Whether you have export credit insurance or not, there are still many ways you can take steps to mitigate risk while doing business internationally. Exercising the following precautions can only benefit your business and help you protect your finances while expanding your growth even more.
Research Potential Export Credit Risks
Doing your research means identifying the main risks linked to export in that country. This could include risks of non-payment, foreign exchange risk or political risk. Find out the specifics for the country of export as many have very specific export/import requirements. You may also encounter bribery and corruption in some countries. Be prepared of these risks and how to deal with them. Being prepared for these risks makes a big difference when trying to recover payment. You can refer to Euler Hermes country reports and collection profiles to help you in this research.
Doing your research also means finding reliable information to check your customers. Get up to date information to balance the need for increasing sales but getting paid. Keep in mind that legal obligations and access to information are not the same everywhere.
Ensure Your Export Contract Paperwork is Accurate
If you haven’t done so already, get your terms and conditions checked by a lawyer who has export and import experience to avoid potential risks, such as harsh late delivery penalties, onerous indemnity clauses and clauses related to the transfer of intellectual property. To minimize disputes and litigation, contracts should include all essential terms and include a clause that mentions if payment is delayed past the due date, the buyer is liable for third party collection costs incurred, late payment interest and legal charges. Contracts should also be clearly written with unambiguous language and specify the law that governs the agreement.
Ensure that your terms and conditions are in hard copy at some stage. These could be printed off by the buyer and signed and dated. It’s much better to do this before the order is placed, just like ticking terms and conditions when placing an online order.
Maximize Your Chance to Secure Payment
Make sure you understand the local legal procedures and linguistic aspects to anticipate non-payment. Know how to conduct an out of court negotiation. You can also use Euler Hermes debt collection services with our global network of offices and contacts.
Build Long-Term Relationships
In many countries, a commitment to building long-term personal relationships is vital for your project to get off the ground and succeed. It can take significant time to build trust and understanding so get started as soon as you can. Being flexible can also help build lasting relationships. Be ready to adapt to your market entry plan and products as you proceed. Good relationships with local partners will help you get the feedback you need to hone your efforts.
Vet Partners Carefully
Do thorough due diligence on partners, acquisition targets and other companies you hope to deal with. It’s vital to investigate a potential strategic partner’s reputation and financial health. Make a list of criteria they must meet and be disciplined about sticking to it. Businesses sometimes get caught up in the excitement of a venture and make the mistake of making a deal with a company that isn’t a good strategic fit because, for example, the financial terms are attractive. Your partners should understand your business goals and share your values.
Be Patient and Persistent
Don’t expect quick sales, much less quick profits. As your expansion progresses, keep learning, tweaking your efforts and getting better. If you encounter difficulties, remind yourself that it’s common for a company’s first foreign venture to stumble.
It can take two to five years to recoup your investment, depending on the country. Make sure you monitor your progress and what’s going on in your markets to stay ahead of changes and update your planning as needed.