Winning an export contract is one thing—financing it is another.
When financing export contracts, you need to consider that you may need substantial funds upfront to pay for market entry, production and delivery costs.
Payment for export contracts is typically after delivery, and given the time taken for international delivery, the period between starting work and getting paid could be much longer than the arrangements you have with your Australian customers.
This can create a gap in your cash flow and put pressure on your working capital, both for your export operations and the day-to-day operation of your domestic business.
As part of starting negotiations or preparing a tender for an export contract, you should look to:
- Consider your financing needs by looking at all the costs associated with your export business
- Consider your funding options to ensure that you aren’t forced into an arrangement that’s not suitable for your business
- Manage your cash flow effectively so that you can fulfil the contract without hurting your existing domestic business.