As international trade is expanding, credits have become an important competitive factor on the market. Giving credit means providing financing for the buyer. This is reflected directly in the exporter’s working capital. If the buyer is slow or unable to meet his payments, problems are reflected in the enterprise’s own finances. Sometimes the shortage of working capital caused by delays in payments needs to be covered with shortterm financing from external sources. This in turn causes expenses reducing the enterprise’s profitability.
It is important to assess the risks included in giving credit. They may be commercial risks associated with the buyer’s payments, or political risks associated with the operating environment in the buyer’s country. Examples of political risks include restrictions imposed on currency transfers, rescheduling of debts, and war or insurrection. Through international analysis of countries and banks, Finnvera monitors the creditworthiness of countries involving political risk.