Understanding all the costs associated with exporting helps you make an informed decision on whether your business is ready to start an export project.
The main differences between exporting and operating in Australia include:
- a longer cash flow cycle, which could increase the pressure on cash flow and working capital
- being further away from customers increases the risk of non-payment and makes it more difficult to collect debts
- getting paid in other currencies can expose you to foreign exchange risk, which can impact profit margins
- access to finance can be more difficult, as Australian banks are often reluctant to accept overseas assets as security for loans
- the upfront costs of establishing export operations may take several years to recover, which can reduce the cashflow and working capital available for domestic operations.
Putting together a detailed financial plan, one that you can easily adjust as you collect more data and change your assumptions, can help you determine if your export plan is viable.