CREDIT MANAGEMENT SOLUTIONS FOR EXPORTERS

Offering trade credit can be an important tool for winning new business, but comes with risks such as late payment, default and customer insolvency.  When the customer is based overseas, managing the relationship and collecting payment can be even more difficult with language and cultural differences, potential regulatory complications and the risk of economic or political instability.

To manage these risks, it can be good business practice to use a specialist credit insurance company which can replace crucial working capital when non payment impacts on cash flow.  Credit insurance is also useful in determining the creditworthiness of a new client and can provide key information on the trade sector in which a company operates.

Access to extra working capital can be invaluable when expanding into new markets overseas and to help fund longer payment terms which are often required when selling abroad. Unlocking the cash tied up in unpaid invoices from clients abroad through export invoice discounting, raises immediate additional working capital and, unlike a fixed overdraft facility, the financing grows in line with a company’s sales.

SME exporters and even large firms often do not have credit management staff with experience in dealing with clients based abroad. Outsourcing the collections process brings many benefits, but selecting the right partner is vital. Choosing a reputable international agency with the resources and capability to collect international debt is essential. At Coface, a leading provider of credit solutions for business, we have a highly skilled, multi-lingual staff in the UK & Ireland and an overseas network of partners and subsidiaries to complement them.

Exporting is a good way to expand a business and judicious use of external expertise can help improve the chances of success. The use of credit information, credit insurance, outsourced collections and invoice discounting, can help manage the risks associated with trading abroad, allowing the firm to focus on its core activities and drive the business forward.

Contact: Trevor Byrne, Coface