Home About Contact  
Export Assistance
Guides to Exporting
Finding Export Finance
Export Consultants
Export Documentation
Register as an exporter
Proforma Invoice
Commercial Invoice
Letters of credit
Packing Lists
Exchange Control Forms
Insurance Forms
Customs Documents
Document Completion Guide
Export Training
Training providers
Training calendar
Export Guide
Export Marketing
What is involved in export Marketing?
Export Marketing Channels
Using Export Agents
Finding Export Agents
The Role of Trade Fairs
Preparing to participate in a Trade Fair
Finding Trade Fairs
Inward Bound Missions
Outward Bound Missions
The Internet and Exporting
Website internationalisation
Export portals
Overseas Trade Missions
Embassies and Consulates
Financial Assistance for Export Marketing
ETO Systems
Dealing with Export Environments
Trade Agreements
Export Tools
Export Readiness Checker
Export Checklists
Export Business Planner
Export SWOT Analyser
Country Risk Evaluator
Product map
Translation Resources
Currency Converter
Export Documentation
Document Completion Guide
SA and Foreign Tariff Databases
Export Software & Technology solutions
Tracking tools
Exporting & the internet
Export e-Newsletter
Export Law
Laws affecting Exports
Maritime Insurance
Exchange Control
SA Export Regulations
Trade/Maritime Lawyers
ITC Services

You are here:Step 9: Obtaining finances/resources for your exports > Payment terms and export financing



Payment terms and export financing


Payment terms as a means of financing your exports

Your financing requirements begin at the time you decide to enter the export market, but the serious financing requirements start once you get the order. The contract that you negotiate with the importer dictates:

  • How you will be paid
  • When you will be paid
  • For what you will be paid

These are referred to as your 'payment terms'. All of these factors impact on your post-contract financing requirements. Take, for example, if you agree to be paid in 90 days. This will mean that you will not see any money from the buyer for 90 days (and more, bearing in mind the time it takes for the money to reach you). The 'how' also affects your financing requirements. As we said before, 'cash in advance' is good, while a 'revocable, unconfirmed LC' is not so good - this affects your risk of payment and your chances of getting finance from someone such as a bank. Also, what you agree to be paid for affects the financing you require. If you have agreed to provide spare parts as part of this agreement, then it may increase your income, but it also affects the financing you will require. The lesson to be learnt here, is not always to negotiate the biggest contract up front. A smaller contract reduces your risk, financing requirements and may place less demand on your firm and by succeeding with the smaller order, impress the buyer enough to purchase from you again.

Negotiating payment terms

It is highly likely as you become increasingly involved in exporting, that a point will come where you have to negotiate an export sale. During these negotiations, the importer is most likely going to ask you what payment terms you offer. A payment term refers to the way payment will be made as well as the period over which you will allow the importer to pay for the goods (if you offer a period after which the importer can pay, you are in effect extending credit to the importer and instead of using the phrase "payment term", you could instead refer to a "credit term").

Such payment/credit terms are important in international trade as they can be used to competitive tool to attract business for your firm, but they can also be used by the importer against you!

You are a risk to the importer

You may think that this is very unfair, but you should also realise that the importer is taking quite a risk buying from you. If your goods are not up to standard and the importer has already paid you, they will have lost out. Once you have received your money, it is very difficult for the importer to exert any influence over you. You may argue that you are a reputable company and that you would never renege on a contract or that you will always provide after-sales service, but the importer may not be willing to take a chance with a company that they do not know and that is also very far away.

If the importer is in a stronger position (i.e. the sale is more important to you than to them), then you may be obliged to offer payment terms. What is more, if payment terms are being offered by your competitor or if payment terms are normal in the industry or country that you are competing in, then may again be obliged to offer such terms.

Know the market before negotiating payment terms

It is important, therefore, before you begin negotiating with the importer, to know exactly what circumstances prevail in the industry or country that you are competing in. Payment terms ranging from 30 to 90 days are quite common in export markets (capital goods tend to attract even longer payment terms, compared with consumer goods). Be very careful when extending longer payment terms, as longer credit periods may increase the risk of default. You should also take note of the fact that most payment terms start only once the goods have been received by the importer. You may therefore have to take into consideration as an additional time period, the amount of time it takes you to produce and ship the goods to the customer.

Always undertake a credit check on the importer

Also you need to be aware of your own importance that you attach to this sale. It would also be worthwhile having undertaken a credit check on the company you plan to do business with. With this knowledge you will be in a better position to decide whether to offer credit or not.

Bear the cost of financing and method of payment in mind

You should also have determined what financing options are available to you and how you intend to receive payment. The cost of financing and the method of payment will impact upon the payment terms you can offer. You should also bear in mind that once credit terms have been extended to an importer, they tend to set a precedent for future sales, so you should review with special care any credit terms extended to first-time buyers.

Top of page


Step 9: more information

Step 9: Obtaining finances/resources for your exports
      .Bank financing
      .Payment methods as a means of financing
      .dti export incentives
      .Pricing as a means of financing
      .Export receivables
      .Foreign currency loans
      .Alternative sources of financing

Click where you want to go

© Interactive Reality

More information on Step 9
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
Export Reference
HS Codes
SIC Codes
Country Codes
Airline Codes
Airport Codes
Port Codes
Telephone Codes
Industry specific export control
Electricity Voltages
Transportation Types
Container Types
Hazardous Cargo Symbols
International Trade Agreements
Country Info
Export Documentation
Trading cycle
Export Articles
Export Glossary
Export Acronyms
Export Opportunities
Export portals
Export calendar
Inward Bound Missions
Outward Bound Missions
Trade Fairs SA
International Trade Fairs
Country Info
Country Help
SA Missions Abroad
Missions in SA
SA Representatives
Bilateral Chambers
Export Network
SA Economic Representatives
SA Missions Abroad
Missions in SA
Export Councils
Export Consultants
Export Trainers
Export Agents
Customs Clearing Agents
Trading Companies
Export Financiers
Bilateral Chambers
Government Departments
Trade Associations
Freight Forwarders
Airline Companies
Shipping Lines
Road Haulers
Courier companies
Trade/Maritime Lawyers
World Trade Point Federation
South African Translators
Universities with international Expertise
International Trade Statistics
Import and Export Statistics
Main Trading Partners
Main Export Products
Economic Statistics
SA Statistics
SA Reserve Bank
Data Mapper®
UNCTAD Statistics


     Our sister sites:

Indexing the World


Trade Training





     Other useful links:

Freight & Logistics Gateway

Freight quotes