Doing business internationally: mitigate your trade risks

The idea of not getting paid is unbearable. When trading internationally, make sure you do it with confidence. When exporting, you want to make sure that your client pays, and when importing you want to be certain that the goods are delivered. It’s essential that you make clear agreements about payment. A Bank Guarantee gives you payment security if the other party doesn't stick to the agreement. A Documentary Collection and (standby) Letter of Credit give even more certainty when you’re doing business internationally.

Make sure that you know the main rules that apply to you as an international businessperson. You’ll encounter regulations applying to EU and non-EU countries. The Access2Markets tool is essential. This gives you all the information you need about import and export by country and by product. First of all, find out which criteria your product needs to satisfy.

Then look into the rules regarding transport. These may include import duties and customs regulations. Certain goods, such as foodstuffs and chemical products, may require specific customs controls. You can use Incoterms to make agreements about transport. Using Incoterms, you can agree who is responsible for making the arrangements, for the costs and for the risk of transport.

If you have to trade in a foreign currency, be aware of fluctuations in the exchange rate. A change in the exchange rate could form a risk for your business. Currency management gives you greater certainty. Secure your margins safely and protect yourself against unfavourable exchange rates.

Trading internationally is much easier with a foreign currency account, as it allows you to pay and be paid in the same currency. Moreover it gives you a strong negotiating position. You can set competitive prices, because the currency risk does not need to be passed on to you.

To be even more confident about cross-border business, use our Transaction Banking Hubs. They can help you with banking abroad and put you in touch with their local networks.

The situation in a country can change suddenly. The local economy may stagnate or deteriorate, or there may be political unrest, conflicts or a natural disaster. You should also pay attention to the reliability of a country's legal system. If the country is known for fraud or corruption, for example, be prepared for the risks. Look into the market and the situation (in Dutch) in the country and make use of the right (in Dutch) networks and contacts abroad.

If you want to protect yourself from the country risk, discover how a letter of credit can cover this risk.

Language and cultural differences can increase the risk of miscommunication. For example, if you’re doing business with countries in Africa or Asia for the first time, you’ll notice a difference in business cultures. Here too: make sure you’re well prepared. Do some research into your foreign partner or client. Is the company financially healthy, who is mandated to make decisions, what are the standards and customs within the company? You also need reliable company information. This (in Dutch) will explain more about the foreign market and anything you need to take into consideration. Of course, it’s best if you speak the language, but if you don’t, find a local interpreter or make the right contacts (in Dutch) in the country concerned.

Good preparations will mitigate your trade risks. If you need help with the first steps towards import or export, we have a handy checklist.