David DiPero, Chairman and CEO of FGI Finance, discusses with Commercial Factor the areas of consideration associated with foreign credit risk
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Yael Penn
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ypenn@fgiww.com
New York, NY –July 6, 2007 – David DiPiero, Chairman and CEO of FGI Finance (www.fgifinance.com), sits down with Commercial Factor and discusses the five main areas for consideration when assessing foreign credit risk: Political, Commercial, Business Practice, Collateral, and Transactional Risk.
“Rather than a ‘how to guide’,” David says, “We would like to provide a ‘food-for-thought,’ and an interesting window into the factors that go into risk evaluations in international transactions.”
To circumvent political risk, DiPiero suggests avoiding non-hedged exposure to foreign currencies and staying away from doing business with countries where transfers of political power may result in unknown shifts in policy. These shifts may have a negative impact on trade policies, taxation and tariffs.
Although commercial risk is unavoidable, DiPiero states that “there are two main red flags that can help identify a problematic situation.” These red flags are declining payment trends and financial statements or credit reports indicating deteriorating financial health.
With regard to business practice risk, DiPiero asserts the importance of being cognizant of cultural differences with regard to terms of payment. This will help minimize consistent delinquent payments and a strained cash flow.
Finally, DiPiero advises to ensure that your collateral is free of liens, asserts the importance of securing proper documentation to avoid collateral risk and encourages consistent and accurate transactional documents to avoid transactional risk.
The entire article can be found at http://www.fgifinance.com/news_and_media/pdf/commercial_factor_fgi_2007.pdf
About FGI Finance
FGI Finance is a global commercial finance firm providing foreign receivable financing solutions and other financial services to mid-sized exporters, international service providers, and manufacturers worldwide. Headquartered in downtown New York City, FGI Finance has a presence in 6 continents.