Evaluating the End-Buyer
Trade and receivables finance is based upon the commitment of the end-buyer to purchase goods and the identification and capture of a reliable transactional source of repayment. Open-account trade relies upon the ability of the end-buyer to pay the sales invoice. This can be impacted upon by the solvency of the end-buyer, the political and transfer situation of their country, and the enforcement and collectability of the debt. The risk evaluation of the end-buyer and their country is described, to include the financial statement assessment and payment history of the end-buyer, the use of credit reference agencies, status reports, and other sources of information to include a bank’s own invoice finance and correspondent banking departments. The importance of the end-buyer’s bank in the process of evaluation is also discussed.