MANAGING IMPORTING RISK

Be aware of potential risks and fraud and understand strategies that can help protect your importing business.

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About managing importing risk

Currency risk

What’s the risk?

The local currency amount payable on settlement may be higher than the amount calculated when entering into the contract.

How does it arise?

Exchange rates between most currencies fluctuate regularly. There is a time lag between entering into a contract and making the payment.

How can it be mitigated?

By implementing currency risk management solutions.

Non-delivery

What’s the risk?

The supplier fails to perform according to the sales contract.

How does it arise?

The supplier delivers the wrong or inferior goods, or doesn’t deliver on time.

How can it be mitigated?

Get the goods inspected before shipment by an independent inspection agency.

Credit risk

What’s the risk?

The supplier can’t deliver the goods after you have made payment.

How does it arise?

The supplier, or other parties in the payment chain, becomes insolvent.

How can it be mitigated?

Use conditional payment methods such as documentary credit or documentary collection.

Transfer risk

What’s the risk?

A change in government regulations prevents or restricts your ability to make payments or exchange foreign currency.

How does it arise?

Many countries regulate the transfer of money. Unexpected regulatory changes may take place between entering and settling a contract.

How can it be mitigated?

Consult the Australian Trade Commission (Austrade) for expert insights into the foreign markets where you trade.

Country risk

What’s the risk?

A change in government regulations prevents or restricts your ability to receive goods.

How does it arise?

Many countries regulate the import and export of goods. Unexpected regulatory changes, such as the cancellation of permits or licences, may occur between entering and settling a contract

How can it be mitigated?

Consult Austrade for expert insights into the foreign markets where you trade. Consult the Australian Customs Service for further advice.

Transport risk

What’s the risk?

Goods are stolen, lost or damaged in transit.

How does it arise?

Through deliberate or accidental causes.

How can it be mitigated?

Insure against transport risk with commercial marine insurance agencies.

Risk of fraud

What’s the risk?

Unscrupulous suppliers attempting to take advantage of importers.

How does it arise?

People taking advantage of the complexity of international trade to commit fraud.

How can it be mitigated?

Research potential trading partners, including third parties, to ensure they are reputable and have a proven track record.

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As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. View our Financial Services Guide (PDF 56kb).

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MANAGING IMPORTING RISK

About managing importing risk

Currency risk

Non-delivery or non-performance

Credit risk

Transfer risk

Country risk

Transport risk

Risk of fraud

Related products

Methods of Payment

Financing options

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