The importance of an effective credit management function has been mentioned elsewhere in this guide, and bears repetition. A sale is not a successful sale until payment has been received.
Asked about his experience as a successful exporter of library fiction to the USA, a medium-sized UK publisher began with the requirement to be paid, and returned to that point several times. Any customer who is new to you or your distributor must be checked out thoroughly for their payment record with one or more of the agencies that offer such a service. It is also customary to seek references from two or three other publishers with whom the potential customer already trades. If the checks and references are not available, trading can begin, with the agreement of the customer, on a pro-forma invoice basis, where the customer makes advance payment against an invoice. Once a relationship has been established, a move to supply on credit may be agreed. Another essential safeguard is to set a credit limit, which may be raised as trading experience creates confidence in the customer’s ability to pay.
A further safeguard lies in credit insurance: some UK distributors who act on behalf of third-party clients take out a credit insurance policy which covers bad debts from a range of countries, and includes all their clients. As with all insurers, certain countries and customers are subject to exclusions, and this should be discussed with the distributor.
Finally, mostly for larger one-off deals, the UK government operates its Export Credit Guarantee service under the auspices of UK Export Finance.
Prudent business and financial stewardship (not the same as risk-averseness) in pursuit of the principles and practice set out in this chapter are an essential component of making a success of an export operation and should be kept always in mind.