Getting paid With your buyer on the other side of the world, how do you make sure you get paid? International trade creates particular payment challenges for exporters: It usually takes longer to get paid for exports than for sales to Australian customers. You may not be paid in full until after you’ve delivered the products or services. And international transport can be slow—if you’re shipping the goods, there may be weeks between dispatch and delivery. The later you receive payment, the higher the risk of non-payment and the greater the strain on your working capital. This means protecting against non-payment is a key concern for exporters. If you agree to receive payment in a foreign currency, movements in exchange rates can adversely affect the value of your receivables, reducing your profit margin. The main financial issues these challenges raise are: What payment methods are available to me? How can I protect against non-payment? What can I do to manage foreign exchange risk? To find government grants and tax concessions available to you at this stage of the export journey, use the search tool on the right. What payment methods are available to me? A range of payment methods is used in international trade. In each method: payment takes place at a different stage of the transaction there is a different level of non-payment risk for you and non-delivery risk for your buyer. Your buyer will want the longest payment terms they can get, but the later you get paid, the higher your non-payment risk. The payment method you agree with your buyer depends on how much risk you’re prepared to take and how badly you want their business. If you’re keen to gain them as a buyer you may agree to payment terms which are less favourable to you. However, if you know they need your products or services, you may be able to negotiate payment terms which benefit you. The main methods of payment in international trade, from generally most favourable to you as an exporter to least favourable to you, are: prepayment documentary credit documentary collection (sight draft, documents on payment) cash against documents documentary collection (documents against acceptance) open account. How can I protect against non-payment? The ways to reduce your export contract non-payment risk include: Where possible, negotiate payment terms which expose you to a low level of risk—for example, prepayment or payment by documentary credit. Other payment methods are outlined in What payment methods are available to me? If the agreed payment terms in an export contract leave you too exposed, export credit insurance can give you extra protection against non-payment due to certain commercial and political events. Convert some or all of your accounts receivable into cash. Depending on the method you use, you may be able to eliminate the non-payment risk of the receivables. The main alternatives are: invoice discounting export factoring. What can I do to manage foreign exchange risk? If you’ll be paid for your exports in a foreign currency, exchange rate movements can have a real impact on the value of your receivables. Financial tools to help manage your exposure to foreign exchange risk include: forward exchange contract foreign currency option foreign bill negotiation foreign currency account foreign currency loan.