Trading overseas can be a minefield of currency fluctuations, legal complications and communication problems. This can lead to a breakdown in relationships with suppliers and distributors - and worse still, leave you out of pocked. You need to pay special attention to your overseas transactions if you want to stay ahead. This guide will help with:
1) Payment terms
Because UK law won't apply in many of your overseas transactions, it is important to limit your risks as much as possible to ensure you get paid. There are four main ways you can arrange payment: in advance, with a letter of credit, with a 'bill of exchange' once the goods are in the customer's hands, and by invoicing. To decide how to arrange payment, you should balance your risks against your customer's requirements and expectations.
2) Managing currency
Fluctuations in Sterling will affect how much you can afford to buy and sell when you draw up a contract with your overseas suppliers or distributors, as well as when you make or receive a payment. To make this more secure, speak to your bank or alternative currency provider about pre-booking or pre-purchasing currency at preferable rates.
Insurance against non-payment by overseas customers will prevent a delayed or lost payment from having serious consequences. Make sure you factor cost of insurance into any pricing discussions because it could raise the cost of the goods for the buyer, and then decide whether you want to opt for commercially available insurance, or government-supported insurance.
To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website Builder, Business Plans, Accounting Software, Legal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.