September 21, 2018

Doing Business Abroad

Expanding to do business abroad is a great way a small business in the UK can continue to grow and improve the struggling UK economy. As online trading has revolutionised the way we do business nowadays, it’s no surprise that many small businesses in the UK take the form of online companies. This immediately opens up the potential for doing business abroad without actually venturing abroad. But there can often be one major problem.

Getting paid

Timely payment is essential for your business, with the risks of late or non payment often greater when doing business internationally. Making sure 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 against problems.

What kind of insurance can I put in place to make sure I get paid?

Insurance for small business can include insurance against non-payment by overseas customers. Often when exporting goods, delayed or lost payments can restrict your cash flow and end up having serious consequences. In other words it may not be worthwhile selling abroad, unless you have the right insurance.

What payment procedures should I put in place when selling products abroad?

There are various different options of payment you can put in place when selling products abroad, they are as follows:

  • Payment in advance – payment must be received before the goods will be dispatched
  • Documentary credits / letters of credit – a letter of credit will be arranged by the customer with a foreign bank which then pays the money into the UK once you have completed the paperwork and the goods are received – this is one of the safest ways of ensuring you get paid
  • Documentary collection – payment becomes due when the customer has received and accepts ownership of the goods
  • Open account – the goods will be sent and you will invoice the customer stating when you expect to be paid

You must decide on which is the most appropriate solution for your business, depending on the nature of the goods, the country you are selling to etc.

This will need to be factored into the cost of your pricing. Make sure you have this in place and increase your price accordingly. To decide on the best insurance for your small business it is imperative to contact an experienced insurance advisor. If you get it right, the option of selling abroad could become very lucrative.

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