The 6 Biggest Risks Facing New Zealand Exporters
When people think about exporting, they often focus on the opportunity. A new market, larger customers and increased revenue can all be exciting prospects for a growing business. What I've noticed working with exporters, however, is that most aren't worried about finding customers. They're usually more concerned about what happens after they've won the order. Will they get paid? Will the goods arrive on time? What happens if something goes wrong once the shipment leaves New Zealand?
The reality is that exporting comes with risks, but most successful exporters aren't trying to eliminate those risks completely. They're simply understanding them and putting the right protections in place before they become problems.
Customer Default
The biggest concern for many exporters is whether the customer will actually pay. When you're dealing with a customer down the road, it's generally easier to resolve issues if something goes wrong. When that customer is based in another country, things can become far more complicated. Different legal systems, different business cultures and the physical distance between both parties can make recovering money significantly harder than it would be domestically.
I've spoken with businesses that have spent months building a relationship, fulfilled the order successfully and shipped the goods, only to find themselves chasing payment from the other side of the world. The good news is there are ways to reduce this risk. Credit checks, Letters of Credit, Trade Credit Insurance and strong due diligence can all help exporters gain greater confidence before shipping product. If you have a gut feeling the relationship is not right then don’t take it on.
Payment Delays
Even when a customer fully intends to pay, timing can create pressure. Many exporters work on 30, 60 or 90-day payment terms and once shipping time, customs clearance and local distribution are added into the mix, there can be a significant gap between the goods leaving New Zealand and cash arriving back in the business.
I've seen exporters doing everything right and still finding themselves under pressure because multiple customers paid a few weeks later than expected. Individually it might not seem like a major issue, but when several large invoices are delayed at once, the impact on working capital can be substantial. As exporters grow and take on larger customers, managing that cashflow gap becomes increasingly important.
Quality Disputes
Another risk that doesn't get talked about enough is quality disputes. A shipment can arrive on time, the customer can be happy with the relationship and the paperwork can be perfect, but if there's a disagreement around product quality, payment can quickly become delayed.
This is particularly relevant for food exporters, produce businesses and manufacturers where product specifications need to be clearly understood by both parties. The exporters that seem to handle this best usually have strong documentation, clear quality standards and regular communication with their customers throughout the process.
Foreign Exchange Risk
One risk that often catches businesses by surprise is currency movements. A deal might look profitable when it's agreed, but exchange rates can move significantly before payment is received.
For exporters trading in US Dollars, Euros, Pounds or other foreign currencies, exchange rate fluctuations can impact margins and profitability. As businesses grow, many begin looking at foreign exchange strategies to provide greater certainty around future cashflows. I work with a few different New Zealand currency managers such as Convera and Ebury. Alternatively your main bank can provide this relationship and support.
Country And Political Risk
Not every market carries the same level of risk. Changes in government policy, import restrictions, tariffs or economic conditions can all impact an export relationship.
This doesn't mean businesses should avoid emerging markets. It simply means they should understand the environment they're trading into and assess risk accordingly. The most successful exporters tend to research their markets thoroughly before committing significant time and capital.
Shipping And Logistics Delays
If the last few years taught exporters anything, it's that supply chains don't always run smoothly. Port congestion, vessel delays, weather events and freight disruptions can all impact delivery schedules.
Most of these issues are outside the exporter's control, but they can still affect customer relationships and cashflow. That's why many exporters build additional time into their planning and maintain regular communication with customers throughout the shipping process.
How Successful Exporters Manage Risk
One thing I've noticed is that experienced exporters rarely rely on a single protection. Instead, they often layer different tools together.
That might include Trade Credit Insurance, Letters of Credit, Credit checks, Clear contracts, Export documentation, Foreign exchange management and Strong customer relationships
None of these eliminate risk completely, but together they can provide a much stronger foundation for international trade.
If You Want to Talk It Through
If you want a quick idea of what this could look like for your business, I’m happy to run through it with you.
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