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In honor of World Trade Month, we are partnering with the United States Department of Commerce to help your small business learn the ins and outs of exporting. Through a series of “how to” videos and tips, you’ll learn how your company can break out into new markets through the power of international trade. Check back every Tuesday in May for the latest installment.
Trade Tips Step 4: Establish the Best Payment Method for Your Company
Once you have identified and captured foreign buyers, it is now time to establish the best payment method for your company. When deciding on an exporting payment method or export financing, it is important to pick a financing option that meets your business’s needs and satisfies your buyer. There are many international payment options out there, and some may be better suited for your U.S. business than others, so it is important to do your research. Read these tips to get insight on all the options that are out there to get paid and finance your export transactions:
Every business wants to receive their payments in full and on time, but there are sometimes additional challenges for U.S. exporters dealing with customers thousands of miles away. Some U.S. exporters use a payment method that is an agreement between your bank and your buyer’s bank called a letter of credit. You may also consider offering your customers an open account as this allows them to pay over time. Make sure to specify payment terms on the commercial invoice, and note the currency you will be paid in. If you do your due diligence, export transactions can be easily cleared, so you can open the door to a whole world of new customers:
If you decide to pursue export sales, then it is important to keep in mind how you are going to finance your international trade expansion. Costs you may need to consider are: increasing materials, product modifications, international travel, and marketing costs. Fortunately, there are U.S. government export financing programs available to help with exporting. These programs can help you purchase equipment, expand facilities, support your participation in foreign trade shows, and translate marketing materials. To find out more about financing export transactions, as well as any other trade financing services, watch this video:
Click here to learn more about how to become export-ready and to discover what other resources the Department of Commerce and Export.Gov has to offer, and check back for next week’s tips on how to get paid and finance your export transactions.