Trading internationally or not, the business risks remain, if not increase when doing B2B business.
You should always carry out due diligence to mitigate risk as much as you can when it comes to dealing with other companies to protect your own business.
Using company credit reports
The good news is that credit information providers have expanded the scope of cost-effective reports so that UK businesses trading abroad have information on companies from across the world.
Both local and international credit reports cross-reference and present company information in a common format, which make the lives of Credit Managers and Controllers much easier, as they can easily analyse the risk of doing business abroad. A company can use credit reports to check that the company is solvent and not part of a failing parent group before agreeing on a commercial deal.
Creditsafe Company Credit Reports also allow you to monitor your business relationships internationally, you will get alerted to any changes in their credit score. This way you have a constant reference as to whether these companies are safe to trade with.
Collecting Debt from Abroad
Although you take every precaution, you may find it hard collecting a debt from a company you have been trading with. Even within the UK, debt recovery can be a complex, difficult and prolonged process, so including a jurisdiction clause in contracts ensures both parties agree to apply British law and that British courts have authority in the event of any dispute when trading overseas. A clear paper trail is also important to proving claims, especially where electronic evidence is not admissible.
There are some processes to be aware of that may help businesses reclaim the money, such as the European Order for Payment Procedure (EOPP), the European Small Claims Procedure (ESCP) and the European Enforcement Order (EEO). These processes are not failsafe so it remains common sense to carry out stringent credit checks in the first place before signing up to any commercial deals.
If you need advice on collecting a debt, in the UK or internationally, Creditsafe’s debt collection service can help you get the money you are owed. Learn more about the debt collection service here.
Information is key
Companies taking the first steps to do business overseas, or simply with organisations within a mixed group structure, will reduce their exposure to risk by being as well informed as possible about the customers and suppliers they are dealing with. Carrying out a credit check on every business before starting a relationship with them can significantly reduce the risk involved.
If you’re thinking of trading abroad, why not look at how Creditsafe's International tools can help. Get a free trial of the complete system today!