When competing to win export contracts, the payment terms that you offer an overseas buyer can really make a difference.
If your competitors are offering generous payment terms, you may need to at least match those terms to ensure your offer remains attractive.
Many overseas buyers will expect to pay you only after they’ve received delivery of your goods, which increases the risk of non-payment.
The two payment methods that are generally most favourable to your buyer, while still providing some protection to you are:
- 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.
- Documentary collection (or documentary credit or letter of credit) 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.
Your bank can provide you with more information about these payment methods.