Export credit insurance helps companies remain competitive by offering open terms when letters of credit or prepayment may have previously been the only safe way to do business. In fact, foreign companies buy an average of 40 percent more when they are offered open terms, according to the World Trade Organization. Sales can also be protected from political risks, including import/export changes and foreign government intervention.

Few companies can effectively compete without extending credit to their buyers. For companies that sell on an export basis, export credit insurance levels the global playing field.

Working with new countries means dealing with new cultures, rules and regulations to follow but they also offer the opportunity to access new markets and customers. Businesses must know how to manage the associated risks that come with exporting products or services.

Doing your research means identifying the main risks linked to export in that country. This could include risks of non-payment, foreign exchange risk or political risk. Find out the specifics for the country of export as many have very specific export/import requirements. You may also encounter bribery and corruption in some countries. Be prepared of these risks and how to deal with them. Being prepared for these risks makes a big difference when trying to recover payment. You can refer to Allianz Trade country reports and collection profiles to help you in this research.


Doing your research also means finding reliable information to check your customers. Get up to date information to balance the need for increasing sales but getting paid. Keep in mind that legal obligations and access to information are not the same everywhere.

If you haven’t done so already, get your terms and conditions checked by a lawyer who has export and import experience to avoid potential risks, such as harsh late delivery penalties, onerous indemnity clauses and clauses related to the transfer of intellectual property. To minimize disputes and litigation, contracts should include all essential terms and include a clause that mentions if payment is delayed past the due date, the buyer is liable for third party collection costs incurred, late payment interest and legal charges. Contracts should also be clearly written with unambiguous language and specify the law that governs the agreement.

Ensure that your terms and conditions are in hard copy at some stage. These could be printed off by the buyer and signed and dated. It’s much better to do this before the order is placed, just like ticking terms and conditions when placing an online order.

Make sure you understand the local legal procedures and linguistic aspects to anticipate non-payment. Know how to conduct an out of court negotiation. You can also use Allianz Trade debt collection services with our global network of offices and contacts.
In many countries, a commitment to building long-term personal relationships is vital for your project to get off the ground and succeed. It can take significant time to build trust and understanding so get started as soon as you can. Being flexible can also help build lasting relationships. Be ready to adapt to your market entry plan and products as you proceed. Good relationships with local partners will help you get the feedback you need to hone your efforts.
Do thorough due diligence on partners, acquisition targets and other companies you hope to deal with. It’s vital to investigate a potential strategic partner’s reputation and financial health. Make a list of criteria they must meet and be disciplined about sticking to it. Businesses sometimes get caught up in the excitement of a venture and make the mistake of making a deal with a company that isn’t a good strategic fit because, for example, the financial terms are attractive. Your partners should understand your business goals and share your values.

Don’t expect quick sales, much less quick profits. As your expansion progresses, keep learning, tweaking your efforts and getting better. If you encounter difficulties, remind yourself that it’s common for a company’s first foreign venture to stumble.

It can take two to five years to recoup your investment, depending on the country. Make sure you monitor your progress and what’s going on in your markets to stay ahead of changes and update your planning as needed.

Bad Debts, Late Payments & A/R Protection

What To Do If a Client Doesn't Pay

Finding, getting, and keeping customers is the challenge every business faces. Very few are lucky enough to have new prospects lining up at the door. However, how can you be sure that the customer, after all your hard work, will pay? What can you do to get a client to pay an invoice—and pay on time?

Suffering a non-payment event—whether it’s your first, the most recent, or the most significant—can feel overwhelming. Damage to companies caused by non-payment of invoices is never solved overnight. Restoring optimism and trust is an ongoing challenge.

Non-payments can actually add up and damage your company on multiple fronts. Even ignoring a relatively-small invoice can hurt your bottom line—especially if you depend on receiving a payment in time to pay expenses or if you rely disproportionately on a small number of clients, AKA “concentration risk.”

So what do you do when a customer doesn’t pay?
Knowing where to start is essential.

After a few years of trading with a given customer, you may feel that the relationship is great and you can trust your customer, so these problems will not affect you. You may believe that because the organization is large, it will pay your invoice to protect its reputation. Perhaps the account has assured you that a budget is in place and there is no danger of nonpayment. Your sales team may have checked the credit history of the customer elsewhere and be confident that the customer is financially robust. These indicators are all important, of course, but don’t be surprised if payment delays do occur.

In order to avoid non-payment from the start, it helps to understand a little more about how the event occurred in the first place. Begin by asking yourself the following questions:

  • Did you have systems in place to prevent loss or limit your exposure?
  • Did you get contracts signed?
  • Did you outline your deliverables and payment terms?

You can make non-payment less likely to happen by answering these questions and being proactive. You can then begin to mitigate your A/R risk by following cash flow best practices.

It’s difficult when a customer misses a payment—especially when it’s one you have grown to trust. How can you convince them to make a payment? Start with these four steps below, and remember that nurturing the relationship with your customer is of the utmost importance. Fostering open communication with your customers can save you from hefty legal fees and court dates in the end.

