and customs of the debtor's country should be employed.
At Debitura, we take a people-first approach to ensure your money is recovered while preserving the good relationship with your customer. Our strategized PR methods are just and stringent - safeguarding our number one priority of protecting your reputation at all costs!
If your aim is to understand the Japanese debt collection process from start to finish and collect it for yourself, this guide is definitely for you. However, if you would rather work with a local law firm specialised in Japanese debt recovery, we can assist you every step of the way!
Debitura makes debt collection simple and accessible in Japan as well as +200 other countries. Don't wait, begin your claim uploading process today! Our team will assess your case within 24 hours and offer you three free quotes from reliable local attorneys. We'll help ensure that recovering what's owed to you is effortless - start now! By using a people-centered method supplemented with cutting edge technology solutions, we cultivate customer relationships and drive positive outcomes. Our comprehensive approach to contact management delivers exemplary results without sacrificing customer loyalty. Furthermore, our vast network of debt collectors, attorneys, providers and vendors are relationships that we value deeply. We recognize their significance without regard to the size of each individual relationship. Together these connections empower us to accomplish any task with excellence.
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Begin the debt collection process in Japan today, at no cost. Simply create a free profile and submit your case in two minutes.
Pre-legal
During the initial 3 months, we'll attempt to recover your debt through our successful pre-legal collection system. We operate on a 100% no-win, no-fee basis.
Legal
If we are unable to collect your debt during the pre-legal phase, we will connect you with three local debt collection attorneys who will provide you with quotes.
24/7 updates
You get access to our online portal where you can track your case in real-time
Introduction to collecting debt in Japan
Struggling to collect debt from customers in Japan? Worry no more; we make it effortless for you to get the money your Japanese clients owe.
In Japan, the party responsible for an outstanding debt is referred to as “the debtor”, while “the creditor" refers to the individual or organization who has issued the bill.
When the original creditor collects a debt, it is referred to as “first-party collection”.
When creditors assign the job of collecting debts to an external agency, this is known as “third-party collections”.
- Thanks to the culture-particular practices in Japan, invoices are generally paid on time; but disparities exist among different sectors. The payment process is incredibly reliable, with only a small portion of bills going unpaid.
- Domestic courts typically provide quick decision-making, however tribunals are a prolonged and costly process. To avoid such challenges, well-structured pre-litigation collection activities should be executed beforehand.
- Obtaining debt from people who are insolvent is generally a complex exercise, and while bankruptcy proceedings could yield some recompense, it would be spread out over numerous years and incur considerable costs.
Days Sales Outstanding (DSO)
The payment culture of Japan is exemplary, with a miniscule amount of invoices that remain unpaid due to the nation's strong cultural norms. What’s more, if anyone fails to pay twice in the span of six months - they may be prohibited from using banking systems and services!
It is expected that payments should be made within thirty days on average, however terms may extend to sixty. The Days Sales Outstanding can vary from sector to another and the general DSO average remains consistent at 69 days for public companies over past years.
In reality, 45% of transactions are paid on time while delays up to a duration of 10 days may be experienced.
Common payment types in Japan
In Japan, more often than not, domestic transactions are done on open account. That is, the goods are delivered prior to payment being due. Alternatively, promissory notes (Yakusoku Tegata) can be used as evidence of debt in case of non-payment; however bills of exchange (kawase tegata) do not appear to be widely employed in practice.
Bank transfers (furikomi) are swiftly gaining traction as the payment option of choice for international transactions, due to their security and efficiency bolstered by a growing worldwide banking infrastructure.
The debt collection process in Japan
Japan employs a multi-step procedure for the collection of debt, ensuring that all parties involved receive fair treatment.
Step 1: In Japan, the amicable collections process usually begins with friendly reminders and a final notice letter.
Step 2: If your debtor fails to take action even after you've sent a few friendly reminders and a notice letter, it's time to move forward with legal collections. To do this, enlist the help of a local attorney who can use the court system in Japan to make your debtor recognize and pay your claim.
