Preparing for your first export contract

Securing your first export contract can be an exciting time for small to medium businesses (SMEs). The opportunity to grow your business in new markets and build new customers can mean rapid business growth. Being prepared is critical. Getting the right information, support and advice to help you succeed is important. We know that getting access to finance may be one of the challenges you face as you take on your first export contract, and we're here to help.

The information contained in this eBook will help you understand some of the other key challenges you should think about when exporting, including:

9 Key steps to exporting – from building a strategy to identifying the right markets.

9 Building networks – finding the right partners and knowing where to get advice.

9 Managing export risks – understanding the different risks when operating in international markets.

9 Protecting your intellectual property – what to be aware of and how to protect your IP.

9 Managing your export cashflow – from preparing your business for export to managing growth.

9 Export-related finance – considerations and alternatives available.

9 Resources – key organisations and associations that can help you get export ready.

Preparing for your first export contract

Download the Export Essentials app – your complete export toolkit.

www.efic.gov.au/exportessentials

The decision to export, or enter into an export-related contract, is a great opportunity for many businesses to grow and expand sales, but it is not right for every business.

Before entering into export activity, you should address the following considerations to decide whether export is right for you:

Key steps to exporting

Management commitment and resourcesExpanding or investing overseas takes a lot of work. Do you have the right senior team in place to drive and support everything that is needed to make it work?

Export experienceThe ability to draw on the export learnings of others is invaluable. Do you have staff or a network of contacts with export experience you can tap into for insights?

Financial resourcesSetting up export operations in a new market and dealing with overseas buyers will take a toll on finances. Have you considered how you will finance your business growth?

Market demandA solid customer base in a new market is critical. Are you confident demand is strong enough for your product or service?

Market entryKnowing demand exists is only the first step. Have you assessed your market entry options and requirements to set up operations in a new country?

TimeframesExporting is a long process: from making the decision to go overseas to having up-and-running export operations can take between one to three years. Have you factored realistic timeframes into your business planning?

“ Export was always part of our strategic plan to help us deleverage risk in our customer base.”

Peter McDonald, Capilano Honey

“ We thought that when we were successful in Australia, that story would translate pretty well overseas. In reality, there is a four to five year pipeline to getting substantial work in new markets.”

Bruce Rodgerson, Rubicon Water

While there will always be things that take you by surprise on your export journey, you can set your business up for success by covering these important steps to prepare for exporting.

How do I set myself up for success with exporting?

Develop a robust export strategy, and stick to itWhen you start exporting, you may find that a lot of different options come across your path, whether they are potential markets, buyers, or partners, that aren’t part of the plan. It can be easy to get sidetracked, and while it’s important to consider your options carefully, stay focused and stick closely to your export strategy.

1

Consider the positioning of your product or service in a new marketWhen considering if your product or service will succeed overseas, you need to consider your positioning, which will include price points, quality and competition among other things.2

Build an experienced and flexible teamYou need to know you have the expertise and resources to support you when you win a big export contract, but in the early years of exporting the flow of work may fluctuate. Getting the right team, with the ability to be flexible, will be key.

3

Identify strong local partnersIn the export game, relationships are everything: finding and working with great local partners will set your exporting business up for success.4Test, test, and test againToo many SMEs make the mistake of launching their product or service too early, without testing whether it works and how it is received in the local market. Just because a product is well-received in one market, this may not be the case in another market, while manufacturing capabilities and standards in different countries can vary significantly.

5“ We made the mistake of launching our product

too early. We thought our product was perfect, in fact it wasn’t even close.”

James Douglas, Carbon Revolution

“ We weren’t going to get any major orders unless we could demonstrate that these products would actually work [in the market].”

Aaron Begley, Matrix Composites and Engineering

An export strategy is an essential component of your overall business plan. It doesn’t need to be complicated, but at a minimum it should cover the following:

What do I need to think about when building an export strategy?

“ Have a team in place that has done it before... They know what you don’t know, they have been on the journey, they have made mistakes.”

Matthew Michalewicz, Entrepreneur

“ [We decided] we’ve got to be at the top of the market, to have a quality product and to be in a niche market.”

