Exports and international markets

Export finance and risk

Export finance and risk

If you’re considering expanding into international markets, we can help you work out the best options for your business and understand the risks involved with trading overseas.

Exporting products and services can be challenging and may have a significant effect on your company’s finances and cashflow. The costs involved in setting up and running an export operation and the extended sales cycle can be a big investment at first.

Accessing export finance

If you’re thinking about starting to export, accessing external finance could help you cover the costs of working capital demands, and smooth out the process for completing sales and receiving payment. Securing export finance could also allow you to offer better payment terms to customers, making you more competitive in your target markets.

Find the best finance option for your business

If you’re considering expanding into international markets, we can help you work out the best options for your business. Our Finance Readiness specialists work with Scottish companies to find the right route to funding for them.

Contact a specialist

We have also published a series of guides explaining different funding options and what you can do to become investor-ready.

Read our guide to finance for exports

Research funding options and preparatory steps

Managing financial risk

Expanding into overseas markets can feel like a step into the unknown. Although a great opportunity to grow sales, it can be expensive to get a foothold at first, with control over stock, fluctuating currency and financial market conditions all potential challenges to operations.

Understanding methods of payment

Having the ability to offer and accept different methods of payment can help you to be paid on time, in full and mitigate against non-payment. While business to consumer transactions usually involve payment at the point of sale, business to business sales payments can be more complicated.

Principal payment types

The main payment terms used in international trade are:

  • advance payment – the safest and most secure method for an exporter, receiving payment in full before releasing a product or service
  • letter of credit – a guarantee from your buyer’s bank, promising to pay if the buyer can’t, subject to terms and conditions of sale being met
  • bank collection or documentary collections (D/C) – your bank collects payment from your buyer’s bank on your behalf; used primarily for shipments by sea
  • open account – the least secure method for an exporter, goods or services are shipped, then an invoice issued with terms for payment stipulated (e.g. 30, 60 or 90 days, or upon fulfilment).

The Exporting is Great website explains these options in more detail.

It’s best to talk to your bank about the solution that fits best with your exporting plans.

Open to Export resources

Open to Export provides free information and advice from the Institute of Export & International Trade to help businesses export and expand. Their webinars and articles on payment terms include:

A more detailed guide to letters of credit is available from Trade Finance Global.