All businesses want to get paid in full and on time.
For Indian exporter’s, there may be additional challenges. When dealing with foreign customers thousands of miles away many businesses just starting out and exporting expect to be paid in full in advance. This may involve accepting credit cards or requesting cash in advance where payment is wired directly to your bank account. You will have zero risk of non-payment if you do business this way but you will risk losing business to competitors willing to offer buyers more attractive payment options.
Some Indian exporter’s use a payment method called letter of credit. This is an agreement between your bank and your buyers bank that specifies the terms of the export transaction and triggers payment based on receipt of documents or on a specific date because discrepancies which may delay or cause non-payment are easily created and letters of credit documents should be prepared by trained professionals or outsourced.
You may also consider offering your customers and open account for established customers. This allows them to pay overtime 30 days, 60 days or even longer. This has greater risk of non-payment. So you only offer these terms to a buyer you know well. Make sure to specify payment terms on the commercial invoice and also note the currency you will be paid in.
Foreign buyers generally prefer to trade in their local currencies.
Finally, you should consider export credit insurance which protects you if your buyer doesn’t pay. This type of insurance is available through credit insurance brokers who can advise you on options from private insurers or from the Indian government export-import bank. For more information about selling and foreign markets check out India’s various departments trade finance guide.
Executing international financial transactions can present hurdles that don’t exist stateside if you do your due diligence. Export transactions can be easily cleared so you can open the door to a whole world of new customers.