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The complete 40-minute session, Session 1 of the August series.

Q1: How is international credit risk different from domestic credit risk?

The goal is the same — get paid in full, on time — but the terrain changes completely. Across a border, the credit information you normally rely on may be limited, outdated or unavailable; legal recourse can be slow, expensive or effectively out of reach; and risks you'd never consider domestically — political instability, currency controls and sanctions — become very real. That's why a foreign buyer is assessed differently from a domestic one, even for the same order value.

Q2: What is the difference between country risk and buyer risk?

They are two separate layers, and you must assess both. Country risk is the environment your buyer operates in — whether money can actually reach you from that country safely, legally and in a usable currency. Buyer risk is the customer itself — whether that specific business can and will pay you as promised.

What to do:

• Assess the country and the buyer separately — never let a strong buyer hide a fragile country, or a stable country hide a weak buyer.
• Treat a weak buyer in a fragile country as the highest-risk combination — both layers are working against you.

Q3: What do political, economic and sovereign risk mean in practice?

Political risk covers instability and conflict, sudden government intervention (expropriation, import bans), sanctions, and weak rule of law that makes contracts hard to enforce. Economic risk covers currency depreciation, recession in the buyer's market, inflation and interest rates, and fragile banking systems that delay or block transfers. Sovereign risk is risk attached to the government itself — a state that defaults or freezes obligations drags its banks, currency and businesses down with it. Each one can stop you collecting even when your buyer is willing to pay.

Q4: Can a good buyer still fail to pay me because of their country?

Yes — and this is the risk unique to cross-border trade. Through exchange or capital controls, a central bank can limit or suspend money leaving the country. Through transfer and convertibility risk, the local currency may not be convertible to yours or legally sendable abroad. In a crisis, a state can even order a payment moratorium on all foreign payments. In each case your buyer may have paid their bank in full, in local currency — and the money still never reaches you. The buyer's creditworthiness cannot protect you from this, which is exactly why country risk is assessed on its own.

Q5: How do I assess a buyer when the usual credit information isn't available?

You build the picture yourself from several independent sources, and look for them to agree. No single source is ever enough across a border — triangulation is the golden rule.

What to do:

• Ask the buyer directly for audited financials, a bank reference and trade references — reluctance to share is itself information.
• Verify the business on that country's company registry: legal name, ownership, and that it is active and genuinely trading.
• Speak to existing suppliers and the buyer's bank — a real payment history is worth more than any document.
• Start with a modest limit or safer terms on the first order, and let actual payment behaviour earn a larger limit.
• Cross-check everything: where the sources disagree is exactly where the risk hides.

Q6: What quick, free checks can I do before paying for a credit report?

Five minutes of free checking has stopped many a bad debt before it started. Do these before spending a cent on formal reports.

What to do:

• Map the address — put it into Google Maps and check Street View. Does the premises match what they claim, or is it a house, an empty lot or a mailbox service?
• Call the landline — phone the switchboard, not the mobile, and ask for the person named on the application. Does reception know them?
• Find the person — search them on LinkedIn and Google. Do they exist, hold that role, and does the business have a real history or any bad news?
• Check the website and email — a brand-new domain or a free Gmail address on a supposedly established business doesn't add up.
• Cross-check the details — name, address, phone and tax number should agree across the application, website, registry and invoice. Chase every mismatch.

Q7: Where can I find cross-border credit information?

A whole ecosystem exists for this. Ratings agencies (S&P, Moody's, Fitch) publish sovereign ratings — the headline read on country risk. Export credit agencies (in South Africa, the ECIC) insure exporters and publish country risk views. Trade credit insurers (Allianz Trade, Coface, Atradius, and locally Credit Guarantee) assess buyers and countries daily. Country risk databases include the OECD country risk classification, the EIU and World Bank governance indicators. Always also check sanctions lists (UN, EU, US OFAC, UK OFSI) — and don't forget your own network: banks, freight forwarders and suppliers already trading in that market.

Q8: How can I protect myself when extending terms to a foreign buyer?

A credit decision isn't only yes or no — it's also how. When confidence is limited, structure the deal so the terms carry the risk instead of you.

What to do:

• Ask for an advance payment or deposit before goods move — the simplest protection of all.
• Use a letter of credit so the buyer's bank guarantees payment once the documented terms are met.
• Take out trade credit insurance — many policies also cover country and transfer risk.
• Secure the terms with guarantees, sureties or collateral that are actually enforceable in that country.
• Keep payment windows short and limits small, and build the cost of cover and currency risk into your pricing from the start.

Q9: What red flags should make me pause before extending terms?

One flag means slow down and ask more questions. Several together mean do not extend terms until they are resolved.

Buyer-level flags:

• Won't share financials, references or clear ownership information.
• Details that don't match across documents and the registry.
• Payment routed through a third country or an unrelated account.
• A rushed, unusually large first order with pressure to skip your checks.

Country-level flags:

• The country is under sanctions, or the buyer is close to a restricted party.
• A sharp sovereign downgrade or newly introduced exchange controls.
• Trade credit insurers unwilling to cover the buyer or the country.
• Payment terms that keep being renegotiated before you've shipped.

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