Get paid on time

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Will foreign customers pay up?

When selling overseas businesses should be aware of the risks of getting paid late, or not getting paid at all. Businesses should seek to actively manage payment risk, seeking payment methods which mitigate against the risk of non-payment, such as use of Paypal for business to consumer transactions, and credit/debit card for lower value transactions. Credit reference checks and status enquiries should be considered for all export transactions.

What if I want more certainty?

If payment up-front is not suitable for commercial reasons, then Letters of Credit can be considered. This is a guarantee from the buyer’s bank that you will be paid a specified amount of money within a specified term, PROVIDING you as the exporter present documents on time and in order. There is less risk of a bank defaulting on such a promise.

Can’t I just ask for letters of credit on all overseas sales?

This may not be possible for all your customers. There are also bank charges to pay, raising the cost of buying from you. Anyway, if a buyer has a good credit record, you may feel less vulnerable.

Are there any other options?

Export Credit Insurance can be considered, providing cover against late payment or delayed payment. In the event of credit insurance not being available from the private market UK Export Finance, a Government agency, may consider cover.

I still feel worried.

Prudent exporters will seek to manage payment risk effectively in order to reduce the risk of non-payment or late payment. Keep clear records, set your trading terms carefully and provide secure payment options. 

 

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