Question : I have recently begun exporting and have had a bad experience of getting paid. What steps can I take to protect my business?
Invest NI trade director Vicky Kell says:
Ensuring you get paid for overseas sales is a combination of assessing risk, settling on acceptable payment terms and methods and considering insurance to protect yourself.
First get an overview of the country you are trading with, looking at political and economic stability, and then find out how credit-worthy your potential customers are by running credit checks.
It's important to agree payment terms with new customers before providing goods. Based on what you know about your new customers you may decide to ask for payment in advance. If this is unacceptable to the customer, you can minimise your risk by using letters of credit. This is one of the safest ways to get paid by overseas customers. Your customer arranges a letter of credit with their bank, which pays a bank in the UK once you complete the necessary paperwork. You will incur a small bank commission charge using this method. It's advisable to work closely with your bank to ensure you minimise risk and select the right payment option.
Once you have established a relationship with the customer you may want to move to open credit, the same system you would use with a UK customer.
If you have had problems with getting paid in the past you should consider getting insurance against non-payment by overseas customers.
Invest Northern Ireland's international trade advisors can advise on all aspects of selling overseas. There is detailed information on the nibusinessinfo.co.uk website.