Paul Cooper, Rinstrum

Market positioningWhat market segment in each country will your product or service be positioned for, where are they located, how much will they pay?

Regulatory requirementsWhat are the government standards that you will need to adhere to, the licenses you will need to apply for, the warranties and after-sales service that you will need to provide?

ProductDoes your product need to be adapted for each new market, how will you brand and market your product?

Distribution strategyHow will you distribute your product or service, what are the delivery costs, how will you service your customers?

CompetitorsWho are your competitiors in each country, what are their strengths, weaknesses, distribution strategy, price point and customer service strategy?

StaffWhat is the size of your current team and what headcount growth do you project you will require, how will you meet this growth, what export experience do your staff have?

Target marketWhat is the country or countries that you will target, including the size of the market, the cities or regions you will be targeting, the demographics of your target market?

Financial resourcesWhat capital do you require for growth overseas, what costs and expenses do you estimate you will encounter, how will you source the finance you need?

Domestic business overviewWhat is the current status of your domestic business?

One of the most common mistakes that new exporters make is picking the wrong market – this may be due to misguided assumptions about demand for your product in that market, or just because you happen to have a good contact in that market who can help you get off your feet. Take the following steps to avoid making that mistake:

How do I identify the right export markets?

Do your research on the right market for youDo as much research as you can on whether a market is suited to your product or service before making any commitments. Visit the country, meet with potential partners and distributors, understand the local customs and regulations, calculate the costs of modifying your product – this will help you determine whether you are likely to be successful in that market.

Understand the economic and political environment of your target marketsIn addition to the business environment, it’s important to understand the economic and politicial context of doing business in different markets. Currency risks, political risks, tough regulations on businesses – these can all influence the attractiveness of an export market. Efic’s Country Profiles outline some of the risks of doing business in different countries.

Appreciate that every market is differentHowever well you know one market, another market may be entirely different. Every country is different, and you need to understand the profiles, consumer trends and price points in those markets to develop a product specifically for that market.

Think about the customerFor some businesses, the market is a secondary consideration to identifying the customer that can pay the best price for your product. Making sure the customer is right may need to come before choosing the market.

“ We started exporting by making some big mistakes. We went to a country where I had a good contract in South East Asia. We should never have gone there – the country didn’t make sense.”

Joel Montgomery, Affiniti

“ We use the UAE as a hub into other markets so that we can service the region efficiently.”

Peter McDonald, Capilano Honey

Consider the competitionAssess the size of the market and the competition you are likely to face in the market – the competitive environment may be a prohibitive factor at worst, and at best will influence how you market and position your product.

Australia's Free Trade Agreements (FTAs) with China, Japan and South Korea have opened up new and exciting opportunities for Australian exporters. The FTAs have enhanced the growing trade and investment relationships between the North Asia region economies and continue to benefit Australian exporters. Make sure you understand the benefits and opportunities for your business when exporting to these growing markets.

Free trade agreements – opportunities growing

ChAFTA at a glance▪ ChAFTA provides Australia with an advantage over our major agricultural competitors,

including the United States, Canada and the European Union.

▪ More than 96 per cent of Australia's goods exports to China are now eligible to enter duty-free or with preferential access.

JAPEA at a glance▪ More than 9.5 per cent of Australia's exports to Japan will enter duty-free or will receive

preferential access when JAEPA is fully implemented.

▪ JAEPA will slash prohibitive agricultural tariffs on a wide range of products to Australia's third-largest agricultural export market.

KAFTA at a glance▪ 99.7 per cent of Australia’s goods exports (by value) to South Korea will enter duty-free on

full implementation of the agreement.

▪ KAFTA will enable Australia’s agriculture exporters to compete in this highly-protected, lucrative market.

Austrade run an Australia-wide outreach programme to provide Australian small and medium businesses with practical information on how they can maximise the benefits from Australia's FTAs.

" The Free Trade Agreements recently signed with Japan, South Korea and China are a great boost. And it gives us the opportunity to take advantage of the opportunities the FTAs will give us."

John Cassegrain, Sole Director, Cassgrain

Exporting to new and different markets can require a complete shift in culture and way of operating. SMEs need to think about:

What do I need to think about when entering a new market?

