Here's a look over the shoulder of a credit manager whose sales area is virtually the entire world. We explore how he's adapted his credit program to cope with the baffling variety of trade practices, customs, and expectations that you find when you do business in scores of different countries.

Latin American customers of Novus International, Inc. (St. Louis, Missouri), are asked to fill out a Solicitud de Credito. Created by Credit Manager David I. Marsh, the two-page, Spanish-language document is similar to a traditional U.S. credit application in many respects. It explains that interest may be charged for late payments and that the customer will pay any court costs and other legal fees if they are required, and it requests permission to contact trade and bank references. But it does not ask for personal guarantees.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006.

"Businesspeople in Latin America almost universally resent requests for personal guarantees," notes Marsh, who explains that the Solicitud is just one of many ways he had adapted Novus's credit program to the special demands and rigors of international selling and credit exposure. These adaptations have been absolutely essential for the company, which manufactures and sells a poultry feed supplement and has world area offices in Mexico City (for Latin America), Brussels (for Europe and Africa), and Singapore (for the Asia-Pacific area).

• Latin America. Marsh is able to obtain financial statements from almost all of Novus's Latin American customers. However, all are written in Spanish. While Marsh doesn't speak Spanish, he can read and understand it at a rudimentary level, which allows him to accurately interpret most of the information. "When I receive a financial statement with highly detailed footnotes, I will often hire a translator, especially if the statement is from a high-risk prospect or marginal customer in a weak country."

• Europe. It is extremely difficult to obtain financial statements from private companies, but he is able to obtain them from government agencies on the public companies.

• Asia-Pacific countries. Here again, financial statements are available from public companies or the governmental agencies where such statements are required to be filed.

• Trade references. It is difficult to get trade references from companies in most countries, according to Marsh. It is almost never possible in Europe, but it is at least sometimes possible in Latin American, Australia, and the Asia Pacific Rim. "We have a Trade Inquiry form letter that we have modified slightly from our U.S. version that we mail or fax to trade references in Latin America and the Asian Pacific Rim countries," he says.
  One strategy that helps in getting trade references from customers in any country is to ask the company for the names of any U.S. suppliers with whom it does business. "Then I can easily get payment experience from these domestic suppliers," says Marsh.

• Bank references. While most U.S. and Canadian banks will provide useful reference information on customers, few banks in other countries will. "International bank references, even if we're able to get them, are usually vague and virtually useless," reports Marsh. "Few banks will say anything derogatory about their clients. So we usually don't bother to contact bank references."

• Credit reporting agencies. While trade and bank references provide only limited hope of useful information, credit reporting agencies around the world are usually a bright spot, according to Marsh. "In fact, many of the credit reporting agencies in other countries are better than some of our domestic agencies," he says. "Many of their reports are very thorough, detailed, and fairly up-to-date. Some even include payment histories with other suppliers, as well as copies of financial statements, which we may not be able to get on our own directly from customers."