Financial data is available for large corporations and larger mid-size companies. It can be difficult to get hold of financial data for smaller companies particularly partnerships and sole proprietorships.
Traditionally, Indian business houses show only marginal profits, to avoid taxation. The real profitability of Indian companies is often far higher than that revealed in the balance sheet. Understanding the private wealth and standing of company owners and managers can be important when assessing credit risk in India.
Crédito y Caución uses a variety of sources to check companies standing, including information suppliers, the internet and local partners. We may also ask a companys customers to assist us where we draw a blank, as supportive trading experience can be useful.
Insolvencies are uncommon. Winding up a company by petition can take a very long time, so is very much a last resort for recovery of debt.
Open account trade is the norm 60/90 day terms are prevalent for export transactions into India.
Letters of Credit are rare except for large value contracts with state or state-owned entities. If they are used, great care should be taken in presenting the documents in exactly the correct form as otherwise the buyer may exploit any discrepancy by delaying payment.
Retention of Title is not common in India and, even if specifically stipulated on the invoice, is legally very difficult to enforce.
Post dated cheques are common in domestic trade transactions. The Indian law takes cheque fraud seriously - it can lead to criminal action. This tool is most effective if the cheque is signed by the company proprietor.
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