Colombia collection profile



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Complexity of collecting debt:

Notable High Very High Severe

Executive summary

  • The payment behavior of domestic companies is good but DSO remains excessive and late payments are frequent.
  • The court system lacks transparency and significant procedural costs and delays are significant so that court proceedings overall ought to be avoided.
  • When it comes to insolvent debtors, collecting debt is a genuine challenge and, overall, negotiating payment during the pre-legal action phase remains the most efficient alternative.
General Information GENERAL INFORMATION arrow-transparent
Collection Practices COLLECTION PRACTICES arrow-transparent
Court Proceedings Court PROCEEDINGS arrow-transparent
Insolvency Proceedings INSOLVENCY PROCEEDINGS arrow-transparent
General Information 


Days Sales Outstanding (DSO)

Payment terms in Colombia usually provide for 60 to 90 days payment, however in practice 65% of transactions tend to be delayed by 10 to 30 days on average.


Late payment interest

It is possible to charge interest for late payment in Colombia however the system is singular. Instead of providing a minimum interest rate in case late payment occurs, the law provides a maximum interest rate (Tasa de Usura) applicable in case of late payment, and each entity is given liberty in deciding whether or not interest will be charged.

Article 1629 of the Colombian Civil Procedure Code clearly stipulates that all cost caused by collection activities are to be supported by the debtor provided that costs and efforts undertaken to recover the debt may be justified.

collection practice 


Orchestrated negotiation first

As a result of the last amendment of 2012, civil and commercial procedures ought to become increasingly oral in the future but, in the meantime, formal legal action remains overly lengthy and unreliable. As a result, amicable settlement opportunities should always be considered as a strong alternative to formal proceedings. As a matter of fact, it is actually mandatory (under Law 640 of 2001) to conduct conciliation or mediation hearings before commencing formal proceedings (and pre-trial mediation must also be conducted in administrative litigations under Statutory Law of Justice Administration n°270 of 1996). Before starting legal proceedings against a debtor, in addition, assessment of its solvency and assets is essential as it allows verification as to whether the company is still active and whether recovery chances are at best: if insolvency proceedings have been initiated, indeed, it often becomes impossible to enforce a debt (see below). It is worth noting that most conciliations are agreed before the matter goes to court as an attorney will look to resolve the matter in conciliation or arbitration centres.​

Court Proceeding 


Colombia has a codified Civil Law system inspired by continental legal frameworks, which distinguishes constitutional and administrative jurisdiction from ordinary (civil and commercial) jurisdiction. At the first instance level, claims are allocated to Municipal Courts and Circuit Courts depending on the amount of the claim. Different Courts of Appeal (Tribunales Superiores del Distrito Judicial) then deal with cases in their specific districts, depending on their expertise. Civil procedure is governed by the Civil Procedure Code (Decrees No. 1400 and No. 2019 of 1970), the last amendment (Law No. 1564 of 2012) coming into force in January 2014. Colombia also has a codified Commercial Law with a special policy and judgment process for companies and debtors. In a Civil Court, judges apply different policies for companies and private individuals. Where an individuaul trades as a company, the judge could apply both policies. Colombian judiciary is influenced by political authorities and authority given to the rule of law has room for improvement. ​

Ordinary legal action would usually commence when amicable collection has failed. When the debt is certain and undisputed (for instance if a promissory note or bill of exchange is available as provided under Law 1321 of 2008) the creditors may initiate summary proceedings to obtain a Payment Order, in which case the debtor must comply with the decision (or bring a defence) within four to ten days. Having said this, Law 1231 has made it more difficult to commence proceedings on the basis of a bill because it has established various restrictive conditions to their admissibility. Otherwise, formal proceedings may commence as soon as a judge has authorized the action and the debtor has been served with a Writ. The debtor must answer the claim within twenty days, but any failure of the defendant to bring a defence would normally lead the judge to issue a default judgment depriving the defendant from its right to appeal. Otherwise, the courts would systematically invite the parties to attend a mediation proceeding in order to reach an agreement. If the parties fail to do so, the evidence collection may commence, and the court will consider the parties arguments before rendering a decision. The courts would usually award specific performance or issue an order to execute an obligation or abstain from doing something. As a rule, the claimant must be fully compensated so that the courts tend to award damages by taking into account profit losses. Similarly, interests on overdue debts are usually awarded upon the claimant's request. There are however no punitive damaged under Colombian law. 

insolvency Proceeding 


A debtor is deemed insolvent when it faces the imminent inability to satisfy its obligations, or whenever it fails to satisfy two or more obligations representing 10% or more of its total liabilities for a period exceeding ninety days. The Colombian Insolvency Act (Law 1116 of 2006) provides for reorganization proceedings similar to U.S. Chapter 11 proceedings, as well as judicial liquidation proceedings (similar to U.S. Chapter 7).


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> For more information on local collection practices, court proceedings and insolvency read the full Collections Profile


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