Trade risk

Discover tailored solutions for all aspects of your business’ trade transactions. Our Supply Chain Finance specialists can help you manage or minimise the most common trade-related problems including:

Goods not in accordance with the contract of sale

Be cautious in your dealings with a new supplier. Thoroughly investigate their reputation and the product, prior to placing an order. If the need for legal action arises, payment may be enforced upon the importer/buyer, who will not be able to on-sell or recoup their costs as the goods received were incorrect. If you have an agent in the supplier's country, try to inspect the goods prior to shipment - this can also be done by an independent superintendence company, however this could be expensive.

Goods not arriving within the time required

Your contract of sale should be specific if the date for shipment is vital. A letter of credit can specify a latest shipment date, which if not met, may allow the importer clear legal grounds for refusing payment.

Goods damaged or lost in transit

Normal marine insurance can be obtained to cover the risk of damage to, or loss of, goods in transit. This cover should be discussed between the importer and exporter, and should be included in the terms of the contract of sale. If any doubt exists, independent advice from an insurance broker specialising in international transport is recommended.

Credit Risk

'Credit risk' is the risk of insolvency, default, fraud or the importer’s unwillingness to accept the goods. NAB can obtain a commercial report on potential trading partners to help you make an informed decision on the bona fides and commercial standing of buyers. Export Finance & Insurance Corporation (EFIC), the Australian government’s export credit agency offers insurance products that can be used in conjunction with NAB's products, to mitigate many trade related payment risks. Local trade insurers can also assist with your domestic trade needs.

Transfer Risk

When a contract of sale specifies payment is to be made in a particular currency, a 'Transfer risk' may exist. The importer’s country may introduce controls which prevent payment in a currency other than the importer's domestic currency. However, generally the issuance of a letter of credit as the payment method, indicates that the transfer of a specified currency will be approved when required. Weakness in the economy of the importer's country, a country's low level of external reserves and balance of payments problems, may all indicate the possibility of transfer difficulties. Protection can be obtained by insuring with an export credit insurer, such as EFIC.

Contact us

NAB's Supply Chain Finance specialists will assist your company in determining which is the most appropriate solution for your business needs. Depending on the complexity and ongoing nature of the transaction, we will be pleased to introduce to you a risk management specialist.

To arrange an appointment with a Supply Chain Finance specialist, contact us: