If you’re in the business of exporting, you’ll know that having access to finance is critical – but managing cashflow can sometimes be a challenge.
You might be scaling up your business or growing your international footprint. This means you’ll need to balance working capital expenses with ongoing costs. Add shipping and payment timeframes to the equation and you may need to rely on external finance to keep you moving forward.
The key to exporting successfully is to understand and manage your risks. That way, you’ll be able to make the most of the opportunities and be on the way to becoming cashflow positive.
If you’ve successfully navigated the below steps, your business could be ready to take on the world. Call Export Finance Australia on 1800 093 724 to see how we could help.
1. Prepare your business
Before making any commitments, test your export readiness by mapping out financial processes.
Consider every possible aspect of a transaction – from receipts and records, through to customer payment terms and GST rebates. Create a cashflow forecast, build your business’ creditworthiness and establish strong financial systems for your export business.
The more you plan, the more likely your business will achieve export success. Our free ‘Five ways to manage your export cashflow’ eBook can guide you through this process – read it here.
2. Manage export cashflow
You’ve secured a new contract – congratulations!
Be sure to identify and resolve any risks that may impact your finances before commencing a contract. Having open and honest conversations early on with your customer about contract requirements, deliveries and payment terms will help manage expectations on both ends – and prevent payment delays.
Consider a loan from Export Finance Australia to help bridge the cashflow gap between paying your suppliers and receiving payment. Find out more here.
3. Understand the risks
When it comes to dollars, it makes sense to have a good handle on possible currency, country and transfer risks. Ultimately, non-payment is the biggest risk an exporter can face. This can be mitigated by larger deposits, payment before shipment, letters of credit or trade credit insurance.
However, other risks can include:
- Foreign currency risks
- Change of overseas government policy, which could impact your ability to do business
- Disruption by shipping or delivery schedules
- Operating in a new country with laws you aren’t familiar with
If you’re unsure about any of these get in touch with Austrade or your local chamber of commerce.
4. Control the payment process
Set yourself up for success by having a strong payment system in place. Stay in control by:
- Establishing a good customer relationship from the beginning
- Locking in terms
- Agreeing on methods
- Considering an Export Finance Australia loan to cover any cashflow gaps – see more information here
5. Plan business growth
With your export business up and running, you might be considering a larger share of the export pie. You may want to look at:
- Planning for future growth – expanding capacity to cater for new business
- Talking to your advisor or accountant – to make an informed assessment about your export growth readiness
- Get in touch with Export Finance Australia to see how our range of financial options could help you take on your next export opportunity
Download our free Five ways to manage your export cashflow eBook for more information