• Introduction - Risk and the relation to trade credit

    Many producers and exporters have difficulty in accessing competitively priced finance. Often this is because finance is not available, but sometimes they do not approach the issue correctly and, as a result, their applications are turned down. But, often the relationship between risk and credit is not fully appreciated either, nor the fact that there are three parties to each transaction: the seller, the buyer and the institution or bank providing the finance.

    This chapter, Risk and the relation to trade credit, offers some views on the hows and whys of accessing trade finance and the role of ‘risk’ therein, separated into commercial risk (10.02), and how risk relates to credit (10.03 and 10.04).

    Section 10.05 deals with the conditionalities attaching to the provision of credit whereas the remaining sections cover credit issues specifically relating to producing countries.

    It is strongly recommended to read Chapter 10 in its entirety so as to gain a comprehensive overview of the relationship between credit and trade risk.

    NB: A substantial number of resources dealing with general financial literacy is available at http://www.fastinternational.org/en/node/733.

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