How to Obtain Reliable Information on Export Customers and Reduce Risk
Obtaining reliable information is the essential first step in assessing a customer's creditworthiness, but it can be particularly difficult in international trade. Available sources, their quality and corporate transparency practices vary considerably from one country to another.
Finding information about a foreign company is often more difficult than researching a business in your domestic market. In France, for example, many companies are generally required to file annual accounts, although some qualify for confidentiality or simplified disclosure arrangements. Elsewhere, filing requirements, public access to documents and the reliability of the data vary widely.
How can you obtain an export customer's financial statements?
The availability of balance sheets and profit and loss statements differs from country to country. In Germany, publication requirements and databases do not operate in exactly the same way as in France. In China, Russia and some Middle Eastern countries, access to detailed financial information may be more difficult, incomplete or subject to restrictions. Avoid generalisations: regulations evolve and depend on the company's size, legal form and status.
Asking the customer directly for its balance sheet and profit and loss statement is often the best solution. However, in some business cultures, particularly where personal relationships and mutual trust play a central role, this request may be interpreted as a sign of mistrust. Be careful not to cause offence!
It is better to explain that a credit assessment is a standard process applied to all customers and that it helps establish appropriate payment terms. Sales teams can facilitate this approach by introducing it at the beginning of the relationship, rather than when a large order is about to be delivered.
The principle: because export transactions involve many different risks, every exporting company should seek to assess its buyer's creditworthiness or secure the transaction through suitable payment methods and guarantees. Full, irrevocable payment before shipment eliminates most of the credit risk on the amount received. A properly structured documentary credit, potentially confirmed, can also provide excellent protection, provided its documentary requirements are met.
When financial statements are unavailable, use multiple sources
Information must then be obtained through other channels. Some business information providers specialise in international investigations and can produce useful reports even when financial statements are not publicly available. Their work may include local field investigations, interviews, payment experiences reported by other companies and cross-checking information available locally.
The quality of financial information is crucial. For complex cases, reports should be prepared or validated by an experienced credit analyst who can assess the consistency of the information and highlight its limitations. This expertise comes at a cost. Be wary of low-cost reports that offer little more than company identification details and a score without explaining how it was calculated.
Also pay attention to market intelligence and informal signals: cash flow difficulties, frequent management changes, unpaid suppliers, site closures and recurring disputes. These indicators can be valuable, but they must be dated, assessed critically and corroborated before conclusions are drawn.
What information should you look for?
| Information | Use in credit analysis | Points to watch |
|---|---|---|
| Legal identity and existence | Verify the contracting entity, its registration, directors and beneficial owners where accessible. | Similar company names, subsidiaries and intermediaries, identity fraud. |
| Annual accounts and financial data | Assess profitability, financial structure, liquidity and repayment capacity. | Age of information, accounting standards, consolidated versus entity-level accounts, unaudited statements. |
| Payment behaviour | Identify recurring late payments, incidents and payment practices. | Incomplete or unrepresentative information, commercial disputes. |
| Group structure and ownership | Understand ownership links and potential financial support. | A financially strong parent company does not automatically guarantee its subsidiary's debts. |
| Local and industry environment | Assess economic, regulatory and commercial constraints. | Country risk, foreign exchange controls, sanctions, sector concentration. |
| Local commercial sources | Complement financial figures with recent facts and first-hand market knowledge. | Rumours, conflicts of interest and information that is difficult to verify. |
Financial analysis in international trade
Analysing profit and loss statements and balance sheets remains one of the main ways to determine whether a buyer is financially sound and creditworthy. This principle applies to every business, wherever it operates.
However, this analysis is less systematic in international trade, not because it is less relevant, but because the necessary documents can be difficult to obtain and their quality or representativeness can be uncertain.
In particular, check whether the financial statements relate to the entity actually placing the order, whether they have been audited, whether they are recent enough and whether they can be compared with previous years. Reassuring consolidated accounts may conceal the weakness of a local subsidiary. Conversely, a company may have satisfactory liquidity without publishing detailed financial information.
Where quantitative analysis is possible, focus primarily on profitability, debt, equity, liquidity, working capital requirements and business trends. These indicators must then be considered in the context of the industry, economic conditions and the amount of credit requested.
Finally, buyer insolvency is only one of the risks involved in exporting. A solvent company may be prevented from paying by foreign exchange transfer restrictions or a political crisis. Financial analysis must therefore be complemented by country risk assessment and appropriate risk mitigation solutions.
How do you turn information into a credit decision?
A business information report is not an end in itself. It should support an operational decision: approve or decline an exposure, set a credit limit, request a down payment, shorten payment terms or select a guarantee.
- Verify the buyer's identity and the consistency of commercial documents.
- Assess the reliability of information sources and clearly identify missing data.
- Evaluate creditworthiness and payment behaviour by cross-checking the information available.
- Assess country and banking risks separately from buyer risk.
- Adapt sales terms to the exposure and expected margin.
- Update the assessment when order volumes increase, a payment incident occurs or local conditions change.
Incomplete information does not necessarily mean that a sale should be refused. It means that uncertainty must be acknowledged and offset by an appropriate level of protection. Credit management should enable sales under controlled conditions, rather than simply issuing positive or negative credit opinions.
Main sources of information on international companies
Several providers offer economic, financial and commercial information on companies around the world. The precise scope of their services and geographic coverage varies by product.
Coface
A credit insurance and business information provider offering, among other services, international customer risk assessment and monitoring.
Altares D&B
A business data and commercial information specialist drawing on the international Dun & Bradstreet network.
InterSud
Specialist in international business intelligence and corporate investigations, particularly for cases requiring on-the-ground inquiries.
Ellisphere
A provider of legal, economic and financial company information, credit risk assessment services and international solutions.
These providers can be supplemented by local registries, trade promotion agencies, chambers of commerce, banks, credit insurers and internal payment experience. The value of information depends less on the number of sources consulted than on their reliability, timeliness and complementarity.
Conclusion: gather information to secure sales, not prevent them
Obtaining reliable information on an export customer often requires more time and resources than in the domestic market. Nevertheless, it is an essential investment to avoid discovering financial weakness or poor payment behaviour too late.
When accounts are unavailable, the assessment should not stop: field investigations, payment experience, industry intelligence and country risk analysis can support a reasoned judgement. The right level of information is the level that enables a credit decision proportionate to the risk.
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