Seller Beware: Here’s how you can perform credit checks for international buyers

Global trade hit a record high of $28.5 trillion in 2021, and by the first quarter of this year, the number had already touched $7.7 trillion! If your business is a part of this thriving export-import market, you will likely have a busy year ahead of you. But when you sell your goods or services to foreign buyers, how can you be sure they will honor their financial commitment?

Here’s where a credit check comes in handy. It allows you to evaluate a buyer’s ability aswell as their willingness to pay their dues on time. For businesses engaged in exports, here are some easy ways to credit-check international buyers.

• Take a look at the buyer’s Dun & Bradstreet (D&B) Report

Headquartered in the USA, credit information company Dun & Bradstreet has a comprehensive database of over 53 million businesses. A credit report from D&B gives you various essential insights about your foreign buyer, such as their credit scores, financial stability, profitability, and payment performance. These details make credit risk management easier for your export business.

• Research their shipment data

Data is the undisputed king if you want to assess the creditworthiness of your foreign buyers. Historical shipment data, in particular, gives you greater clarity about the consignment dates, items purchased, and other key metrics about the importer. You can use this information to assess how genuine and trustworthy your buyer is.

• Check the ECGC ratings

Your buyer may come across as creditworthy, but internal risks in their country of operation may prevent them from honoring their dues. Here’s where the country-based risk ratings offered by the Export Credit Guarantee Corporation of India (ECGC) can help. The ECGC classification ranks countries on a scale from A1 (insignificant risk) to D (very high risk). Check these ratings to look beyond the buyer’s credit risk.

• Make use of a letter of credit

To further secure your trade and improve the level of trust in an international transaction, you can rely on a letter of credit from the importer’s bank. In case a foreign buyer is unable to pay up a part or all of the amount due to you, you can rest assured that the buyer’s bank will cover the liabilities as per the terms and conditions of the letter of credit.

Secure your exports today

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