Step 3: If you have yet to receive payment even after the legal collection process, your last resort is enforcing your claim in Japanese enforcement courts.
Debitura enables you to complete all three steps of the process in Japan with ease.
Amicable collection in Japan
With Debitura, you can rest assured knowing that we guarantee a zero-risk and highly efficient process for Amicable collections. All it takes is the submission of your claim, which begins our work within 24 hours!
As part of our debt recovery process, we will go the extra mile to reach out to your debtor via all viable methods in Japan - from emailing and texting them, sending physical letters and making calls, even connecting with them on social media.
Through this process, we are aiming to achieve one of two outcomes:
A) either the debtor pays the full amount or
B) they agree to acknowledge their debt and construct a payment plan.
If the debtor has contested your demand, you have no choice but to begin with legal collections and bypass an amicable resolution.
Late Payment Interest
By virtue of the law, creditors can charge interest on any late payments from debtors as they are held accountable for defaulting their contractual obligations (Civil Code Articles 404, 412 and 419). As such, Companies or individuals engaging in commercial activities may be subject to a 6% legal rate of interest imposed by the Commercial Code.
Moreover, if payment is still in arrears after 365 days and the debtor has been notified to pay, then late payment interest may be added onto the principal (Civil Code Article 405).
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Legal collection in Japan
In the event that your claim is not settled amicably, or if the debtor contests it, we will procure three complimentary estimates from our regional debt collection attorneys. Our local attorney shall then take action and strive to negotiate a settlement with your debtor. If need be, our partners can also navigate through Japan's legal system and gain an enforceable payment order at court - which subsequently can be used for enforcing your claim via enforcement court.
Ordinary proceedings
The debt collection process usually commences with the mailing of a registered Demand Letter (Naiyo Shomei) to the debtor in order to demand payment of both principal and interest.
If the debt is undisputed and certain, a Demand for Payment (Tokusoku Tetsuzuki) may be swiftly obtained through a fast-track procedure. At times, court clerks can even deliver a Payment Injunction (Shiharai Meirei) within seven days of initiating it. However, if the debtor contests this demand in two weeks' time or less, then bringing this claim forward to courts via established legal action becomes necessary. Before the legal process begins, neither party is obligated to cooperate with one another-- even if a court order requests documents from either party or an unrelated third-party. Nevertheless, there are no repercussions for failing to adhere to this demand.
If the debt is less than JPY 300,000 (roughly EUR 2,300), a Small Claims procedure can be launched before Summary Courts. In most cases they will deliver their verdict on the day of oral argument; otherwise it would lead to a more common litigation process.
When friendly attempts at collection have come up short, a creditor can begin formal legal proceedings by filing a claim with the District Court. The court then summonses the defendant for an appearance and retains authority to postpone hearings if requested. If unsuccessful in their defense, it is understood as implicit agreement of the facts presented in the claim. Hearings are conducted to examine evidence while also allowing room for negotiations between parties; often resulting in compromise outside of courtroom discussions.
Otherwise, the courts may award remedies including a declaratory judgment (kakunin hanketsu), specific performance (kyufu hanketsu) or damages. Unfortunately, punitive damages can't be awarded by the court under these circumstances.
Japan's Civil Law system offers no binding precedents, yet Supreme Court decisions are often taken into consideration by the courts. Their justice is executed through a copious amount of Summary Courts located in each local area (438 total), 50 District Courts (Chiho Saibansho), 8 High Courts situated across Japan (Fukuoka, Hiroshima, Osaka, Nagoya, Sapporo, Sendai Takamatsu and Tokyo) which function as Appellate Courts and one final higher authority - The Supreme Court.
Individuals who wish to bring a claim worth more than 1.4 million JPY (around 10,000 EUR) or file litigation involving real property must take their case to the District Court. Additionally, these tribunals are granted exclusive jurisdiction for disputes concerning patent rights and utility models in both Tokyo and Osaka. Similarly, District Courts have authority over disagreements regarding designs and trademark rights as well.
