Insure to ensure you get paid for export sales
Make sure you get paid – manage your international payments
It is such a challenge to identify potential export customers and win the business that companies sometimes overlook the basics of credit management, i.e. making sure you get paid.
Identifying an overseas customer can be a challenge, and from a legal perspective you need to be sure that you have identified the correct principal to contract and that the paperwork is correct. This includes ensuring they accept your terms and conditions and receiving written orders which are formally acknowledged.
Set a credit limit
The next step is to set a credit limit, and credit reference agencies can be helpful in this respect, although their information can sometimes be less complete and reliable in overseas markets. Export orders are often larger than local deliveries due to economies of scale, and outstanding balances will often be higher as delivery times lengthen. There is less opportunity for formal or informal trade credit references which may be available in the home market to help you make an informed decision on credit terms.
Prepare for the worst
Finally, prepare for action you may need to take if the customer does not pay to terms. It can be much harder to pursue international payments in a foreign language and where you are not familiar with the legal process.
Credit insurers can help in all these areas, and we have worked with the Chamber of Commerce to lower the barriers to entry so that all this support is available to companies with relatively small current or future export sales. It will also mean, of course, that if you have an insured credit limit on your export customers you will receive up to 90% of your outstanding balance in the event that your customer becomes insolvent or disappears.
Trade credit insurance is now more cost effective and easier to administer than you may think, but if you choose to take your own risk give yourself the best chance of getting paid!
For further information read Open to Export’s overview of trade credit insurance and advice article for managing your local representatives.