How money reaches you could involve charges or delays. You should avoid taking payment by cheque. Cheques take time to clear, can be cancelled or may bounce.
There are a number of payment methods that can be used whether you give terms of credit or take payment in advance including:
- international bank transfers
- credit or debit card payments
- merchant services
- local bank transfers
Country specific requirements
Research your target country before you start exporting. Different countries have different regulations and laws around payments and currency. For example, ‘open account’ is not allowed in India, and you may be expected to accept payment by cheque by customers in the United States. Some countries have strict rules about local currency and bank accounts. Others require specific paperwork or additional information on commercial invoices.
Bank transfers and card payments
International bank transfers, credit or debit card payments and merchant services are all quick and secure. They all have fees but credits card fees are usually higher.
Be aware that credit card transactions can be queried and charged back by the buyer after delivery.
Merchant services
There are several large companies that provide merchant services and all charge fees. For example, PayPal is recognised worldwide and charges a fixed fee for each transaction but there are limits on the size of payments you can receive through PayPal.
Local bank accounts
Some countries put restrictions on opening a local bank account. If you can set one up, consider being paid in the local currency.
You can avoid losing money to currency rate changes by transferring money to your UK bank account when rates are in your favour or buying things in the local currency.
Be aware that some countries cap the amount of local currency that can be transferred out of the country.
Bank guarantees
For larger payments or where the buyer and seller need more security, there are financial products like letters of credit or bank collection. With both products money is released by a bank once certain documents are produced and the seller and buyer share the risk.