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How to hedge against risks in foreign trade?


Finnish companies are scanning more and more distant markets. In many areas, business in blooming and demand continues to increase despite the decline prevailing in Europe. Especially in these emerging markets, hedging against risks is vitally important. The ability of a new trade partner to pay or to deliver produces a significant risk that needs to be considered when planning your company's risk policy and operations.

Outside the European Economic Area, the economic and political risk formed by your trade partner's country and bank become relevant, in addition to the buyer risk. At the same time, the European financial crisis is pressuring companies to offer collateral in contract negotiations, even to their current trade partners. In addition, counterparties abroad will want to ensure that a Finnish company can fulfill its contractual obligations, deliver the goods and the payment according to the terms of contract.

It is both possible and advisable to hedge against risks

Your company can hedge against most risks in foreign trade with Trade Finance services: foreign bank guarantees, letters of credit, and collections. If your company needs means to improve its working capital management, financing after delivery can be included in letters of credit - usually without additional collateral.

Our experts will help your company find the right tools for foreign trade. Pohjola has a wide international network of partners and correspondence banks. In cooperation with them, we can offer solutions to protect your company, tailored according to your needs.

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