Exporting: Late or Non-payment for Overseas Sales
Chasing payment is a headache for any business, especially when you’re trying to collect overseas debt. Here’s how to minimise the risks
The risk of late or even non-payment can sometimes be greater when doing business internationally.
Ensuring you get paid for overseas sales is a combination of assessing risk, settling on acceptable payment terms and methods and considering insurance to protect yourself against problems.
To minimise the risks of nonpayment, you should research the market conditions in your target country and the credit worthiness of potential customers before you start trading.
There are also currency issues you need to consider. In some countries where there are restrictions on access to foreign currency, your customers may face problems getting currency to pay you. In this case, it’s worth insisting on a (confirmed) irrevocable letter of credit that secures payments according to the terms of the credit and often at an agreed rate.
Businesses which sell on credit to foreign customers can use factoring or invoice discounting to free up cash flow. Export factors specialise in the collection of money from overseas.
The factoring company pays you a percentage of the invoice value up-front and the balance (less their percentage) once they have collected payment.
Export Case Study – ABF Europe
Overseas sales have soared for ABF Europe, the creator of the revolutionary Kite table system.
The North Yorkshire firm first introduced the conference and business table, which can be adapted to accommodate both large and small groups of people, into the international market four years ago when sales took off in the US.
ABF now supplies 17 countries globally and has offices in a number of overseas markets, including Spain and Dubai.
Managing Director Darren Buttle says:
“Our international operation is gathering pace. Our immediate focus is undoubtedly America, but I’m keen to explore opportunities in Canada, Brazil and regions of South East Asia as well. These are all markets that are experiencing rapid growth of their own and countries where we can really play a part in helping companies compete in the international arena through effective use of office space and cohesive work-life strategies It promises to be an exciting journey ahead as we harness the skills and expertise available from trade advisers to support us and show us the way.”