Free Online Course in International BusinessTrade ReferencesTrade information consists of facts obtained from merchandise suppliers of the customer, including the following: 1. recent high credit, amount owing, amount past due 2. whether customer payments are discounted, prompt or slow and, if slow, how many days 3. whether a supplier has referred the account to a collection agency 4. other facts about the buying and paying record of the customer. This vital information describes how the customer actually pays bills, regardless of other financial facts. The payment record should be examined for specifics as well as for the trend of payments, and be reconciled with the condition indicated by a buyer’s financial statements. Though slow trade payments are often a sign of trouble, they may also characterize a business that is having growing pains but is substantially healthy; its slowness may be seasonal or a result of expansion. Sources of Trade InformationDepending upon a buyer, the industry, location, size of order, and other factors, an international credit manager has several places to get this information. Those most commonly used include credit reporting agencies that report on all industries, industry credit groups, direct interchange with other suppliers, and agency trade checks.Direct exchange of information with other suppliers is costly and timeconsuming but can be very useful when there is substantial credit exposure, when agency and bureau reports are inadequate, or when industry group interchange is not practicable. Personal acquaintance, proper identification, and mutual trust and confidence play a key part in these direct exchanges. International credit managers should also bear in mind the legal limitations to such an exchange, as noted earlier. Other Sources of Direct InvestigationSources of information are plentiful and limited only by a credit manager’s lack of creativity. The following sources are by no means exhaustive of the information available for credit investigations.NewspapersThe Wall Street Journal, Financial Times, and local newspapers are important, essential reading for a credit manager. First, it is important to understand the current economic climate. Second, there is much company-specific news that can affect credit decisions or at least suggest further investigation. Directories, Internet and Other Reference Materials There are a host of printed materials useful in a credit investigation. First, there are the standard sources: Thomas Register, Wards Business Directory, Directory of Corporate Affiliations, MacMillan Directory of Leading Private Companies, Moody’s Industry Review, Million Dollar Directory, Experían Trade Payment Guide, Value Line Investment Survey, and several different publications from Standard and Poor’s and Dun & Bradstreet. Specific industry references can be helpful as can directories of state businesses and chambers of commerce. The amount of general information (publications, periodicals, and news services) on the Internet is truly overwhelming. Internet access does make it easy for a credit executive to check out many more publications than one would normally purchase to read. All the major newspapers are available on the Web. Right now The Wall Street Journal is one of several charging an access fee. Publications such as Fortune and the Economist are online, as is Business Credit (on the NACM site). Financial networks, such as CNN Financial News and Bloomberg, are also useful. Finally, the Internet offers a fast, efficient, and effective way to communicate with buyers. E-mail seems to work faster and has an inherent friendliness that is a bonus in international credit management situations. People find it easier to compose e-mail messages rather than to use regular mail. Of course, a global credit executive must ensure that e-mail messages adhere to the same standards as regular letters. A relaxation of style does not mean relaxing credit policy or normal business practices. Much credit information is confidential in nature. A professional credit manager should take every precaution to maintain standard levels of confidentiality, which may mean using encryption or otherwise securing messages and transmissions. Security also means controlling access to the computer where email messages are stored (Business Credit Principles, Field Version 4, NACM Publishing).
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