Y Enterprise Export Credit Risk Management Case Study

After China’s accession to the WTO, domestic and international marketcompetition is increasingly fierce, export enterprises face a growing risk. In order toexplore overseas markets, on the basis of credit sales has become indispensable toChina’s export enterprises to expand sales and stable customers. According tostatistics, accounting for enterprise credit payment more than eighty percent of thetransaction. But at the same time, as China’s important export areas, economicweakness in European and American markets in the wake of the financial crisis, theEuropean and American customers often default payment for goods in a variety ofreasons, some customers even bankruptcy, eventually led to the domestic exportenterprises to produce a large number of bad debt losses, export credit risk is alsogrowing, obviously, lagging behind and lack of export credit risk management hasbecome obstacles hindering the development of the export enterprises in our country.Therefore, the enterprise credit risk management has become a modern enterprisesurvival and development of the necessary conditions, only to strengthen the riskconsciousness, establishing and perfecting the credit risk management mechanism, toensure always within the scope of the controllable risk the steady development of theenterprises.This article summarizes related theory on the basis of selecting the Guangdongelectrical appliances enterprise Y company as the research object, Y company is aproduction of household kitchen appliances and commercial kitchen appliancesequipment of home appliance enterprise, sales to sale in domestic market, exportprimarily. Y company sales decline since2008, until the mid-2012operating incomewas back in600million, at the same time in the export trade of the fluctuating, Ycompany is facing more and more exposure to overseas customers through a varietyof reasons and means a delinquency, lead to Y company accounts receivable seriousbacklog. Analysis found that Y enterprise three major problems in the process of trade,the first one is in order to negotiate a lack of scientific selection basis for the customer,for order blindly choose the customer, a dangerous precedent for subsequent proceeds; the second one it is in order stock issue caused by the backlog of accounts receivableslow turnover of funds, lack of working capital affect the development of production;Third, in order to settle, accounts receivable bad debts rate high eroded the profits ofthe enterprise.For the three big problems of the Y enterprise, this paper puts forward thecorresponding solutions: using professional credit investigation report identifyingexisting customers and potential customers; Using the letter confirmed transfer ofcreditor’s rights, trade financing tools under specified in advance, speed up the moneycollecting; Use of international factoring, short-term export credit insurance and otherfinancial tools to avoid export credit risk, strengthen the overdue account recovery,reduce the rate of accounts receivable bad debts. In addition, this article also proposedexport enterprises should in daily management should be established in advance,matter and afterwards the export of the whole process of risk management system.