• Establishing international business relations can be more challenging than those closer to home
  • Trust and reliability are key to building a strong partnership
  • Ensure clear expectations on both sides from the very start

Building strong relationships is key in any business – and this is particularly true when doing business outside of the UK, when trust and dependability can be difficult to maintain over large distances.

Following Brexit, with exports to non-EU countries in May 2022 exceeding those within Europe, global trade further from our own borders is increasingly important to the UK economy.

Thankfully, the world has been getting smaller. Technology advances in communications, e-commerce and logistics, are making it easier for businesses of all sizes to buy and sell globally, while using tech such as Zoom or Skype to enable quality long-distance relationship building.

Although the foundations of these relationships are similar for domestic and international markets, establishing foreign business relationships comes with its own challenges. We look at five key things your business needs to consider:

  1. Check the credibility of your global partners
    Trust in your international partners, their integrity and abilities, may not be easily won – and they may be equally cautious about placing trust in your business.

    Products like trade credit insurance can help check the creditworthiness of an international customer or prospect to ensure it has enough assets to cover its liabilities. This can provide initial confidence that will help you build the foundations of a successful business relationship.

    David Edgell, Allianz Trade's Regional Commercial Manager in the UK & Ireland, says: "Trade credit insurance allows you to take on additional work safely and securely, whether it's a new customer or expansion from existing customers.

    “Trade credit insurance allows your resources to be focussed on financially solid companies with a good payment track record.”
  2. Set achievable expectations for international business relations
    It is important to have an open mind when dealing with new customers, suppliers and others who are essential to your business.

    When you are dealing with different business cultures, it is vital to take the time to understand what their expectations are likely to be from the outset, and how this ties in with your own expectations. Make sure you are open and realistic about your business planning and set achievable goals with their input – aligning your offerings with their goals.
  3. Build an understanding of some of the localised pitfalls
    Understanding some of the pain points your international customers/partners may be facing can help businesses better plan for possible problems and enable you to adapt your working relationships to include these potential areas of risk.

    Remember to factor in time differences for example and be aware of regional trends.

    The Allianz Trade Global Survey for 2022 highlights some of the risks and opportunities facing different regions. For instance, environmental, social and governance (ESG) measures are more of a concern in China than in the US, according to the survey, which may impact those doing business in these regions.

  4. Create a regular dialogue/frequent contact
    Ensuring you speak to your international customer/partner on a regular basis will help you build your relationship and ensure that you can adapt quickly and address any growing issues.

    This can be particularly important if bills are not being paid on time, as global debt collection can be tricky. In the 2022 edition of the Allianz Trade Collection Complexity Score and Rating, our experts warn that around $4.2tn is at risk in those countries where debt collection is the most complex.

    Analysis shows that currently Sweden, Germany and Finland are the three best countries to recover international debt in the world, while it is much harder for foreign companies to recover their dues in Saudi Arabia, Malaysia and the United Arab Emirates.

  5. Build a foundation of trust and transparency
    Be open and honest with your global partners. You may not always be willing or able to share every scrap of information with them, but an open dialogue can help avoid conflicts or misunderstandings.
    You should also try to make it easy for other companies to understand what your business is about. If you have regular relationships with customers/partners in different countries, you should consider having a clear website in languages that they are likely to speak. This can be a useful aid to explain who you are and your core business vision and goals.
    Be transparent and select business partners that are transparent as well. Service providers with a clear service offering and terms and conditions available on your request will enable mutual understanding.

How Allianz Trade can help

Your first step towards building a successful foreign business relationship should be to speak to your trade credit insurer if you have one. At Allianz Trade, we leverage our proprietary risk data to ensure your credit limits are pitched at the right level – increasing your competitiveness while also minimising your exposure. We also provide trade credit protection, compensating our customers in the event of bad debt or late payment.

For more advice and insight on how to manage economic risk in international business, download our top tips for growing your export markets.

For a free credit insurance consultation call our UK team, 09:00-17:00 Mon-Fri.