How to protect your business when exporting overseas
FYI, this story is more than a year old
Despite the Australian dollar being back on the rise against the US Greenback, economic conditions remain favourable for Australian exporters, according to Atradius.
The company says more local companies seem interested in exporting to take advantage of these conditions, but they they should be looking at ways to protect themselves so they can trade confidently in markets they haven’t dealt with previously.
“Exporting can deliver success, but it’s important for business owners to have a thorough understanding,” explains Mark Hoppe, managing director, ANZ, Atradius.
“There can be many benefits to exporting goods internationally, especially when the exchange rate is favourable,” he says.
“It not only opens up new markets and potential customers and also gives companies the opportunity to expand their business.”
Hoppe says many export markets are considered less secure than the domestic market.
“Companies need ways to assess potentially risky customers in foreign markets before dealing with them. They also need ways to approach deals that are out of the ordinary for them without being exposed to additional risk,” he says.
While it presents opportunity, international exporting also presents a number of unique challenges, Hoppe says.
“These include changes to other countries’ political landscape and regulatory systems, transfer risks, legal risks, and changes to terms of trade mid-way through a transaction.”
Despite these risks, companies thinking of exporting to foreign markets can take several steps to protect themselves before they start trading with overseas customers, Hoppe adds.
Risks can be managed with discipline, and businesses thinking of exporting should actively implement a risk management plan, he says.
“Exporting safely is all about being able to protect yourself from any number of variables that are likely to be out of you control,” Hoppe explains.
“Trade credit insurance provides an extra layer of protection with which to wrap your business and trade safely with markets in other countries,” he says.
Hoppe says one of the most effective elements in a risk management plan is trade credit insurance.
“Much of the Australian market and, most local exporters, rely on trade credit. However, if a customer can’t pay, or won’t pay for goods, companies can be left high and dry,” he says.
“Trade credit insurance provides a cash flow buffer zone so that companies can trade confidently, no matter what the economic landscape looks like.”