The economic shifts, new trade deals, and fluctuating interest rates in Australia will make the financial year for 2017 an interesting one for most companies, and especially those looking to expand.
Organisations looking to expand overseas should consider credit insurance as a risk management tool before making a move, according to Atradius.
Mark Hoppe, managing director, ANZ, Atradius, said, “Entering overseas markets presents opportunities to grow the business by broadening the potential customer base and increasing profits. However, with expansion comes risk. Businesses must have a thorough understanding of the new market, and put in place adequate protection against late or non-payment from customers, in order to minimise risk to the business.”
Atradius recommends businesses consider these three questions before expanding overseas:
1. How well will risk be managed?
Businesses considering overseas expansion should develop a risk-management plan. This includes thoroughly researching potential customers and suppliers, local trading customs, and market conditions.
Mark Hoppe said, “Organisations with credit insurance can receive early warning of potential payment difficulties. Credit insurers can provide access to credit information on companies operating worldwide, and can evaluate the risks of working with new businesses so they can limit unnecessary trading risks.”
2. What advisory network is available?
One of the biggest challenges for a business when it comes to expanding overseas is getting sound advice. For example, not fully understanding the local rules and regulations can create huge problems for organisations that accidentally fall afoul of the authorities.
Mark Hoppe said, “Credit insurers generally have people on the ground in the countries businesses are looking to expand into. This means they can advise businesses on a wide range of crucial trading factors, such as suitable local distributors to partner with, local customs and how to protect your products and profit.
3. How will cashflow be protected?
One of the most effective elements in a risk management plan to protect cashflow is credit insurance. In cases where a customer can’t or won’t pay for goods, businesses can be brought to their knees. Credit insurance covers for the losses due to non-payment, so that businesses can trade confidently in new markets.