This is the second part in my series of articles on assessing country and customer risk.
In my first article, I explained why it is important to classify both countries and customers. A rogue customer in a good (from a risk perspective) country is not a much better risk than a good customer in a rogue (from a risk perspective) country.
In this article I will concentrate on measuring the level of corruption in your current or potential foreign markets.
Any entrepreneur interested in exporting to a foreign country or importing goods from abroad is inevitably faced with assessing the risk of doing business with both the relevant country and the particular customer or supplier.
Risk assessment is something that should be done by any entity. The process of assessing risk varies from organisation to organisation and industry to industry simply because the context and, therefore, the variables are not the same.
In the second article of this three part series, I discussed some common variations in terms and practices in the Incoterms® 2010 rules and definitions. In this article I will focus on some best practices that sellers and buyers may use to manage their delivery term risks.
In the first article of this three-part series, I discussed the responsibilities of the seller and buyer in relation to freight and associated charges depending on the Incoterms® 2010 rule chosen in the contract of sale.
In this article I will focus on some of the most common variations in terms and practices that sellers and buyers need to consider under the international trade terms so that the cost of the transaction can be properly accrued and to ensure certainty about the point at which risk is transferred.
A fundamental aspect of any sale of goods transaction is costing the product accurately. This equally applies to both the seller and the buyer. In this three part series, I will be discussing the responsibilities of the seller and buyer in relation to freight and associated charges in accordance with the Incoterms® 2010.
International trade is both important and problematic.
Important, because we live in a globally interconnected economy where we depend on one another for commercial activity. At times this dependence is dangerous, as the problems created in one country may affect others.
Problematic, because international trade is not easy. As one of my former staff members used to say when trying to explain the complexity of export transactions to others in the organisation: when you export, you just don't whistle for a taxi. How true this is.
The International Chamber of Commerce released the text of the Incoterms 2010 with much fanfare before the new rules went info effect in January 2011.
These voluntary set of trade terms require specific incorporation into a sales contract in order to apply to a specific transaction. They are one part of the contract and not the whole contract, and in particular, they say nothing about the price to be paid or the method of payment that is used in the transaction.
The transport of cargo is one of the most critical aspects of international trade. As essential as transport is, however, it is only a means to an end—goods are transported from origin to destination to meet demand. Demand is driven by what individuals wish to do with the product—be it in an industrial setting or a private setting. As an executive of a drill manufacturing company once said, "People do not buy 1/4-inch drill bits, they buy 1/4-inch holes."
An important ceremony for users of sea freight services will take place on September 23, 2009: the signing of the Rotterdam Rules, officially known as the Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea.
Negotiations over the past seven years saw the United Nations General Assembly adopt the rules on December 11, 2008.
It is widely accepted that one of the most crucial aspects for any business is the management of risk, particularly credit risk. This is fundamental to any firm’s success.
Risk management is based on a thorough understanding of business processes and practices, and successful risk management programs incorporate risk mitigation principles.
Risk mitigation is the actual anticipation of risk—that is, being able to predict, somewhat, where things could go wrong and taking preventative steps to minimize or avoid that risk from becoming reality, thereby avoiding potentially dire consequences.