Regulations and complianceDomestic and foreign markets are likely to have their own regulatory and compliance requirements, which come with practical and financial considerations, including consumer protection rules, product standards and product liability insurance. Don’t get caught out by overlooking local regulations.

LogisticsMany exporters overlook the time and resources that need to be dedicated to shipping and freighting when they first start out exporting. The logistics component of an exporting business is huge – how are you going to get your product to your market, how long will it take, how much will it cost, how will you manage the process?

Marketing and labelling requirementsSome markets will have specific requirements around how you package, label and market your product which you will need to adhere to.

Cultural factorsIt’s important to consider whether there are any language, religious, cultural or climatic market factors you need to be aware of and adapt to. For example in China, red is considered a very prestigious colour and generally, red packaging symbolises good luck.

“ My business has become a logistics business.” Carolyn Creswell, Carman’s Kitchen

“ Some of the challenges we have faced [include] understanding the colour on labels in some markets. Some of our Australian labels that have white on them don’t work in China. We’ve now redesigned some of our labels.”

Peter McDonald, Capilano Honey

Industry associationsEvery industry has at least one association that represents the interests of its members. Associations range in size and role but many will provide basic resources for members, publish a regular magazine with industry news and updates, organise events and provide a forum for sharing advice and knowledge.

Trade showsTrade shows or expos, both in Australia and in overseas markets, are a great way to meet potential partners and customers by showcasing your goods and services.

Industry events and conferencesIndustry events are a great way to meet peers and learn about their experiences as well as connect with potential customers. Organisations that provide support for exporters, such as Austrade and Efic, also host regular events providing information and advice for SMEs.

Face-to-face meetingsTravelling overseas and meeting local potential partners is vital. If you don’t know where to start, Austrade has on-the-ground representatives in a wide range of markets who can help you with introductions by setting up appointments with buyers that have a good fit for you.

Networks can encompass everything from friends, peers and other companies operating in similar markets, to professionals such as lawyers and accountants, to mentors and advisers, to government contacts, and critically, market partners. Establishing broad and deep networks is a critical success factor in exporting and operating in a global supply chain. There are some simple things you can do to build your networks:

Building networks

“ You may go to the trade show and set up your stand… that has a component [in business development]. What I’ve found to be more important is that they can see your presence in that market.”

Sean Ashby, aussieBum

“ We’ve done lots of international trade shows. It did help us get set up in lots of markets that way.”

Carolyn Creswell, Carman’s Kitchen

There are lots of different ways for an export business to go to market, which will determine who you need to build partnerships with.

Who do I need to build relationships with to succeed overseas?

The Export Council of Australia provides information on some common export partner relationships:

Export merchantsNormally based in Australia, export merchants have strong links with a country or a particular market segment. Exposure is minimised as the merchant normally purchases the product in Australia, ships, insures and takes the payment risk.

AgentsWorking on your behalf, agents seek out potential clients for your product or service. They do not take ownership of the goods/service and can be paid a salary, retainer or commission, or a mix of all three.

DistributorsTaking ownership of the goods and paying the exporter for them, distributors will then market and resell them and often provide after-sales service. As distributors own the stock and have an investment in representing a product, they are normally performance-driven and usually have strong market knowledge.

Joint ventureWhen exporters enter into joint venture arrangements, they are usually financially driven, with shares held by both parties involved. Many joint ventures are between parties who have past experience in working together in a distribution arrangement.

“ You have to make a decision how you want to go to market... this is a business decision that every business needs to make. Do you want to go to market directly, or do you want to partner with someone to go to market? There are risks on both approaches and it’s a trade off between cost and control.”

Matthew Michaelwitz, Entrepreneur

You are likely to come up against different risks when operating in international markets compared to your domestic market. Depending on the country, some of the key risks you may encounter include:

Austrade and the Export Council of Australia provide more detailed information on some of the major risks exporters may encounter in overseas markets.

Managing export risks

Contract risksDifferences in contract law between countries means seeking legal advice on contract terms is important to ensure they are binding and enforceable – it’s also important to understand the local business culture to ensure you have an appreciation of the expectations of doing business with local partners.

