Managing Export Risk ? Know the Risks

| September 14, 2013

Business is always risky; no matter how big or small it is. Especially, when you are in export business then you are in bigger risks. Export is risky in local as well as in the international trading industries. However, risks in international trading are different from the risks that are involved in any kind of domestic trade. So, it becomes important to deal with the risks that come with the export business in international market a proper risk management system and with required efficiency.

There are various types of risks involved in an international export business. Here are some of them:

Credit Risk:

When you are exporting goods to abroad the very first hurdle you need to cross is the long distance. Sometimes because of this huge distance, it may not be possible for an exporter or a business owner to authenticate the reputation and the creditworthiness of the buyer or the importer. Any fake importer can deny paying you or can increase the risk of late payment. So, it becomes necessary for every exporter to check the creditworthiness of the foreign importers.

In case it is required, an exporter can ask for the professional help from any commercial firms that can handle credit-checking of foreign companies and can assure the creditworthiness of the same. Managing export risk can become easier for you with their professional and experienced help.

Logistic Risk:

As an exporter you need to understand all the vital aspects of international logistics, particularly the contract of carriage. This is a contract which is settled up between a carrier or transport operator and a shipper. Otherwise he may face some risks that are involved with the logistics sector in the export business.

Below Quality Risk:

When you export some goods to your foreign client, he may reject the entire order because of poor quality. If you want to get rid of such kind of risk then you have to be sure about the high quality of your products. However, sometimes the importer can show the cause of poor quality just to keep the exporter in high pressure and settle down the payment at a lower rate. You can avoid this kind of situation by arranging a quality check process before the goods are supplied to the importer. However, the inspection can be done by an individual checking company in order to give an impartial report.

Legal Risks:

This is one of the main risks that are involved in any kind of export business. Since the international laws change frequently so you may not be aware of all these rules as soon as they change. You need to sign a contract in conjunction with a law firm in order to ensure that your interests are taken care of in a proper manner.

Export Risk Management Plan:

Risk management is a vital process which is required to be followed by the exporters in order to ensure the proper protection from all these above mentioned risks. This will make your export business successful and hassle free. There will be risks but you will be well prepared to face them.

Author Bio: Anny Smith is an experienced writer and she writes on various financial topics. You can get more information about other financial terms from her articles.

Managing Export Risk ? Know the Risks

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