When it comes to obtaining the most competitive prices for legal services, your best bet is to obtain multiple quotes from different lawyers. Fortunately, Debitura makes this tedious process simple and efficient by allowing you to compare quotes with just a few clicks of your mouse! Consider the size and complexity of your claim when analyzing costs - Debitura will help guide you in selecting the optimal lawyer at an exceptional rate.
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Debt enforcement in Japan
Are you in possession of a legal document that states your claim? Maybe it's a court order or an acknowledgment from the debtor. If so, then Japan has got you covered with their bailiff’s court - ready and willing to enforce your claim!
Following the two-week appeal period has lapsed, enforcement may be initiated if the debtor does not fulfill their obligation to settle a monetary claim. Should this occur, compulsory enforcement will take place through (i) execution against Real Property by submitting an application to court and obtaining issuance of an Execution Court's commencement order with regards to organizing a compulsory auction; (ii) To execute judgements on movables, an application is made to the Marshal Court and a seizure of the subject matter is commenced; and (iii) Judgements against claims are enforced by filing applications with an execution court for compulsory executions through attaching orders.
For your personal situation, the procedure and expenditure will differ. Upload your case details to Debitura right away - you'll get three distinct quotes for your claim within just a day!
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Insolvency proceedings in Japan
When your debtor is unable to fulfill their payments, you can proceed with insolvency proceedings. This process seeks to dissolve the debtors' property and disperse it amongst creditors in accordance with priority of claims. Through this method, debts will be settled swiftly and justly.
- Established in 2001 by the National Bankers’ Association, the Federation of Managers’ Association and other relevant associations.
- Provides for Business Reorganization by Alternative Dispute Resolution (BRADR) proceedings.
- A private sector organization (Japan Association of Turnaround Professionals, JATP) recommends neutral third-party experts in charge of leading such workouts in a fair and independent manner.
- Restructuring the debt:
- Civil Rehabilitation proceedings (under the Civil Rehabilitation Act of 1999) may be initiated upon demand of the debtor. The latter files a petition with the court in order to obtain a preservation measure under which the payment of debts to unsecured creditors is temporarily prohibited. A supervisor is nominated and assets may be frozen until the debtor becomes solvent again.
Our analysis has shown that the risk of running a business in Japan is low. Based on this low score, You can feel reasonably confident that you will be able to get paid when trading with customers in Japan. Nonetheless, we always recommend doing a specific credit analysis on an individual customer basis before offering any credit. The low risk score is based on the following factors:
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The economic risk in Japan
Our conclusion based on the economic risk factors, is that the economic risk in Japan is low (2 out of 6). An economic risk of 2 out of 6 is low in Asia.
GDP and economic growth are critical drivers for economic risk.
The GDP of Japan is 4937.42 bn. USD (2021), growing by 1.62% per year.
In terms of the size of its economy, Japan ranks #4 out of 183 countries and has a large economy.
In terms of growth rate, it is ranked #147 out of 183 countries and is therefore considered a slow-growing economy.
GDP per capita is 39285 USD, ranking Japan number #26 out of 183 countries. The result of this is purchasing power of citizens in Japan is high compared to the rest of the world.
You can see a more throughout picture of GDP and economic growth in Japan in the table below:
Another significant influencer for the economic risk score is the inflation rate and the interest rates. You can see a more throughout picture of monetary key performance indicators in Japan in the table below:
The inflation in Japan was -0.2% in 2021 which is considered a very low inflation rate.
The business environment risk in Japan
Our analysis shows that the business environment risk in Japan is very low (1 out of 6), which is a low risk score in Asia.
Economic freedom and rights determine the business environment risk in a country. The critical facts for Japan in the table below:
As you can see in the table, the property rights index is 88 in Japan, which is considered good in Asia.
