Access to finance can be a powerful tool in winning export business.
When there’s intense competition for international contracts, you need to be sure that you can fulfil your buyer’s tender requirements or can gain a competitive advantage with favourable payment terms or by helping your buyer arrange finance.
Whether you’re negotiating a deal with a potential buyer or submitting a tender, here are the key financial issues you’ll face:
How can I give my buyer competitive payment terms?
How can I help my customer arrange finance to buy from me?
How do I provide a contract bond to my buyer?
To find government grants and tax concessions available to you at this stage of the export journey, use the search tool on the right.
How can I give my buyer competitive payment terms?
When competing to win contracts, the payment terms you offer an overseas buyer can make or break the deal. Many buyers will expect to pay you only after you’ve made delivery. If competitors are offering generous payment terms, you may need to match those terms to make your offer attractive.
'Getting paid' explains the payment methods frequently used in international trade. In each, payment occurs at a different point in the export transaction. Generally, the later the payment date, the greater your risk of non-payment. Open account and documentary collection (documents against acceptance) are the payment methods generally most favourable to the buyer.
How can I help my customer arrange finance to buy from me?
If you’re involved in a long-term export contract, such as the sale of capital equipment or goods or services for a large overseas project, your overseas buyer may often be unable or unwilling to pay for their entire export order at one time.
If so, you may gain a competitive edge by helping your buyer arrange finance, enabling them to purchase your goods or services over an extended period. Some tenders will require you to include an option for a buyer finance arrangement.
Two arrangements which help your buyer purchase your export goods are:
- buyer finance—a loan to your buyer from a bank or other financial institution.
- finance lease—you sell your equipment to a leasing company, which leases it to your buyer.
How do I provide a contract bond to my buyer?
Your buyer may want assurance that you can deliver products and services on time and to the required standard. Contract bonds (also called guarantees) are often requirements of tenders and conditions of export contracts. They protect your buyer from loss if you don’t enter into a contract after winning a bid or tender or don’t comply with your obligations under the contract.
Being able to provide contract bonds to potential buyers means you can compete effectively for export contracts.
Contract bonds often required by buyers are:
