FINANCING Why do we need financing in the import/export business? To start, expand, or take advantage of opportunities, all businesses need new money sooner or later. By new money, we mean money that we have not yet earned, but which can become the engine for growth. For the importer, financing offers the ability to...
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AVOIDING RISK Doing business across international borders always involves risks related to financial exposure. However, avoiding or controlling risks in global trade is an everyday occurrence for importers and exporters, and understanding the instruments available for avoiding risk is not difficult. Essentially four kinds of risks exist: BUSINESS or COMMERCIAL Not being paid; nondelivery...
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Getting Paid Ensuring prompt payment often worries exporters more than any other factor. The truth is that the likelihood of a bad debt from an international customer is less than from an American company. It might surprise some people that the foreign bad-debt ratio is less than half of the United States ratio. In...
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Avoiding Bad Credit Pick your customer carefully. Just as in the domestic American market, bad debts are avoided more easily than rectified. If there are payment problems, keep communicating and working with the firm until you have settled the matter. Even the most valued customers have financial problems from time to time. If nothing...
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Insurance In addition to the various methods of avoiding nonpayment, insurance against marine, commercial, and political risk also is available. Avoiding Shipping Risks. Marine cargo insurance is an essential business tool for import/export. Generally, you purchase coverage on a warehouse-to-warehouse basis (i.e. from the sender’s factory to the receiver’s platform). Coverage usually ceases a...
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