Lyndsey Connor, business development manager for Wales, Euler Hermes, the world’s leading trade credit insurance company.

A growing number of Welsh businesses are selling their goods and services abroad as they look to capitalise on the cheap pound. The value of the country’s exports has increased by nearly a fifth in the last year, above the UK average of 15 per cent, with Germany, France and the United States the key destinations.

Almost 4,000 Welsh firms now export and it’s clear the government is committed to ensuring the trend continues. Together with revamped support from UK Export Finance, First Minister Carwyn Jones announced the government is set to open new offices in these countries, in addition to Canada and Qatar, to boost trade opportunities.

Exporting can deliver numerous benefits, from increased sales to a more diversified customer base, but it does not come without risk. There are a number of areas companies can focus on to help them avoid running into financial problems with new customers overseas. Lyndsey Connor, business development manager for Wales at Euler Hermes, the world’s leading trade credit insurance underwriter, outlines a checklist of five tips firms should be wary of.

Understand differences in payment culture

The length of time between selling goods and services to a customer and receiving payment can vary greatly from country to country – a factor often missed when companies start working with new clients overseas. While the average Day Sales Outstanding (DSO) figures for Germany and the US remains similar to the UK at 53 days, businesses trading with French and Chinese firms should expect to wait for an average of 73 and 90 days respectively. This change can have a significant impact on cashflow, so Welsh companies looking to export should consider how this might impact their cashflow and working capital.

Keep track of new trade barriers

The number of protectionist measures affecting trade worldwide currently stands at a record level. Almost 400 new tariff and non-tariff measures were put in place last year, with the US being the biggest contributor with 89.

A growing number of countries are now imposing national standards for product quality, food safety and environmental protection to safeguard home-grown producers. The potential impact of new measures can be significant and this should be a key area to monitor when it comes to assessing future markets.

Source legal support

Don’t assume that legal processes operate on the same basis as the UK and EU. Differences in legislation governing employment, contracts (sales, rental and buyer agreements), company registration, tax liability and transport are common and can render an opportunity unsustainable and unprofitable. Levies and duties can also often apply for countries outside the EU, which usually entails additional documentation.

Monitor geo-political risk

Political instability can either disrupt or, in some cases, prevent the completion of an export contract. Companies trading in markets run the risk of contractors defaulting on payments, currency exchange transfer blockages, property confiscation and changes in government policies.

Do your homework

Building a detailed profile of new clients can help give new entrants a clearer picture of the market and customer they are forming a relationship with. Armed with insight on a range of factors, from political risk to the financial health of the supply chain, new exporters can make a more informed decision on who to sell their products to. Ask around and get help and advice from government agencies, chambers of commerce, financial advisers and accountants, your bank or credit insurer to help you make an informed decision.