Product risks are the automated risks which have to be accepted by the sellers as an integral part of their commitment. For example, specified performance warranties, agreed maintenance of service obligations. Crucial external factors like how negligence is being performed during the process of production or how the extreme weather during the time of shipping can affect the product.
These are one of the prominent factors which lead to disputes between the parties, even after they sign the contract. It is important for both parties to make sure that the contract has been made adequately in such a way that if it affects the product, by default will include compensation or changes in the seller’s commitments.
Product that has been made with different specifications carries manufacturing risks and is a very common risk in this industry. The cost of readjustment is covered by the seller before hand or until the buyer sees fit, because they then cannot sell the products to the other buyers. These risks are easily noticed during the period of product planning, meaning the buyer will have to pay the seller at a very early stage of transaction.
In order to limit the risks for both the buyer and seller, they make the process of payment into part- payments and separate guarantee.
Transport risk also plays a vital role in export import market and business. Cargo and transport risk can only be reduced with the help of cargo insurance, which we define as standard international policy wordings (the definition issued by the institute of London underwriters or the American Institute of Marine underwriters).
A seller should be aware and known of the area from where the cargo insurance papers are made and who has taken the person in charge of all the arrangement of the papers related to cargo insurance. Another place where the risk might take place is the buyer arranging the insurance according to his convenience and terms of delivery. In case the buyer is not able to give the surety of the cargo shipment in a proper way, the insurance can be considered as invalid.
Currency risks most often occurs due to the foreign exchange rate as it keeps on fluctuating. That is why the management who handles the exchange rate has to become strong and active. They are pressured to reduce the exchange rate because the government keeps examination of everything on a regular basis.
Currency risk policies does not have a great effect on anything has been relatively very basic if we compare it with history and time.
Trade receivables nowadays are given a lot of attention.
The types of risks mentioned above can only be measured through the way trade receivables are being generated and what parties are involved in the work.
Buyer credit: weak or strong?
Confidential versus disclosed?
Frequency of shipment / history of the supply chain
Connect2india has a diversified portfolio of trade receivables that is supported by structures and procedures in order to limit these risks. We generate securities that investors can believe upon and are able to build up trust.