Keep the cash flowing when you trade overseas

Take extra care with your cash flow when you buy and sell overseas. “The difference with trading internationally is that time lags are exaggerated – sometimes by months – and you may be trading on different terms to those you are used to at home,” says Teresa Baffa, an International and Trade Manager at Barclays. Here’s what you can do.

Put together a cash flow forecast (it’s easier than you think!)

If you’ve never worked on a cash flow forecast, now’s the time to learn the basics. See our story on the benefits of cash flow forecasting for domestic businesses – the rationale for calculating a cash flow applies whether you’re selling to Tyne and Wear or Timbuktu.

Add in the international factors

The speed with which you get paid will depend on:

  • Your sector: What are the usual terms for your sector in the country you want to trade with?
  • Your suppliers: What are the terms you can agree with international suppliers (they may be different to domestic terms)?
  • Logistics: How long will it take for your product to arrive at its destination ?

Not sure of the answers? Teresa Baffa has some advice: “Talk to others in your sector who have experience of importing and exporting to build your knowledge. Your accountant, freight forwarders, trade associations and your Barclays Business Manager can all help too.”

Keep the cash flowing

To ensure you get paid in the shortest time possible, make sure you:

Check credit: Ensure you are dealing with suppliers and buyers who are financially healthy by running international business reports, providing you with accurate information to help control your international risk exposure.

  • Agree payment terms: Make sure all your contracts include detailed payment terms and specified payment dates.
  • Spread the risk: As your export business grows you can spread the risk of non-payment by selling to several buyers.

Make the figures add up

If your cash flow forecast reveals that money will be tight, why not try to:

  • Haggle: “Negotiating hard for favourable terms is even more important with foreign suppliers and buyers than domestic ones, as the time frames and distances are greater than you are used to,” advises Teresa Baffa. “Don’t roll over and accept opening gambits or take whatever you’re offered. Be prepared to walk away and keep pushing for better terms – view every negotiation in terms of how it will help your cash flow. Renegotiate better terms every few months as you establish yourself in foreign markets.”
  • Use finance: The products that can bridge funding gaps when you trade overseas are known as ‘trade finance’. If your business needs this sort of help, an accurate cash flow forecast can help your application. For more help and guidance on ‘trade finance’ talk to a Barclays Business Manager

Barclays can help you export successfully

Barclays Business Abroad is a package of discounts and banking tools that can give you a great start in the world of international trade. The package includes all the following:

  • Introduction to international trading workshop – an immersive workshop that’ll equip you with the knowledge and capabilities you need to better deal with the pressures of international trade
  • Free currency accounts
  • 25% discount on all outgoing and incoming international payments
  • 25% discount on export document preparation – helps you to ensure your products have the correct documentation they need to successfully reach their destination
  • 40% discount on international business reports – helps you control your business’ exposure to international risk by giving you accurate information on new overseas customers and suppliers
  • Free exchange rate iAlert – keeping you up to date with any rate fluctuations that could affect your trading

Topics: Credit Facilities, Export Planning, Finance, Getting Started, Payments, and Transport & Logistics
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