8th Year Issue 48/2005
How to Manage Foreign Buyers with Confidence
 Power of Diamond
 
       Gem and jewelry exports are a major contributor to national economic development, earning substantial amounts of foreign exchange for the benefit of the country. Export value continues to expand and the industry is destined to become a high potential industry in the future.
       Thai gem and jewelry manufacturers have proven to be sufficiently capable in production management and product development, enhancing products with value added adornment. The industry also possesses a competitive edge in its labor skills. Export products are high in quality and product design variety, offering good incentive value to buyers around the world. As these products are of very high value, personal relationships were of serious importance in the past. Exporters could request advanced payments, or even high down payments and thus avoid commercial risk. Now, however, the scenario has changed. The market has become highly competitive and more players are now in the game. Volume buyers can no longer obtain advance payments or high down payments. Importers need more cash flow to expand their business and therefore need suitable credit terms. Other than being manufacturers, Thai gem and jewelry exporters also double as financiers to their customers. Buyers do not have to pay cash and during the credit period, can employ their own cash to expand, or invest in other businesses. This creates a greater risk for exporters. If customers misuse their funds, or fail to sell all the goods on time, default payments may occur.
       Due to payments not received when due, exporters may be forced to extend credit terms, or even receive returns of goods. Exporters therefore face various problems on cash flow and increased expenditure.

       Furthermore, trading methods have advanced rapidly as a result of consumer behavior, especially in trading partner countries such as the United States , England , Germany and Japan . More and more consumers will buy through nontraditional channels such as the Internet, mail order, or television shopping. These channels force buyers, who are importers, to employ the same sales channels. Sellers can also sell direct to consumers through the same channels. Thus sales on consignment, or on memo, arise. By this, buyers will receive the goods first, sell them and then pay for the goods on agreed terms, say, monthly or quarterly. If all the goods cannot be sold, or when the sale season is over, the remaining goods will be returned to the exporters and a new shipment follows. This trading practice demands high reciprocal trust between exporters and importers.

       Risk management in credit sales, or buyer management, is being accorded increased importance. To generate business stability, credit sales should start early from the initial sales talk and definitely not after credits have been granted. The more you know about the buyer the better for your trading confidence. This buyer management does not preclude old customers; exporters should know all customers. It is not sufficient just to know their names, businesses, addresses, sizes of businesses and branches - to know them and do business on credit, the following principles should be followed :

1. Type of formal registration: limited company, partnership, or sole proprietorship. This is an important criterion as it is governed by law. Each country has its own laws, which may also provide advantages to buyers.

2. The real owner: business can be transacted through representatives or employees of the buyer. For present and future business, it is an advantage to know the real owner personally.

3. Financial standing: exporters should check regularly the financial standing of their customers by asking for financial statements for analysis. A guarantee letter from a bank provides good assurance.

4. Side information: inquiries from old trading partners to check buyers' payment history, or from banks to check their statements, or from other exporters in the countries of buyers to learn their habit of payment and their personal characters. Other sources of information on Buyers are also useful In the analysis of customers.

5. Business environment which may affect buyers' businesses: local economic conditions, the market and competition.

       After knowing the buyers well, then comes trading, or credit term consideration, specifying credit limits, terms and conditions, tailored to each and individual buyers. To extend and control credit, exporters should organize a work unit consisting of company director, finance and marketing managers.
       For credit sales, exporters will have a receivable account in the accounting system to effectively control customers' credit. This is good for exporters, bankers and investors. For efficiency, receivables must be controlled within credit limits based on each buyers' credit worthiness. Regular credit control must be maintained. All business communications and agreements should be in writing. A credit collection and follow up system should be set up to ensure on time payment. Late payment calls for a stoppage of further deliveries, to limit any risk. Regular late payments indicate liquidity problems, or failure to meet sales targets.
  

       Collection follow ups on buyers are important in receiving payments. Statistics from the Commercial Law League of America reveal that credit follow ups within credit terms enabled nearly full collection, but follow ups after due dates, showed collections dropped with the lengthened period.
       It is advisable that exporters establish a system, or process to collect receivables from buyers as follows:
DETAILED PROCESS
PERIOD
1. Contact customers to confirm payment. Before due date.
2. Contact customers for payment. 7 days after due date.
3. Written notice for payment. 15-30 days after due date.
4. Second written notice for payment. 30-45 days after due date.
5. Contact Collection Company, or lawyer. 60 days after due date.

       It is very beneficial to exporters to set up a system, or process of credit collection. It enables on-time collection and is good legal evidence, if buyers default on payments.
       Other than managing buyers, exporters can pass on the risks to those who provide collection services such as factoring, or factoring without recourse, in which factoring service providers assume the whole risk by buying receivables outright. Exporters can also have recourse to export credit insurance in which exporters are insured against default payments arising from commercial, or political risks. Service providers will collect payments from buyers themselves.
       In summary, presently, receivables, or buyer management is important and necessary. It enables business to expand solidly.

Exporters should therefore:
      1. Set credit limits and terms of payment for each customer,
      2. Expand trading to cover a property broad range of customers. both in terms of countries and number of customers. A customer should not exceed 10%, or a country should not exceed 50% of the total sales of the company, depending on the company's policy.
      3. review credit limits and terms regularly at least once a year,
      4. establish a system, or process for credit analysis, credit limits and terms of payment, and also a collection process,
      5. Always remember that granting credit to customers is lending money to buyers, and the money must be repaid in the future.
       Diamond was originated underneath the earth surface thousand years ago. It can be said that diamond was created at the same time the earth was formed. Composed of one of the most commonly found chemical compound on earth-solid carbon-diamond is forced to move upward to the earth surface by volcanic eruption. The fact that a chemical compound available everywhere is a source of valuable, hard-to-find gems like diamond makes it mysterious, worth searching for and valuable.

       Diamond is like a symbol of purity, beauty and durability. But nowadays diamond is not just a charming or shinning jewelry anymore. Many gemological therapists and New Age diamond designers believe in the healing and energy-driving qualifications of diamond. This is a very popular trend among Hollywood movie stars like Gwyneth Paltrow, a young mother and a keen Yoka practitioner who likes her back treated with Chinese hot Cupping Mark everyday. Ancient Chinese believed that this cupping mark helped improve blood circulation. Another Hollywood celebrity Jennifer Garner likes to wear white gold necklace with oval shape diamond pendant. She said that it would
enrich imagination and creativity of ancient philosophers and Indian warriors. As for Courtney Cox, white gold necklace with round shape diamond pendant would bring good things, prosperity and hope to the person wearing it.
       Diamond has long been linked to miraculous power and might since ancient days. It was used as an amulet for warriors going to war to keep them from dangers. Diamond also has a healing power, both physically and mentally. It helps extract poison from our body. It enhances the imagination and creative thinking of the wearer as well as helps in maintaining balance in Metabolism and improving eye vision.
  
 
      Diamonds that enhance the wearer's power are classified into 5 categories as follows :

              Clear Diamond helps boosting pure and long-lasting love.
              Black Diamond helps building sincerity and self-esteem.
              Blue Diamond helps maintaining health.
              Pink Diamond helps enriching creativity thinking.
              Yellow Diamond helps maintaining circumspect thinking.

With all qualifications aforementioned, diamond for therapy should be advised for those who care for health, beauty and serenity. Anyhow, with its value and immortal beauty, diamond will remain the first choice for women all over the world.