Frist essential step in assessing the creditworthiness of its client, obtain reliable information can be very difficult in export business. This will be more complicated than in its domestic market. France, for example, is one of the few countries in the world where publication of balance sheets and P&L statements is mandatory for most companies.
In Germany, no more than 150,000 balance sheets are available while the country has millions of companies.
In China and Russia these data are not present in any official database. In Middle East, this information is confidential and used by private management.
Ask its client to communicate its balance sheet and income statement is often the right solution but can be misinterpreted in some cases because synonymous with distrust while the local business culture is based on mutual trust.
However, risks are particularly numerous in export business. Any exporting company must ensure the solvency of the buyer, unless the business case is 100% secured through an advance payment or a documentary credit.
Obtaining information is through other channels. Some companies are specialized in this area and are able to produce high quality financial reports. They are based on field surveys, payment experiences found by other companies, and cross-checking information.
The quality of financial information is paramount. For this, the report must be performed by an experienced credit analyst. It has a price. Beware of reports available at low cost are often stingy of interesting and relevant information.
Pay attention to the "noises" of the market by filtering credible information. Trim them with other sources of information in order to build an opinion based on solid foundation.
However, the financial analysis is less systematic in international trade due to the difficulty in obtaining basic information, and if we get them, to ensure their quality and representativeness. In addition, the risk of insolvency of the buyer is a risk among others (political, currency risks...etc.). It is for this reason that the transactions must be secured through the establishment of a suitable tool.
In Germany, no more than 150,000 balance sheets are available while the country has millions of companies.
In China and Russia these data are not present in any official database. In Middle East, this information is confidential and used by private management.
Ask its client to communicate its balance sheet and income statement is often the right solution but can be misinterpreted in some cases because synonymous with distrust while the local business culture is based on mutual trust.
However, risks are particularly numerous in export business. Any exporting company must ensure the solvency of the buyer, unless the business case is 100% secured through an advance payment or a documentary credit.
Obtaining information is through other channels. Some companies are specialized in this area and are able to produce high quality financial reports. They are based on field surveys, payment experiences found by other companies, and cross-checking information.
The quality of financial information is paramount. For this, the report must be performed by an experienced credit analyst. It has a price. Beware of reports available at low cost are often stingy of interesting and relevant information. Pay attention to the "noises" of the market by filtering credible information. Trim them with other sources of information in order to build an opinion based on solid foundation.Financial analysis and export
The analysis of profit and loss accounts and balance sheet of a company is one of the main means for determining whether the buyer is strong and solvent. This principle is true for any company regardless of its geographical location.However, the financial analysis is less systematic in international trade due to the difficulty in obtaining basic information, and if we get them, to ensure their quality and representativeness. In addition, the risk of insolvency of the buyer is a risk among others (political, currency risks...etc.). It is for this reason that the transactions must be secured through the establishment of a suitable tool.
Main sources of information
| Specialists in Business Information in export | ||
|---|---|---|
| Coface, French specialist for export with a very complete offer: information, insurance, factoring, collection. | D&B, the global leader in information on 160 million companies worldwide. | |