1. Contact the customer

The first step is to make contact with the customer. Sometimes a phone call or resending the invoice is enough to secure payment. If this doesn’t work, explain the consequences of nonpayment for your particular business courteously—whether it’s discontinuing their service or reporting their delinquency to a credit-rating organization.

2. Call a collection agency

If you do not find success contacting the customer, you may consider calling a collection agency. This helps free up your staff’s time for other work and delegate responsibility to the agency. This may be the best solution for small payments, as you often won’t have to put up any money—the collection agency will just take a part of the recovered sum. For larger delinquent payments, filing a lawsuit may be warranted. Talk to your attorney about how to proceed in your state; you may not need representation for the proceedings, but it is a good idea to get legal advice before following a suit.

3. Pay attention to your staff

In severe nonpayment events, your cash flow may be damaged, and employee morale may be impacted—especially if you have to introduce job cuts and other cost-saving measures to remain competitive. In these cases, it benefits you to foster open and honest two-way communication between employees and management about the situation: what is being done to resolve it and how it will be avoided moving forward. Maintain trust by making sure that payroll is satisfied and that employees have clear expectations about when they will receive their checks. If you have to get a bridge loan or pursue financing to ensure these payments, do so. If your employees stop trusting you, you could end up facing even bigger issues, like non-attendance and loss of reputation.

4. Take legal action

If working with collections did not work, and unpaid invoices are still lingering, it is time to seek legal action. You have the choice between small claims court or civil court. Small claims court is less time, money, and is quick to resolve your issue within the same day. With civil court, you will need to hire a lawyer, and the case typically spans over a series of days—ultimately racking up in legal and court fees. Before deciding which venue to pursue, you should pursue legal advice.

A well-designed sales process should be tracking and monitoring customer performance and standing in the market, but that can be difficult when time is short and there is limited information available.

Alternatively, you might be selling to many small businesses and run out of time to check their credit score, especially at the month-end when the pressure is on to meet sales targets. Eventually, you are likely to have a client who refuses to pay an invoice, or delays the payment.

That’s where credit management discipline is vital. Whether you have a dedicated team, rely on sales, or do it yourself, putting in place the tools and processes to track customer credit will build confidence that today’s sales will bring profits tomorrow. Confidence that can be shared with your lender, finance company, and investors.

After you have been burned by an invoice nonpayment event, start the rebuilding process by establishing a predictable standard for your core A/R business practices.


Every time you work with a customer, create a contract, write out the timeline, and spell out the consequences of late payment.


If you have not already done so, consider hiring an attorney to draft your company’s standard terms and conditions. These conditions should specify the customer’s agreement to cover all costs related to debt collection—including but not limited to third-party collection expenses, late fees, and legal fees. As part of your standardized process going forward, require customers to agree to these terms when applying for credit terms with your company.

If nonpayment has been a real issue for your company, you may also want to institute new policies to protect yourself.

Establishing a clear, signed agreement is key for an option like this. While these options insulate you from some or all of the receivables risk, keep in mind that they may also affect your competitive edge. If your competitors offer open terms and you require cash terms, you may lose business.

Your credit team’s primary responsibility is to check and monitor the creditworthiness of your prospective and existing customers. Creditworthiness is fluid, so this is not a “one-and-done” task. Rather, you should implement a defined system of monitoring for changes in financial health, particularly warning signs of distress. This process should be informed of the relative risk of customers, with more frequent checks for newer, smaller and less-stable companies.

Also, officially document your credit policies and procedures to define how creditworthiness is determined and monitored. This document should specify data sources including (but not limited to) bank and trade references, credit reports, individual company financial statements, and ongoing monitoring of political risk and macroeconomic risk.

Prudent credit management is a tough and never-ending job; you may want to consider augmenting your internal staff by partnering with capable experts to ensure efficiency and thoroughness.

The most powerful tool in the credit management kit is trade credit insurance. It is the “backstop” that will ensure you receive payment. This product is designed for those times when you’re let down by the most reliable account, or the organization with the best reputation, or your longest standing customer.

A trade credit insurance policy with a world-leading carrier is more like a partnership with a worldwide network of risk management experts. The carrier provides data and insights to help you pick the right customers to do business with, monitors their financial health throughout the year, and reimburses you in the event a covered customer fails to pay.

It is not easy to bounce back from the disruption that can be caused by an unexpected nonpayment event, especially if there is significant operational and morale damage left in its wake. However, remember that you survived it in the end, and are now able to treat it as a wakeup call.


Take steps to better prepare your company for these events in the future. As you start to take on the challenge, setting up predictable policies and procedures that incorporate industry best practices can be step one. As a powerful step two, consider engaging with a partner like Allianz Trade who can provide guidance and information on risk management. This kind of relationship helps you make sure the next nonpayment does not affect your company’s solvency.


Even companies who have never been burned by a significant loss may find they are limiting their growth potential by being overly conservative with their credit risks. Companies who have been stung by nonpayment magnify this tendency. The investment in a credit insurance
 policy can often pay for itself multiple times over—even if a claim is never filed, simply by fueling safe, but aggressive sales in the future.


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