Currency risksAdverse movements in exchange rates are an inherent risk of doing business overseas and can lead to a loss of earnings or profit. You can protect yourself by quoting only in Australian dollars or taking out a foreign exchange facility, which will allow you to lock in exchange rates and hedge your currency exposure.

Environmental risksNatural disasters can occur anywhere in the world and can cause significant or even devastating damage to a business. While no one can predict natural disasters, it is important to be aware of the potential risks of your business location and how you might prepare for possible events.

Legal risksLegal requirements and processes can vary significantly across different markets, so do some research and receive legal advice to understand your legal position. Some common considerations include: local contract law, patent registration and IP requirements, product liability laws, dispute resolution processes and OH&S laws.

Operating risksExporters need to become familiar with the operating environment of new markets, as this can be very different to the Australian operating environment. Some important things to look out for are industrial relations policies and practices, permitting rules and import requirements.

Political risksAn uncertain political environment can hamper export operations in a number of ways. A trade embargo could affect delivery of goods, civil war or political violence could affect the safety of your staff and partners, political instability could result in defaults on payments, confiscation of property and assets, and blockages in transfer of earnings.

Unfortunately, there are no short cuts to avoiding risks in export markets. As with any other business risk, you will need to follow a robust process of risk management to ensure your business is in the strongest possible position to cope with risks.

Efic’s Country Profiles provide more information on the risks of doing business in a range of different markets around the world. While it is important to be aware of the potential risks involved in exporting to these markets, there are some great opportunities for Australian SMEs looking to do business in Asia. With the new North Asia Free Trade Agreements (FTAs), there will be even more opportunities for Australian businesses looking to export to China, South Korea and Japan. For more information on how your business could benefit from the FTAs, visit Austrade’s website.

How do I manage risks?

1Do your homeworkThe first thing you need to do is identify the potential sources of risk in your chosen export market. Efic’s Country Profiles are a good place to start. The World Bank publishes a range of data on individual country risks and the Australian Department of Foreign Affairs and Trade (DFAT) continually monitors the effects of political changes on Australian businesses.

2Seek adviceYour bankers, lawyers, insurers and accountants will be able to give you advice about the risks you may encounter in overseas markets. It is also a good idea to try and find someone who has dealt in the country before so you can learn from their experiences – you may be able to find such an organisation through your industry association or business chamber.

3Make an assessmentWhile it is impossible to predict the occurrence of specific risks, it is possible to make a reasonable assessment of the likelihood and impact of most scenarios that could affect your business. You should also rank the likelihood and importance of different risks to identify critical areas of focus.

4Develop risk management strategiesAs with any other business risk, you then need to identify the steps you can take or measures you can put in place to avoid or mitigate the risk, or minimise its impact. Ensure your risk management strategy is as clear and simple as possible, and that everyone in the business is aware of what they need to do.

5Monitor and reviewIt’s important to regularly monitor the risks that have the potential to affect your business in different export markets. This may well change over time and you need to ensure you are aware of this and have updated your risk management strategies if necessary.

For Australian businesses, exporting presents an attractive opportunity for growth, providing access to new and potentially bigger or more lucrative markets around the world.

Some SMEs can be reluctant to expose their business to the global market, fearing that their brands, products and designs will be quickly copied, and thus undermining their ability to compete. Conversely, others may be so keen to grasp the global opportunity, that they unwittingly expose themselves to significant IP risk.

IP protection is often about striking a balance between achieving maximum protection and managing IP costs. The solutions you choose to protect your IP in foreign markets will need to reflect your broader commercial business strategy, at home and abroad.

Protecting your intellectual property (IP)

Preparing for export: a checklist. Is your product or brand eligible to be protected under IP law?

Is your packaging part of your product’s value? Have you protected its design?

What are your target markets? Are they covered by international conventions?

What is the value of your brand, design or product features to your business?

What is your budget for protecting your IP?

Is your IP already registered by a third party in your target markets?

Do you have non-disclosure agreements for offshore manufacturers and distributors?

Have you consulted an IP professional with connections in the countries you want to export to?

Have you considered registering trade marks for the local language version of your brand?

" By being different, by being innovative, by trying something different and listening to the customer, you can find there are other ways to market [your wine]."

