FCIB Survey Roundup: Risks of Doing Business in South America Elevated in Several Nations

Due to various political and economic factors, some South American countries are riskier than others. In an August FCIB (The Finance, Credit & International Business Association) International Credit and Collections Survey, credit managers doing business in South America shared their customers’ reasons for payment delays and gave advice on extending credit within the region. 

Most of the survey respondents cited disputes and legal issues as the reasons behind payment delays in Argentina. Others listed the central bank’s limit on foreign exchange and poor cash flow. One credit manager advised, “[You] have to stay on top of them to get payments; whatever extra time you give them, they will take.”

In Brazil, the primary reason for payment delays was poor cash flow. Credit managers also listed foreign exchange parity, failure to have correct paperwork requirements and exchange rate resistance, among others. When it comes to doing business, one survey respondent said: “We find that for the most part, our customers are very business savvy, understand their economy and are prepared to ride out the downturn. They have cut way back on all of their purchases and have very little long term debt.”

However, another one wrote, “use caution, set risk limits and do business only when a real relationship is established through visits; know the customer and build trust.”

With rampant corruption continually present in Venezuela, one credit manager said, “We do not sell directly into Venezuela, but rather we sell to two dealers who sell into Venezuela. One is on cash in advance and it works, and the other was placed on open account with N90 terms. They are now 150+ days past due because they have not been paid by the Venezuelan government.”

Full FCIB survey results can be found on the FCIB Knowledge and Resource Center. Next month’s survey will focus on Eastern Europe.

- Jennifer Lehman, NACM marketing and communications associate

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