IThe most central risk in international trade is that
of non-payment. Exporters should approach their local bank in order to obtain
additional information pertaining to international methods of payment, the
transferring of funds and the rules and regulations pertaining to international
payment procedures as laid down by the South African Reserve bank.
Access to adequate finance expands an exporter's range of potential customers
through an ability, when necessary, to offer extended credit terms. All exporters
must investigate what financial options are available.
Each international payment options has different risk. It is essential that
exporters understand the risks and the costs involved with each method of payment.
The four main methods of payment are: Cash in advance, Documentary credits
(also called Letters of credit), Bank collections and Open account.
Payment ranges from the least amount of risk for the exporter, such as cash
in advance, to the most amount of risk for the exporter such as: open account.
All potential clients should be investigated for creditworthiness. Your Chamber
of Commerce and Industry and commercial banks can assist exporters with creditworthiness
checks.
Exporters should consider export credit insurance particularly if the exporter
is selling on a bank collection or open account basis.
The major distinction between domestic and international sales is that the
latter involves a higher risk.