The business freedom index is based on 10 indicators, using data from the World Bank’s Doing Business study. The Index is 86 in Japan, a good score for a country in Asia.
Japan's overall economic freedom index is 74 out of 100 and is based on factors such as the rule of law, regulatory efficiency, and market openness.
The political risk in Japan
The political risk in Japan is very low, with a score of 1/6. This is a low political risk score in Asia.
The governance and political stability indicators are vital drivers for political risk. An overview of Japan can be seen in the graphs below:
The rule of law index analyses to which extent agents have confidence in and abide by the rules of society, in particular the quality of contract enforcement, property rights, the quality of the courts, and the police's ability to enforce court orders.
When doing business in a country, the rule of law index is critical as it describes your ability to enforce commercial contracts.
In Japan, the rule of law index is at 1.58 points, with the score going from -2.5 (weak) to 2.5 (strong).
Japan has, therefore, a very high rule of law index, which means you have a very good chance of enforcing your contracts. If your individual customers have good creditworthiness, you should therefore feel relatively safe when providing credit.
Other drivers for the very low political risks are the strong control of corruption, the average political stability index, and the small shadow economy that is 8.19% of Japan's GDP.
The commercial risk in Japan
In Japan, the commercial risk score is 2/4, which in our model is a low score. This low commercial risk score is pretty average compared to the average in Asia.
The commercial risk is impacted by a country's international trade relationships. You can see some of the key facts for Japan in the table below:
Japan has a total of foreign exchange reserves of 1405.75 bn. USD.
The financing risk in Japan
We have calculated the financing risk to be 1/4, which equals a very low risk. A very low financing risk score is low for countries in Asia.
The country's banking system, efficiency, and stability influence the financing risk. You can find the extra information for Japan in the table below:
In Japan, the credit information sharing index is 6 on a scale from 0 (low) to 8 (high). The result of this is accessibility and quality of credit information available in Japan is medium.
This makes it easy for you to understand the credit risk of your counterpart in Japan. You should therefore be able to find a good local credit rating agency that can help you analyse the creditworthiness of your specific customers.
Your legal rights as a creditor (and as a borrower) are 5 out of 12 and, therefore, weak.
Debt collection in Japan: Frequently Asked Questions (FAQ)
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In Japan, debt collection follows a multi-step process. First, friendly reminders and a final notice letter are sent to the debtor. If that doesn't work, you can take legal action with the help of a local attorney. If all else fails, you can enforce your claim in Japanese enforcement courts. Thanks to Japan's strong payment culture, invoices are typically paid on time, but pre-litigation collection activities should be executed to avoid challenges.
The debt collection process in Japan involves three steps: pre-legal collection which includes friendly reminders and notices, legal debt collection with the help of a local attorney, and debt enforcement through Japanese enforcement courts if necessary. Debitura can assist you in completing all three steps.
Legal options for debt collection in Japan include civil lawsuits, debt enforcement, and insolvency proceedings. If the debt is disputed, a civil lawsuit is required, and legal actions require a local lawyer. Small claims under JPY 300,000 can be settled via the Summary Courts procedure, while larger claims must be filed with the District Court. Insolvency proceedings seek to dissolve the debtor's property and disperse it among creditors. Debitura can assist you in obtaining multiple quotes from different lawyers and help guide you in selecting the optimal lawyer at an exceptional rate.
Debt collection costs in Japan can vary depending on the situation. Luckily, Debitura offers a no-cure-no-pay model for pre-legal collections with a success fee of 10-20%. Legal actions are case-specific, but Debitura can provide you with 3 quotes from the best debt collection lawyers in Japan.
The timeline for debt collection in Japan can vary depending on the debtor and the case. If the matter can be resolved in the pre-legal phase, typically it takes 3-6 months. However, if legal action is needed, the process can take longer, usually around 12-18 months. Overall, the time frame will depend on the complexity of the case and the cooperation of the debtor.
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