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International trading provides a wealth of unique opportunities to both buyers and sellers. Local traders can enjoy several advantages by engaging in international trade, from currency exchange benefits to increased cash flow and revenue. Trading internationally can also aid people in optimizing their sourcing strategies and supply chain.

Managing international trading risks

While international trading is certainly advantageous, it can also expose your business to specific unique challenges and risks. In addition to dealing with the complex goods handling and logistics requirements, you also have to take steps to protect your business from international export and credit risks. If things go wrong, you can face many complications in chasing lousy debt across international boundaries.  Hence, before you engage in trade with any overseas company, you must be assured of your legitimacy. Now you might be asking yourself, how do I find out if a business is legitimate?  

Well, this can be done easily through companies that provide their clients with due diligence solutions and help them to vet their potential business partners through their registration status and other pertinent details.

How to check company registration status?

For this purpose, you would have first to visit the website of a company that offers due diligence services for international trading. Through their website, you can run checks on your trade partners in less than a minute and acquire details regarding their company registration status, shareholder information, and more. You may also get detailed reports, including the trade history of your trade partner, through such platforms.

Selecting the ideal payment method

The most significant risks with regards to international trading tend to be associated with payments. Due to the lack of face-to-face interaction, exporters are often apprehensive about whether they would get their rightful payments in time or not. This risk can be significantly reduced by choosing the arguably safest method of payment in international trade- which is escrow. When you choose escrow, the funds are held in a safe escrow from companies such as Tazapay until a shipment is received to reduce the risks for both the exporters and importers.

Another secure option for international payment would be through a Letter of Credit. This letter is issued by a bank and tends to guarantee that the payment from the buyer shall be made to the seller on the set date, considering that the seller makes the shipment delivery in time. A Letter of Credit can especially be a useful tool when the buyers and sellers do not know each other well, but the seller is adequately satisfied with the creditworthiness of the buyer’s foreign bank and decides to go ahead with the trade on that basis.  A Letter of Credit also protects the importer as they do not have to make a payment until the goods have been shipped as promised.

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