Export Receivables Verification
Export receivables verification or export receivables auditing is an important process that helps exporters reduce the risk of non-payment. It is an assessment of an exporter’s customer base, ensuring that buyers are able to pay for the goods and services they order before those orders are shipped. The process allows exporters to assess customer risk factors, make sound decisions about whether to pursue a business relationship, and manage the risk for their exports.
The export receivables verification process begins with an in-depth review of a customer’s creditworthiness. Traditionally, this has been done using standard financial reports and rating agencies such as D&B and Experian. Recent advances in technology have allowed for a more holistic view of a customer’s financial health and created more efficient ways of collecting, analyzing and verifying customer data. Exporters can now access customer data from various sources, including their own order management systems, government websites, banks and public record searches. Once the data is collected, analytics tools can be used to help exporters identify high-risk customers and track customer payment performance over time.
Once the customer has been assessed, the exporter can then decide the terms of trade and establish the necessary commercial terms favorable to the exporter. This includes terms of credit, shipping conditions, payment terms and other non-financial components. Exporters should also consider protecting their receivables through financial and legal remedies such as letters of credit, export credit insurance and contractual security interests.
In addition to assessing a customer’s creditworthiness, exporters should also be mindful of their international network of suppliers and distributors. Exporters should ensure that their international partners can effectively manage the receivables and mitigate the risk of non-payment. Exporters should also use due diligence processes to check for: compliance with export regulations; customer financial stability; customer relationships in other markets; and whether the customer is engaged in money laundering activities.
Export receivables verification is an important part of the export business, helping exporters manage the risks associated with international trading. With the right processes in place, exporters can confidently ship their goods and services overseas, secure in the knowledge that they will be paid promptly and fully.
