Mexico collection profile



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2014: 53/189 countries
2013: 51/189 countries

Complexity of collecting debt:

Notable High Very High Severe

Executive summary

  • The law provides no framework on standard payment terms, but it is common to rely on 30 days credit starting from the date of the invoice. In practice, payments take place wihtin 40 to 50 days on average, whilst delays of 15 to 30 days may be expected.
  • The court system is complicated by its federal structure and it is known for a lack of transparency and independence. Business disputes are not dealt with by specialized judges and in practice the fast track mechanisms which could facilitate proceedings when the claim is straightforward cannot be relied upon. Overall, procedural delays and costs are significant and pre-legal action remains the most efficient means of collecting debt.
  • The debt restructuration process is not efficient at all, and proceedings may last for years (ex. Mexicana). As a result, liquidation is in practice the default procedure when the debtor becomes insolvent and the chances of collect debt through this channel are very low.
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)

The law provides no framework on standard payment terms, but it is common to rely on 30 days credit terms starting from the invoice date.  Broad terms are however very frequent and in practice take place within 40 to 50 days on average , whilst delays of 15 to 30 days may be expected if the transaction is not secured. Having said this, the payment behavior of domestic companies is good and characterized by a strong attachment on trust and business relationships. Therefore, small undertakings are flexible with payment schedules but do not voluntarily delay payments (delays would more likely occur as a result of poor banking support), whilst larger companies would endeavor to pay on time in order to preserve their credit rating and maximize their business opportunities on an international plane. Some exceptions exist of course, and in certain occasions collecting from small and micro companies may prove very difficult because these may change names and operations from one day to the other in order to escape their contractual responsibilities.


Late payment interest

The law provides no framework on late payment, which is normally considered as a matter of contractual negotiation.  To claim interest pre-legally, it needs to have been previously agreed.  Often , a 6% interest rate would be applied but in practice it would be difficult to charge any interest as part of pre-legal negotiations. These would ned to be claimed during court proceedings.

Collection costs would usually be used as a negotiation tool when the debtor company has financial difficulties, otherwise they would be charged as part of the legal collection process.

collection practice 


Orchestrated negotiation first

Amicable settlement opportunities should always be considered as a serious alternative to formal proceedings which are costly and very lengthy. In practice, only claims in excess of USD 20,000 would normally be brought to court, and pre-legal collection methods would often be more successful than ordinary proceedings. In addition, it is essential to be aware of the debtor’s activity and solvency status: if the company is not in business anymore or if insolvency proceedings have been initiated, it generally becomes impossible to enforce a debt (see below).

Court Proceeding 


Mexico has a legal system based on Civil Law traditions where the rules are essentially codified. The country is made of 32 states and thus has a federal organisation; various bodies of law operate at the federal level (Civil Code, Commercial Code, and Code of Civil Procedures) and at the state level alike. The judiciary divides into District Courts (competent to deal with civil, commercial and criminal matters) operating in first instance at the federal and state levels alongside with specialized courts (dealing with bankruptcy and family disputes) and administrative courts. The Circuit Courts then act as the appellate body, whilst the Supreme Court operates as the ultimate jurisdiction in Mexico.

Legal dunning always ought to start with a registered Demand Letter recalling the debtor its obligation to pay the principal together with late payment interests (as contractually agreed or taking a legal rate as a reference), but this demand may be reinforced if sent through a notary. When the debt is undisputed by the debtor, a 'preparatory media' procedure aims at helping the parties to reach an agreement within three months. In practice, this possibility is rarely relied upon and formal lawsuits remain the default procedure. Formal legal action in first instance would normally take place through either a Civil Process (Civil Complaint about the Debt) or a Commercial Law Process depending on the case. The creditor would file a claim with the District Court, whilst summons would be served to the debtor. The latter would normally be given 15 days to bring a defence. Failure to do so would otherwise entitle the creditor to request a default judgment from the court. Otherwise, the court would review the parties' evidence and arguments over a 40 days period, prior to rendering its decision. In practice, however, these time requirements are not always applied. The courts would normally award remedies in the form of executive orders, specific performance or injunctions. Punitive damages could in theory be awarded but remain rare in practice as the proof threshold is very burdensome. Prior to commencing formal proceedings and provided that the contract allows it, initiating legal action in a foreign jurisdiction or having arbitration or international arbitration may be considered (arbitration may prove more costly than the ordinary lawsuits, however enforceable decisions would be rendered more rapidly).

insolvency Proceeding 


Insolvency in Mexico is a matter of cash flow and balance. A company is deemed insolvent once it is unable to settle debts when they fall due, or when its assets cannot compensate for its liabilities. Various criteria apply, but as a general rule, prior to commencing insolvency proceedings the debtor must owe to at least two creditors and the debt must have remained unpaid for more than 30 days whilst representing at least 35% of the company’s debt. The Ley de Concursos Mercantiles (LCM) also known as the “Business Reorganization Act” of 2000 provides two main insolvency procedures and is described as having incorporated most of the best international practices. The Law apparently fosters corporate restructuring rather than liquidations, imposes restrictions on litigation, and automatically triggers a liquidation process in order to deter excessive delays. All insolvency proceedings must be conducted before the Federal District Courts.


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