Big moves in exchange rates are presenting unexpected and fastmoving challenges for businesses that have international customers and suppliers – or that are looking to branch out into new markets.
Over the past six months, the drop in the value of Aussie dollar has rebalanced the playing field for exporters and opened up new opportunities for businesses looking to build and sell to a global customer base. The timing seems right. Dun & Bradstreet's Business Expectations Survey conducted during Q1 2015 found that business executives consider weak local demand as the key issue for their operations this year.
In contrast, the government’s AUSTRADE research finds that 69% of exporting businesses say that the outlook for this year is better than 2014 while 74% intend to grow into two new markets in the next two years. Combined with free trade agreements with China, Japan and a reawakening US economy (Australia’s three biggest trade partners), there are clear reasons for businesses to turn their attention overseas.
While the opportunities can be clearly stated, challenges remain on how to locate high-value prospects, with ROI scrutiny, and control the risks involved with managing international business relationships. To help sidestep those risks credit and sales teams are increasingly turning to new sets of data that reach beyond Australia’s borders.
Business information covering payment risks and credit terms can now be accessed on more than 200 countries. This is supported by critical details on the political, commercial, macro-economic and external factors that are likely to influence trade in the region.
With the IMF forecasting the world’s strongest growth in 2015 will come from emerging and developing nations (4.3% compared to 2.4% in advanced economies), the demand for country risk data covering less known markets has become heightened.
Surpassing the growth in data on country conditions is international company insight, which is helping Australian operations make critical decisions about whether to commence a business relationship with an international entity, and under what terms. International entity data can include factors such as a business’s financial strength and credit risk, its current and likely future payment performance, risks of default and failure, and its associated companies and subsidiaries.
Efficient businesses are integrating this information within their risk management platforms to better automate the decision-making process used for their credit and customer assessments.
The sweet spot for businesses in the current low-dollar environment, however, is overlaying this country and company risk information with sales data to find the right contacts to approach when looking to develop international relationships and build a new customer base.
This information juncture can now be reached with the growing availability of sales insight, including structured and meaningful ‘big data’, which can be plugged into risk management and portfolio management systems to provide a complete, integrated view of international opportunity and risk.
The scale of global sales and marketing data for this purpose is enormous. Dun & Bradstreet’s global sales database alone covers 85 million companies, 100 million people and more than 900 industry segments. This data wave has opened up a world of opportunities for local businesses looking to identify and review new markets, industry segments and potential sales targets.
Until now, the challenge has been how to best filter and make fit-for-use the huge volumes of information. In essence, how to turn the data into meaningful insight that identifies the viable international businesses to target for sales while shining a light on those customers that should be avoided. With tools available to manipulate both unstructured and organised data it has become much easier to find the information required to guide these decisions and segment by company records, global contacts, payment risk scores, industry and competitor insight, family trees, financial charts, and company social media references.
The scope and immediacy of the international data now available is allowing Australian businesses to be more agile in responding to the economic conditions that they face; repositioning their exposure in coordination with factors such as currency swings and shifting their focus from local to global, import to export, and back again as required.
With a stagnant local economy and an easing bias for the value of the Australian dollar, the current position for many is outward, to take advantage of the favourable exchange rate and medium-term growth potential in overseas markets. While there are risks that come with the commercial upside of international business, these are matched by the growing and detailed sets of data that is available to help businesses make their move with confidence.
Darin Milner is Director, Risk Management Solutions for Dun & Bradstreet.