There are many reasons your customer in an overseas market might not pay: politics, an economic shift, their banking relationships or the business culture in their market; the list goes on. One of the most important tasks for anyone working in international sales is to keep track of these factors. So information is a key tool for growing sales, an enabler for the best decisions.
A key step in building business outside your home territory is to define terms of payment for international trade that you are willing to offer. Requesting cash in advance is the safest mode of payment for international trade and good practice where the risks of non-payment are high. However, many customers cannot afford to pay in advance so these terms will limit the number of orders you receive.
To maximise the potential sales volume you may want to trade on open account terms. If so, the risks need to be recognised and backed by checks on the credit worthiness of each and every customer. Between the two extremes of payment in advance and open account, fall the options of documentary collection (where your bank collects the payment for you) and letters of credit, a very useful half-way house that can also be time consuming to manage.
Whichever method you choose, attention to detail becomes more important every year. Make rigorous checks on the importer, their banking arrangements and any partners, accessing the best information. Remember that whenever you are producing letters of credit, customs and excise documentation or other official documents, it is essential to get the facts right and provide complete responses.
The key factors for success in foreign trade are the same as in many areas of business: a clearly defined process, well-trained employees and regular monitoring. Working with us will give you access to data and services that have been designed to support and integrate with your processes and systems. Our aim is to make sure that whatever your terms of payment for international trade, they can be applied successfully.
Our trade credit insurance is much more than a policy: our customers have access to a suite of tools which support foreign trade, with the added benefit of a collection service that operates worldwide. Find out more here about trade credit insurance and look at our powerful information tools, EOLIS, SmartView and SmartLink to explore how to have peace of mind when trading in international markets.