Doing Business Overseas? Here’s How You Can Reduce Your Credit Risk
Businesses are competing in an increasingly globalised environment today more than ever before. While the pandemic impacted industries in a major way, economic activity across international markets is steadily picking up. In Singapore, imports and exports fell in 2020, based on data from Enterprise Singapore, but 2021 looks promising with trade figures projected to grow between 2-4%.
When doing business, it’s easier to manage the risk of local customers, vendors, or suppliers. Non-bank lenders in Singapore can draw on credit reporting systems to screen potential borrowers and monitor their risk profile. The Experian Non-Bank Bureau, for instance, helps non-bank lenders get a more comprehensive picture of the customer or prospect and come up with more accurate credit decisions, which we have covered in this article.
But can companies rely on credit bureaus to help them assess risk in international markets when growing their business?
Challenges of credible risk assessment in overseas markets
Whether you are growing your footprint or diversifying your supply chain, doing business overseas will pose some challenges such as varying levels of political and socio-economic development, which could impact reporting mechanisms and the availability and uniformity of data. Thus, the lack of coverage and depth makes it difficult to assess the risk of your overseas partners.
Conducting due diligence in another country can also be time-consuming and costly. For instance, developing countries tend to have fragmented reporting systems that may require actual legwork in order to get the data you need. Without the right expertise, your company can spend a significant amount of time and resources trying to get information in unfamiliar territory.
Getting a comprehensive report from a trusted provider can help you check and verify if the individual or company you are dealing with is considered high-risk. This is where international credit reports come in handy.
Experian’s International Reports provide information on a foreign company’s business profile, shareholders and management, key financials, filings with local registries, and other relevant issues or developments. These International Reports give foreign companies Credit Rating which reflects their operational and financial health, as well as capability to repay obligations.
Demand for more information to support new business needs
In today’s complex business environment, risk assessments have gone beyond the scope of financial and lending services. More companies from different sectors, such as wealth management and e-commerce, are utilising international reports to make assessments on suppliers, high net worth individuals, or foreign-owned companies.
Procurement officers need to screen vendors and partners in the most thorough, yet efficient, way possible, especially if the transaction volumes are in the hundreds of thousands to millions of dollars. Not to mention, the ability of the business to deliver its products and services hinges on reliable suppliers.
Companies are constantly looking for timely and up-to-date information to speed up the onboarding of global customers, evaluate a potential partner, or extend a certain credit limit to a client. With International Reports, companies can assess their foreign partners’ financial strengths with key financial and corporate information, litigation traces, credentials of their stakeholders, and exposure to late payments.
Standardising international credit rating
Harnessing the expertise of Experian in data collection and analysis helps companies better manage risk while seeking new growth opportunities. Experian’s International Reports cover over 200 countries and territories, including Singapore’s top trading countries: United States, Malaysia, Indonesia, Taiwan, Japan, South Korea, Thailand, and Vietnam.
With a consistent credit rating across all international reports, you can be sure that the same credit rating issued for Japanese and Indonesian company means the same risk. This makes cross-border evaluation faster and easier for regional executives to have a standardised risk management view across multiple markets.
Make informed risk assessments and manage overseas risk
Navigating new international markets does not have to be as daunting as it was in the past. Regardless if you are seeking a full investigative report or instant information on an overseas business entity, Experian offers the right data to strengthen your risk assessment and due diligence to onboard global customers and partners with confidence and ease. Click here to learn more about Experian’s International Reports.
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