Getting Started
Top tips on financing your business for exporting
International business is different to domestic trading. Market development costs, foreign currency exposure and credit collection all require new skill sets.
Development costs
It is an imprudent exporter who underestimates either the time necessary for researching each market, the establishment of satisfactory long-term trading contracts or the methods of distribution and the consequent expense, which will be involved.
The run-up period is much longer than that for launching new business with Irish customers. Even allowing for the amount of research and planning possible with the aid of information provided throughout this fact book, costs must be appreciably higher. There is no effective alternative to personal visits to the market to which you are planning to develop. It is only one of the costs, which must be foreseen in exporting, and the development budget may well require outside finance.
Currency of payment
Unlike domestic trade where payments are almost invariably in Euro, exports may be invoiced in any of the following:
Credit periods extended to buyers in international trade may exceed those common in domestic transactions, which could lead to a need for increased finance. Borrowing requirements must allow for the period required for shipment, which may be prolonged in distant markets and for the time allowed the importer for payment from the date of receipt of goods. For example, the average credit period in Europe is between 30 and 60 days from receipt of goods, but many countries have a period of 90-120 days credit, which can have an effect on cash flow.
International business is different to domestic trading. Market development costs, foreign currency exposure and credit collection all require new skill sets.
Development costs
It is an imprudent exporter who underestimates either the time necessary for researching each market, the establishment of satisfactory long-term trading contracts or the methods of distribution and the consequent expense, which will be involved.
The run-up period is much longer than that for launching new business with Irish customers. Even allowing for the amount of research and planning possible with the aid of information provided throughout this fact book, costs must be appreciably higher. There is no effective alternative to personal visits to the market to which you are planning to develop. It is only one of the costs, which must be foreseen in exporting, and the development budget may well require outside finance.
Currency of payment
Unlike domestic trade where payments are almost invariably in Euro, exports may be invoiced in any of the following:
- Euro for the Euro-zone countries of Europe
- Sterling for the UK
- US Dollar for sales to the US and much of Asia
- Any local currency fully convertible to Euros
Credit periods extended to buyers in international trade may exceed those common in domestic transactions, which could lead to a need for increased finance. Borrowing requirements must allow for the period required for shipment, which may be prolonged in distant markets and for the time allowed the importer for payment from the date of receipt of goods. For example, the average credit period in Europe is between 30 and 60 days from receipt of goods, but many countries have a period of 90-120 days credit, which can have an effect on cash flow.
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