Ross Brown, Executive Director, Brown Brothers

Watch Ross Brown talk about the challenges Brown Brothers faced when exporting.

Finding the right IP strategy can be complex, and no matter how much research you do, it’s likely that you’ll still benefit from professional advice. IP specialists, such as IP attorneys, can also provide comprehensive searches for you. Doing your own research first can help to shape your export strategy and ensure there are no nasty surprises.

Steps to develop your IP strategy*

Consider your export strategyYour IP strategy will be driven by your export strategy. It’s important to be clear as early as possible what you want that to be. Ask yourself which markets offer the best potential for your business. The answer may depend on macro factors like population and national wealth – or it may come down to finding the best cultural fit.

Do your researchWhile protecting your own IP is your first priority, you’ll also need to ensure that by exporting to a new country, you aren’t breaching someone else’s IP. Your product or brand may be unique in your own market, but you’ll need to ensure you’re protected from costly legal challenges from potential competitors.

Choose your solutionsWhat is the most valuable component of your IP? Is it the design of your product? Your product or business name? Your brand? Or a combination of all three? Most businesses will need to decide which element (or elements) of their product to cover with IP protection. And the answer is not always straight forward.

Understand the costsProtecting your IP across multiple markets can be an expensive exercise, especially if you’re protecting more than one element of your product. While protecting everything upfront may be the best defence, it may prove to be financially out of reach.

Enlist expert adviceProfessionals who specialise in international IP protection can offer solutions that you haven’t yet considered, and can also give you access to the benefit of their experience. It’s recommended that businesses consult the professionals to help ensure that your strategy offers the protection your business needs.

ResourcesFind out what IP protection you may need to protect your brand and designs when exporting on the IP Australia website.

* The information on this page was sourced from the Efic and IP Australia Protecting your IP overseas eBook.

For small to medium businesses in the export market, having access to cash is critical. As an exporter, your working capital cycles can be very long, and you’ll need cash to cover many costs. However, securing a source of cash when you start out in exporting isn’t always easy. You need to ensure that your business is in the best possible cashflow position to take on the export market.

Achieving positive cashflow: the challenges

Managing your export cashflow

Establish strong financial systems from the startStart your export business with a strong foundation:

Ensure you have a robust export strategy that outlines your financial resources, including the sustainability of your export budget.

Use a good accounting system.

Build a strong relationship with your business banker, by keeping them informed of any developments in your business.

Choose an accounting firm that has experience working with small businesses – especially with exporters.

If you have a financial adviser, ask them to review your export strategy regularly.

Have you consulted an IP professional with connections in the countries you want to export to?

Have you considered registering trade marks for the local language version of your brand?

1Accessing cash

For a new business, having enough cash to establish yourself in an export market can be a significant challenge. Finding customers is only one of the factors to establish your export business. You’ll also need enough working capital at hand to keep the business moving while you’re shipping or waiting for payments.

To minimise cashflow issues, you should consider protecting your business with strong contracts and favourable payment terms. For example, you may choose to ask for an upfront deposit, interim payments and shorter payment periods. There may be times when you need to rely on external finance to ensure you have access to working capital to keep the business going in between payments.

2Managing working capital while growing

A growing business is good news, but it can create significant working capital shortfalls.

For instance, an overseas customer may award you a much larger contract than the value of your domestic business. That’s great news if you want to grow your company – but it could also mean that you’ll need more money to hire extra staff or order more stock from suppliers to meet increased demand.

To avoid a funding shortfall it’s important to understand the financing options available. Bank guarantees and bonds can help to bridge the cashflow gap between paying your suppliers and receiving payment. Or you may need to seek out additional finance, such as a line of credit or short-term loan.

3Managing international payments

Even if you’ve got a successful track record of managing cashflow while doing business locally, managing international payments comes with its own risks. These may include country or political risks, currency risks, corruption, risk of non-payment and more.

Efic helped first time exporter COzero deliver on its first export contract in Japan.

NSW-based COzero works with its customers to enable them to maximise their electricity spend using energy management platform EnergyLink.

“EnergyLink is an ongoing energy management platform. We provide real solutions on a daily, weekly and monthly basis,” says Geoff Alexander, CEO of COzero.

