Export Finance

1. First Steps

1.1 The terms of an export sale must satisfy both you and your customer. You need to agree:

• The 'terms of delivery', covering the division of responsibility for transport costs and for the risk of loss or damage in transit.Standard international terms are set in 'INCOTERMS 2000' (see Import finance).Ask potential customers what terms they prefer and what causes them problems.
• The payment method (see 2). The customer's creditworthiness will determine what payment method you are prepared to accept.
• The currency you will be paid in (see 4).
• The documentation (see 1.2).

1.2 The price you negotiate with your overseas customer also needs to cover a number of additional costs:

• Transportation costs may include the cost of special packaging and labelling.
• Documentation may involve special costs, beyond just issuing an invoice. You must provide all the documentation required by the purchaser and by the payment method you are using.
• Export invoices generally need more detail than those for UK sales. The SITPRO (020 7215 8150) standard format invoice is a good model.Goods for non-EU countries must be declared to HM Revenue & Customs before they are released for export, so export invoices must be prepared ahead of dispatch.
• Insurance of the goods while they are your responsibility, and the cost of any credit insurance you purchase, must be taken into account.
• Financing and transaction costs will include the cost of financing the transaction until you receive payment, and any costs of foreign exchange, payment collection and documentation.