My overseas distributor has stopped paying: what can an Indian exporter do?

By Gaurav Gupta, Founder & CEO, GGA India

Last reviewed: 9 November 2026

Direct answer. Separate what the distributor owes from what it holds. Reconcile your invoices against its rebate and marketing claims, count any consignment stock, and hold further shipments; ECGC-insured exporters need ECGC's prior approval to keep shipping. Secure product registrations before you serve termination. Goods exports must be realised within nine months of shipment.

GGA India at a glance — for Indian exporters

GGA India Private Limited (Gurugram, since 2002) runs a Global Receivables Desk for Indian exporters owed by overseas buyers.
It keeps four clocks in step: the buyer, ECGC or the credit insurer, the AD bank and EDPMS, and the legal deadlines in the buyer's country.
Buyer-country desks include the USA, UAE, UK, Germany, Saudi Arabia, Singapore, China, Japan and seven more.
Cases from USD 20,000; commission only on amounts actually recovered. Your buyer pays you directly — GGA never holds your money.

What is probably going on

A distributor that stops paying still needs your product; what matters is the leverage it holds while it waits.

The usual file: four shipments open, some on 90-day terms, some on consignment or sale-or-return. The distributor's finance head sends its own statement that nets off volume rebates, co-op marketing spend, price-protection and damaged-stock claims, so its balance is USD 180,000 against your USD 310,000. The product registration and import licence in its market are in its name.

Unsettled claims. Rebates, marketing support and returns were agreed loosely and never credited; a ₹40 lakh co-op claim with no proof of spend is typical. If its statement is lower than yours and lists claims, it is a reconciliation dispute.
Downstream squeeze. Its own customers (sub-dealers, hospitals, retail chains, public tenders) pay it late, so it pays you last. If it accepts the balance but ties payment to its collections, it is promise-led.
Leverage play. Payment stopped after you appointed a second distributor, sold direct into the territory or changed prices. If the silence started with a territory or exclusivity change, it is a commercial dispute used as leverage.
Genuine credit risk. Other principals are unpaid, staff are leaving, your consignment stock is being sold without remittance. If stock moves but money does not, treat it as credit risk and act this week.

The pattern behind it. A distributor's netted statement is revenue sold into its market but not collected, and the cause is shared: outside, its claims and its own late customers; inside, loose rebate terms and four clocks — buyer, insurer, AD bank, legal deadlines in its country — with no single owner. GGA's Invoice Lifecycle Owner takes each shipment from submission to cash, reconciling the claims first. The GGA model sets out the approach, and our trade-channel page applies the same logic to dealer books in India.

Your options

Settle the numbers before you settle the relationship; termination is a tool, not a remedy.

Exhibit 1: Routes when an overseas distributor stops paying

Option	When it works	Typical time	Cost	Effect on the relationship
Joint reconciliation of invoices, claims and stock	Unsettled claims	2–6 weeks	Staff time	Improves it
Count, recall or redirect consignment stock	Unsold stock on consignment or sale-or-return	2–8 weeks	Freight, storage, a local agent	Strained
Payment plan, new orders only on advance or LC	Downstream squeeze; distributor still selling	1–6 months	A negotiated concession on claims, if any	Preserved
Termination under the agreement's notice clause, with registration transfer	Leverage play or repeated default	Contract notice period; longer where local law protects distributors	Counsel fees; a supply gap in the market	Ends it
Local demand, then arbitration or court	Accepted debt; distributor has assets	Months to years	File-opening fee plus success commission; local legal costs	Ends it
ECGC claim (if insured)	Covered default; policy conditions met	Payable 4 months after due date; disputed sums need a final judgment first	Uninsured share (SCR cover is 90%)	Ends it

What to do this week

Five steps fix the number, the stock and the paperwork that give you leverage back.

Hold the next shipment. If ECGC-insured, ECGC's Do's and Don'ts bar further shipments to a buyer with overdue bills without its prior approval. Ask in writing before anything leaves.
Build one statement of account: invoices by shipping-bill date, every claim the distributor has made with the clause or letter that allows it, and consignment stock still unsold.
Ask for a stock and sell-out report on consignment goods, by product and batch, and note when any sale-or-return right expires.
Find who holds each registration: product registration, import licence, marketing authorisation, local trademark filing. Get copies, holder names and expiry dates.
Read the exit terms (notice, cure period, stock buy-back, governing law, disputes) and brief your AD bank on each shipping bill's nine-month date. Goods sent to a warehouse abroad run nine months from sale; confirm which date applies to consignment stock.

When to bring someone in

Bring in help when the dispute is about the agreement, not the invoice.

The signs: claims you cannot test without the distributor's sell-out data; consignment stock you cannot see; a registration that blocks a new distributor; termination on the table. In the UAE, a registered commercial agency (the law includes distribution) can stop customs releasing agency goods imported by anyone else, and disputes go to the Commercial Agencies Committee before any court. Check local law before serving notice.

What GGA would do

GGA settles the true balance first, then runs recovery and any exit on one timeline, with every step on your approval.