With an established domestic market, COzero decided it was time to look at overseas markets.

“In 2013 we had a Japanese investor come into the company. We then started our export journey and began talking to people we could provide our services to in Japan,” says Geoff.

“The Japanese electricity market has been deregulating, it was very timely for us to be in the market as it deregulated.”

Because of this, competition is fierce, says Geoff.

COzero was part of a long tender and due diligence process with Japan’s largest non-government electricity provider.

A timely cashflow boost

Competing against two other global companies, COzero was successful in securing its first export contract. “We will be providing our energy management platform, EnergyLink. It has been tailored for the Japanese,” says Geoff.

With long project timelines and the challenge of managing business cashflow, COzero needed a cashflow injection to ensure it met the milestones of the project. Unable to secure the funding needed for the contract from their bank, their advisor recommended they get in touch with Efic.

Efic was able to provide the business with an Export Contract Loan that allowed it to continue to deliver the project milestones of its first export contract.

“There are a lot of development costs on our side to ensure that we integrate with our export customer. The funds from Efic have enabled us to meet our milestones as we deliver on our contract. It has been incredibly important,” says Geoff.

Case study: Helping first time exporters

COzero

As Australia’s export credit agency, we understand the challenges you face as you look to grow your business overseas.

And with your bank often unable to provide all the financial support that you need, it can be difficult to compete and grow internationally. If you are an Australian small and medium company and your domestic business is established and able to support your new export venture, you could be ready to grow your business internationally.

Our first time exporter solutions offer:

• the flexibility to choose a solution that will provide your business with access to additional working capital when you need it to support your eligible export-related contract(s)

• repayments linked to payments from your export-related contract(s).

Keep your financial health in checkAs your business grows, you need to make sure you work with an accountant that understands the fundamentals of your business and where you are looking to go. Your accountant will help you stay on the right track with your financials as you expand into new markets or enter into an export supply chain.

Understand your cashflow requirementsOne of the most common problems encountered by growing businesses is when their growth rate outstrips their capacity, which can create pressure on working capital. By developing detailed cashflow projections into the future, you can ensure you are able to plan and manage your cashflow accordingly to avoid problems.

There are a number of differences between exporting and operating in Australia which will have an impact on your finances. Understanding all the costs associated with exporting will help you make an informed decision on whether your business is ready to start an export project. There are some crucial considerations to bear in mind:

Export-related finance

“ It is all about as much debt funding as possible... as little equity given away as possible.”

Joel Montgomery, Affinity

“ [Export] requires financing and commitment well ahead of receiving significant revenues.”

Bruce Rodgerson, Rubicon Water

Develop a financial planWhen you enter into exporting or start winning export-related contracts, you need to be prepared for all financial eventualities. For example, export can mean a longer cash flow cycle, a greater risk of non-payment and exposure to foreign exchange risk. Putting together a detailed financial plan, one that you can easily adjust as you collect more data and change your assumptions, can help you determine if your export plan is viable.

Build a strong relationship with your bankerYour banker is crucial in your growth journey. Successful SMEs will keep their banker informed on a regular basis, by keeping them updated on what their business plans are, what direction they are heading in and any financial issues they anticipate. If you involve your banker closely in your business, it will be much easier to get help the day that you do run into trouble or need more capital.

One of the most common problems for SMEs is funding growth. Once export comes into the equation, financing requirements become even more important and many businesses need support to enable them to fulfil their export and export-related contracts. Help is available from a number of sources:

Where can I access finance to fulfil an export or export-related contract?

Consider your optionsWhen a contract comes in, think carefully about how you could fund it without entering into risky debt or putting a strain on cashflow – even your own clients or suppliers might be able to help you.

“ The way we approach it is the first place we will look... is to your client for finance. If that is going to cost you margin or some conditions, we look to our subcontractors and suppliers to see where they are at and what they can do. Once we have exhausted those avenues, we will look to the bank.”

Casey van Loo, Ellton Conveyors

Speak to your bankSpeak to your business banker who can assess your situation and advise you on your best course of action. Your bank may be able to offer you a secure loan or commercial bill facility to help you with financing your exports.

