How do I make sure I get paid in overseas markets?


Operating in international markets can throw up a range of payment challenges. The payment terms that you offer an overseas buyer can make a real difference to securing a contract, however you also need to make sure you protect yourself to ensure you get paid.

There are some common payment options to consider:

you receive some or all of the payment amount upfront

Documentary collection
which involves you shipping your goods or services but retaining control of them until you receive payment or a legal undertaking of future payment from your overseas buyer

Open account
(or open credit) which gives your buyer certain credit terms by delivering your goods or services with an invoice requesting payment on a specific date after delivery.

Your bank will be able to provide more comprehensive advice about choosing the right payment option for you.

"[We look] at every single customer to see if we can get payment up front, or we look at letters of credit. We don’t really give an option of an open account – Dirk Pretorius, Frosty Boy Australia."

There are some risks to be aware of:

  • Many overseas buyers will expect to pay you only after they’ve received delivery of your goods, which increases the risk of non-payment. Be cautious of entering into such an arrangement.
  • Until you have an established relationship with your overseas buyers or have a proven track record in exporting, you may not be able to negotiate your preferred payment methods. Your accountant or banker can help you weigh up the risks.
  • The risk of adverse movements in exchange rates is something that is faced by everyone doing business in international markets. Not managed correctly, foreign exchange risk can have a real impact on the bottom line of an export business.There are a range of products that can help manage this risk – speak to your bank or your foreign exchange provider to understand your options.