Sales development involves finding new business partners further and further afield. But entry into foreign counties can bring a lack of awareness of local conditions and therefore commercial risk. Whether customer, supplier, agent or franchisee… knowing your current or future partner has become essential, not only financially but also for legal contractual reasons and brandimage. Regarding the latter points, the financial consequences can be significantly higher than just an unpaid bill.
Your depth of knowledge about your counterparty should vary according to the risk run by your company: is an unpaid receivable the only risk you are facing or could an error of judgment have far wider ranging consequences?
Clearly the real difficulty in obtaining information abroad is due in part to the often complicated accessibility of quality information (even in the public domain) and the ability of the counterparty to conceal the truth about both shareholders (identity, reputation) and information that could impact your relationship.
There are two ways to improve your information: – the traditional Credit or Status Report which provides financial information about the credit worthiness of your counterparty or the more detailed “Business Intelligence” with its various subdivisions amongst which provide details of the ultimate shareholders and their location, the true identity of your counterparty and the background to the financial situation. Trading in dollars for example in Africa or the Middle East may not be without its consequences if you do not know your client.
There are ways to overcome this lack of information when working in the export market. Based on tried and tested methods they initially involve gathering public information, analysing complicated documents, sorting out fact from fiction. Secondly, seek out local sources to find out what is left unsaid or not common knowledge.
A sales project in Africa requires not only knowledge of the counterparty’s financial health but also how involved they are in the local economy and politics. Do they belong to the “right” network, do they have a good reputation locally and abroad? These are important questions that must be asked if progress is to be made.
The key is to make sure good information is at hand (reliable individuals and structures, good local contacts, hidden truths…) so that decisions can be made in full knowledge. To find the right information sources and choose the relevant solution it is important to be supported by experts.