Succeed overseas with the export experts

It was former prime minister Harold Macmillan who gave the blunt advice: "Export or die." But getting a foothold in overseas markets can often seem just too difficult for small businesses.

Hurdles include cultural differences such as language differences, trading conditions, the hassle of dealing with different currencies and fluctuating exchange rates, and regulatory requirements.

Then there is the small matter of actually getting paid. A British Chambers of Commerce survey revealed that of 54 per cent of firms whose export projects had failed, one in three had been unsuccessful due to problems in collecting payment.

This is reflected in a Gerling NCM survey, which found that fear of bad debt is a concern for 84 per cent of exporters, rising to 90 per cent of those with a turnover of less than £1m.

Most exporters felt that overseas customers took longer to pay. However, in marked contrast to the previous year, in 2002 Europeans were found to be settling bills faster, proving that the late payment pattern is changeable and unpredictable.

Since exporters focus on current and future orders, often they lack the time to react quickly to non-payment. And, of course, debts chased quickly after default have a much better chance of being recovered than those followed up slowly.

Sometimes they do not possess the necessary expertise in-house to deal with the complex debt collection legalities that vary from country to country. Also, it may be difficult to obtain credit checks.

But these challenges should not put off businesses from trading internationally because it can be profitable. As few overseas customers will be keen on advance payments, sound credit management procedures need to be in place.

The best protection is an insurance against the risk of not being paid. Reasons can range from the insolvency of the buyer to foreign exchange problems, such as a currency crisis in the buyer's country.

Also, there could be difficulty in remitting money, due to a change of government or currency regulations.

Possession of a policy which covers this kind of risk also makes obtaining bank finance easier. The credit insurer can advise on the creditworthiness of the buyer before the deal gets under way. The advice may be to not go ahead.

And if a deal goes wrong, the insurer has debt collectors skilled in the art of recovering money without alienating future business.

Gary Hicks is head of public affairs at international credit insurer Gerling NCM.

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