Many economic commentators are forecasting a slowdown in growth in several offshore markets in 2019 due to unsettled financing conditions and unfolding political events.
It’s always a good idea to regularly review business operations in light of changing economic and political situations. This can include how you are mitigating potential repayment risks, as well as managing your cashflow in the event of delayed payments from overseas buyers.
Things to consider which could result in additional financial pressure on your foreign buyer include:
- a downturn in the domestic sector of your foreign buyer,
- an increase in tariffs imposed on your exports, and/or
- an increase in tariffs on the goods of a foreign buyer into another country (where your exports are a key part of their supply chain)
Where possible, negotiating upfront payment terms for your exported goods and services will minimise any cashflow and non-payment losses. However, if providing credit terms to your buyer is a requirement, obtaining trade credit insurance can help mitigate against any non-payment losses, and may also enable access to trade finance facilities from your bank.
It is timely to have these discussions with your broker, trade credit insurer and/or bank now because obtaining trade credit insurance on a buyer after a payment delay or default is unlikely to be successful. For list of brokers, insurers and trade finance bankers see: https://exportcredit.treasury.govt.nz/about-us/our-partners
In the event that you are unable to obtain trade credit insurance on a creditworthy buyer, contact NZ Export Credit about its Short Term Trade Credit Insurance.
Click here to see how we helped Te Pari offer longer payment terms to its foreign buyer
Click here to see how Sacred Hill were able to protect payments via Letters of Credit from NZ Export Credit
The following information on preparing for Brexit may also be useful: