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What are the risks facing exporters
Q. What are
the risks facing exporters?
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A. Assessing
risk for an exporter.
Selling outside your
domestic market increases the risk profile of any company.
Exporters encounter risk in
many areas and need to consider some key questions as follows:
Export Markets:
- What markets are open to the exporter and their products? Will the
product sell overseas? Will exporting be profitable for the company?
Country Risk:
- Is the country where the buyer is located politically and
economically sound? Could something happen in the buyer’s country that
would prohibit or disrupt the buyer’s ability to pay the exporter for
goods shipped to them?
Buyer Risk:
- Can the buyer pay for goods shipped to them? Should an exporter
extend credit to the buyer? Is the buyer financially sound and will they be
able to make their payments when due? What are the buyer’s bona fides,
particularly if the exporter is appointing them as an agent or
distributor?
Credit:
- Will the market expect credit terms? How should an exporter manage
the credit risk of each buyer? How can an exporter reduce or eliminate their
credit risks?
Damage to goods in
transit:
- What happens if the goods are damaged in transit and which party will
be responsible?
Payment:
- How can the exporter ensure that payment is received for the goods
they ship overseas? What payment options can reduce an exporter’s risks?
Finance:
- How can the exporter
finance their sales contracts? How can the pre- and post – shipment
periods be financed?
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