Free Online Course in International BusinessIndirect Sources of Credit InformationEvery experienced credit manager can recount instances when "going direct" in an investigation or a personal visit revealed pertinent information about a credit applicant that was otherwise unavailable. However, as mentioned before, the truth is that many international credit managers today have neither the staff nor the time needed to conduct thorough direct credit investigations, especially when dealing with overseas markets. Instead, they turn to a third party. In order to appreciate the list of indirect sources of credit information provided below, you need to understand how the data which is provided from these credit agencies (through credit reports purchased by a seller or exporter) is created. For starters, all information today is automated and is usually obtained via CD ROM or down loaded directly from a mainframe computer. Automation and technology have made credit reports more attractive to credit executives for several reasons.Combined with vast databases, computers can provide information about companies nationwide. Large companies today deal with tens of thousands of customers who are more and more often not geographically local to them. The level of effort required for direct investigations on large numbers of customers is beyond the means of most companies and would take far too much time. Reports can be generated instantly and sent electronically or faxed for same day responses. Decisions about credit applications are time sensitive. There is usually urgency for a fast decision in order to make a sale. The ability to obtain a credit report on a same day or one day basis can affect a company’s revenues. The cost benefit of using credit reports, or reports purchased externally by a seller or exporter, is high. The salary of a credit investigator can pay for more credit reports in one year than an investigator could produce in one year. There are also additional savings in telephone, postage, supplies, storage, and overhead costs. Credit reports can provide additional marketing data for the company. Examples are checking a customer’s trade lines for growth and, therefore, the possibility of additional sales or reviewing trade terms for customers according to their credit risk. Some credit reporting companies also provide relational information reports. A number of agencies provide business information reports on companies located inside as well as outside the United States. Some of these also provide domestic credit reports, while others focus primarily on non US companies. FCIB, Dun & Bradstreet, Experian, SJ Rundt, OECD, Graydon America are some of the groups that report on non US companies. In general, reports on foreign companies are similar in content and format to domestic reports. They may be purchased individually or contracted for in advance. U.S. DoC Commercial Service International Company Profile The International Company Profile (ICP) is a service provided by the US Department of Commerce Commercial Service. ICP’s are available on companies located in over 80 countries. The exporter is charged a small fee for each ICP, and the information is provided within 10 days or less. The ICP includes the following:• a detailed credit report on prospective sales representatives• a listing of the company’s key offices and senior management • banking and other financial information about the company • market information, including sales and profit figures as well as potential liabilities • an opinion by the overseas US Commercial Staff as to the viability and reliability of the overseas company or individual as well as an opinion on the relative strength of the company’s industry sector in the target market. FCIBFCIB NACM, an association of executives in Finance, Credit and International Business, is a wholly owned subsidiary of NACM which serves professionals involved in worldwide export financing, credit, treasury and international subsidiary management. The purpose of the association is to raise the level of expertise and professionalism of members and to provide enhanced job enrichment through relevant discussion and exchanges of experiences. Among the services FCIB provides are the following:• Conferences. FCIB holds regional US meetings, three international conferences, and an annual Global Conference, all of which focus on current worldwide credit, collection and exchange problems as well as indepth country discussions. • Industry Export Credit Groups. FCIB operates eight export credit groups in the US and Europe. The groups meet to discuss past experiences of individual mutual accounts as well as general country problems specific to the industry. • International Bulletins and Newsletters. Current changes affecting credit, collection and exchange conditions throughout the world are reported in the FCIB international bulletin which is distributed to all members. The bulletin, which presents a "reader’s digest" for members, is an invaluable aid to keep them abreast of ever changing conditions in world markets normally not discussed at meetings. • Country Reports. These reports summarize current experience of international finance and credit managers, capturing timely, in depth information on the credit risks of export sales in 16 countries. FCIB’s country reports assist international credit professionals to forecast foreign exchange availability, transfer risks and prospective currency changes. • International Credit Reports. FCIB, because of its large volume, is about to offer its members access to the major international credit reporting agencies at attractive prices.
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