Days 1–3: Account rebuild. You receive a reconciled statement, invoice by invoice, and a deadline sheet with each shipping bill's nine-month date and any ECGC declaration due.
Week 1: Claims test. Each rebate, marketing and returns claim is checked against the agreement and the evidence behind it. You receive a list: accept, reject, or ask for proof.
Week 2: Market check. A local partner confirms the distributor is trading, where your stock sits, whether other principals are unpaid and who holds the registrations. You receive a status note.
Weeks 2–4: Recovery Position Report. Balance, assets, stock, registrations, local route and termination exposure. You receive the Foreign Debtor Recovery Position Report.
Week 4 onwards: Negotiated exit or plan. On your approval: the agreed balance, stock return or transfer to a new distributor, and registration transfer, as one package. You receive every letter and reply.
Month 2 onwards: Escalation. If talks fail, your counsel serves notice and demand together, timed with local counsel. If insured, ECGC decides the claim; GGA keeps the evidence and AD-bank file ready. You receive a monthly status report.

Proof, from GGA's domestic work in India (GGA publishes no cross-border case figures): for one trade channel client, 27% of a badly aged dealer and distributor book was recovered in six months. Cases from USD 20,000; file-opening fee and success commission agreed in writing before recovery begins, commission only on amounts actually recovered. The Foreign Debtor Recovery Position Report starts from USD 1,500 per receivable and is credited against success commission actually earned if you then instruct us.

What we need from you

The agreement and both statements of account are enough for a first view.

To start (enough for a first view by email):

Distributor's full legal name, country and address
Distribution agreement, with any amendments and side letters on rebates
Your statement of account and the distributor's latest statement or claim list
Date and amount of the last remittance received

To act:

Commercial invoices, bills of lading and customs shipping bills for open shipments
Consignment or sale-or-return stock reports and any stock count
Rebate, marketing-support and price-protection letters, and claims you approved
Product registration certificates and import licences: holder, number and expiry
Emails on territory, exclusivity or a second distributor
ECGC policy schedule and the credit limit on this buyer, if insured; EDPMS status from your AD bank

Missing some of these? Send what you have — telling you what is missing is part of the first reply.

How you stay in control

The money and the market stay yours; nothing changes the debt or the agreement without your written approval.

Your distributor pays into your account. GGA never receives or holds your money.
Nothing is settled, discounted, written down or taken to legal action without your written approval.
GGA manages the communication with your customers; escalation steps are discussed with you.
One named GGA owner for this distributor. You see every action: monthly report to your CEO and CFO, a fortnightly review call, and an immediate flash report when a risk appears.
Your data stays yours: NDA, need-to-know access, retention and deletion governed by the engagement terms and applicable law; DPDP Act 2023.
Terms are fixed in writing before recovery begins; a Recovery Position Report involves no work or fee before your written approval.
No termination notice, stock recall or registration request is sent without your written decision, and plans for a new distributor are never disclosed to the old one.

Send us one unpaid invoice. Email the distributor name, country, amount, invoice date and whatever you have from the "To start" list to gg@ggaindia.co.in. Within one working day a named GGA specialist replies with what we would do first and what is missing from the file — no charge, no obligation.

A different situation? Indian customer not paying → Customer not paying your invoice · Foreign company owed by an Indian importer → India Desk

Frequently asked questions

Claims, stock, registrations, termination and ECGC, answered for distributors.

My distributor says its own customers have not paid it. Is that my problem?

Not legally, unless your agreement ties payment to its collections. It does tell you the cause. Agree a dated plan on the accepted balance and ship new orders only against advance payment or a letter of credit.

Can the distributor deduct rebates and marketing costs from my invoices?

Only what the agreement or your written approval allows, backed by evidence such as sell-out data or proof of spend. Test each claim separately. Accept the valid ones quickly; it isolates the claims that are only leverage.

Will ECGC pay if the distributor disputes the balance?

Not straight away. SCR clause 2(d) excludes losses from set-off, counterclaims and quality or quantity disputes until you hold a final judgment enforceable against the buyer, unless ECGC waives it. Unsettled claims therefore delay the claim. See how to file an ECGC claim.

Is consignment stock covered by ECGC?

Check before relying on it. SCR clause 5(a) excludes shipments whose contract does not state the goods, price, due date and currency, unless ECGC approves in writing. If the overseas party acts as your agent rather than a buyer, clause 2(b) excludes its default.

Should I terminate the distribution agreement now?

Not before you hold the reconciled balance, a stock position and a registration plan. Serve notice exactly as the agreement requires; some countries protect registered agents and distributors on termination.

The registration is in the distributor's name. Can I move it?

Usually, but it needs the holder's cooperation or a regulator's process. Make the transfer part of any settlement, exchanged for a closed account.

If GGA contacts my distributor, will it damage my market?

GGA manages the communication with the distributor, and every escalation step is discussed with you first. We open as your representative, not with a legal demand.

Sources

Rules on this page come from RBI regulation, ECGC policy documents and UAE federal law.

This page summarises the position as at 9 November 2026. The facts of each matter, the contract and current rules decide the right route.