Getting Paid in Global Markets

Getting paid in full and on time is the goal of every sale. With 95 percent of the world’s consumers living outside of the United States, exporting can help U.S. businesses expand their sales, diversify their portfolios, and provide insulation against periods of slower domestic growth. 

However, the opportunities provided by global markets also carry potential payment challenges when dealing with foreign customers. Whether engaged in domestic or international sales, businesses must find a balance between mitigating non-payment risk and offering attractive payment terms to remain competitive in the marketplace. Fortunately, there is a range of resources available to assist U.S. exporters in developing a strategy for getting paid in global markets. 

Balancing Risk and Competitiveness 

To succeed in global markets and win sales against competitors, exporters must offer customers attractive sales terms supported by the appropriate payment methods. However, international trade also presents a spectrum of risks, which leads to uncertainty over the timing of payments from your foreign buyer. 

It is safest to be paid before the goods are shipped or services are delivered, as with cash-in-advance payment terms. While this eliminates non-payment risk, it could mean losing potential export sales to competitors offering more attractive sales terms. On the other hand, your international customers are likely to prefer to make payment once the goods or services are delivered. 

Some may even prefer deals with open account payment terms specifying payment due dates after the goods have been delivered. Remember, an export sale is a gift until proper payment is received! 

Developing Your Strategy for Getting Paid 

Exporters should carefully consider which payment methods are appropriate for you and the foreign buyer. It is important to remember that in international trade, it is far easier to proactively prevent problems involving non-payment than to rectify them after they have occurred. Due diligence is crucial to limiting non-payment risk.

Additionally, U.S. exporters should consider obtaining export credit insurance through a private insurer or the Export-Import Bank of the United States (EXIM) to protect against non-payment risk. An often-underutilized tool, export credit insurance can give exporters the confidence to offer more attractive and competitive open account terms to foreign buyers.

The U.S. Commercial Service Pittsburgh office is well positioned to help inform your strategy for getting paid in global markets and connect you with the trade finance resources offered by federal agencies such as the U.S. Small Business Administration (SBA)  and EXIM Bank that fill gaps in trade financing by assuming country and credit risks that the private sector is unable or unwilling to accept. Some of these resources include working capital loan programs, export-oriented loans, export credit insurance, and foreign buyer financing. 

The U.S. Commercial Service offers a wealth of trade finance information on our www.trade.gov website. To learn more about how to develop your strategy for getting paid in global markets, contact the International Trade Specialists at the U.S. Commercial Service Pittsburgh office.

LeeAnne Haworth is a Senior International Trade Specialist with the U.S. Commercial Service Pittsburgh Office and can be reached at LeeAnne.Haworth@trade.gov or (412) 644-2816.