The Risk of Foreign Buyer
International trade connects the markets of countries near and far. Just as the national economies of the world are separated from each other, so are the participants in foreign trade transactions, making it difficult for suppliers and customers to have detailed and verifiable information about each other in relation to a particular transaction. In practice, this means that the exporter cannot be sure that the buyer (customer) will pay, as required, for goods that have been sold to it on terms of deferred payment. Whether it is a long-standing and reliable business relationship between the seller of the goods and the foreign buyer, or a new, emerging collaboration, it is impossible to know in advance with absolute certainty whether the person ordering the goods, the foreign buyer, will pay. Such potential risks include, but are not limited to, buyer insolvency, bankruptcy, or protracted late payment, and include certain political risks (such as war, terrorism, riots, revolution, state bankruptcy, or hyperinflation) that could result in non-payment. One of the main tasks of export credit agencies is to help exporting companies manage these risks, thus promoting the development and growth of international trade.