“ I remember hearing a banker tell me once, ‘speak to your banker early and often.’” Tim Cornish, Forgings, Flanges & Fittings

Think about alternative sources of fundingIf your bank is unable to help, Efic, Australia’s export finance agency, may be able to. Efic can provide financial support to SME exporters, or SMEs involved in an export-related supply chain, in the form of loans, guarantees and bonds to support specific export contracts.

“ The hardest part [of exporting] was when we did get a real game changer of a deal for a multimillion dollar project... but they required a performance bond. Fortunately for us [Efic] were able to put together that bond.”

Tim Rolfe, The Creature Technology Company

Operating in international markets can throw up a range of payment challenges. The payment terms that you offer an overseas buyer can make a real difference to securing a contract, however you also need to make sure you protect yourself to ensure you get paid.

There are some common payment options to consider:

How do I make sure I get paid in overseas markets?

PrepaymentYou receive some or all of the payment amount upfront.

Documentary collectionWhich involves you shipping your goods or services but retaining control of them until you receive payment, or a legal undertaking of future payment from your overseas buyer.

Open account(Or open credit) which gives your buyer certain credit terms by delivering your goods or services with an invoice requesting payment on a specific date after delivery.

There are some risks to be aware of:▪ Many overseas buyers will expect to pay you only after they’ve received delivery of your goods, which

increases the risk of non-payment. Be cautious about entering into such an arrangement.

▪ Until you have an established relationship with your overseas buyers or have a proven track record in exporting, you may not be able to negotiate your preferred payment methods. Your accountant or banker can help you weigh up the risks.

▪ The risk of adverse movements in exchange rates is something that is faced by everyone doing business in international markets. Not managed correctly, foreign exchange risk can have a real impact on the bottom line of an export business. There are a range of products that can help manage this risk – speak to your bank or your foreign exchange provider to understand your options.

“[We look] at every single customer to see if we can get payment up front, or we look at letters of credit. We don’t really give an option of an open account.”

Dirk Pretorius, Frosty Boy Australia

Austrade

Austrade, the Australian Government’s trade and investment agency, can provide you with practical advice, support and insight into many of the countries to which you’re looking to export.

Austrade provides information and advice to assist Australian companies to reduce the time, cost and risk associated with exporting, as well as a range of ‘How to Export’ guides that can help you increase your export knowledge and skills.

Efic

Efic, Australia’s export finance agency, operates on a commercial basis and partners with banks to find financial solutions for SME exporters and SMEs operating in an export-related supply chains.

Efic also provides a number of resources for exporters, including our online Exporter Journey, which walks companies through the steps to successful exporting.

Export Council of Australia

Export Council of Australia is the main industry body for Australian exporters and provides resources, support and information to help Australian business succeed overseas.

Business.gov.au

The business.gov.au website is an online portal created to assist all businesses from start up, registration and licences to grants and assistance, and advice and support.

AdvisersYour accountant, financial adviser and lawyer are a great place to start when seeking advice on expanding your business overseas.

PeersOther successful exporters and like-minded businesses are sometimes the best source of tips, advice and inspiration.

There is a wealth of detailed, easy-to-access information available to help Australian SMEs planning to export, it’s just a case of knowing where to look.

Resources

For more information, contact Efic on1800 093 724 orvisit www.efic.gov.au

There are lots of different things to consider when it comes to growing your export business. Winning an export or export-related contract is one thing – getting ready for export, establishing the right networks

and understanding the potential risks is another. Working closely with experts will help you set your business up for success.

If you would like further information or to have a discussion about funding solutions for your export or export-related business growth,

please call Efic on 1800 093 724 or send us an enquiry via our website and we will come back to you soon.

The information in this document is published for general information only and does not comprise advice or a recommendation of any kind. A person or entity should seek their own independent legal and financial advice. While Efic endeavours to ensure this information is accurate and current at the time of publication, Efic makes no representation or warranty as to its reliability, accuracy or completeness. To the maximum extent permitted by law, Efic will not be liable to you or any other person for any loss or damage suffered or incurred by any person arising from any act, or failure to act, on the

basis of any information or opinions contained in this document.

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