One of the biggest challenges for a business is probably making the decision to ‘go international’, or at least to trade to some extent with another country.

Knowing your product and knowing your market are crucial to success in any business and this is particularly relevant when entering the cross-border market. The language barrier might not be as big a challenge as some might expect, as English is widely used within the EU for regulatory communications.

Trading with overseas companies is of course nothing new; it has been taking place for hundreds of years. Centuries ago, merchants’ chief concerns were how to make sure they received payment for their goods and whether ships would make the sometimes treacherous journey between the countries concerned. Fortunately, nowadays the latter is virtually unheard of and payment guarantees in their various forms are sophisticated enough to provide adequate protection. But apart from making sure payment is received, perhaps the main worry for a business about to step into the importing or exporting business is making sure that they understand and comply with tariffs, licensing, testing and certification procedures that will need to be strictly adhered to.

Help and support

Organisations such as Chambers of Commerce are invaluable in overcoming trade barriers, whether perceived or real, and can be your guiding hand as far as the technicalities on the business side are concerned. Naturally, your primary concern will be to ensure that you get paid on time for goods you export and that you can negotiate suitable terms for paying for goods you import. There are several ways of making payments internationally and you can control conditions under which you make payment for goods, ensuring that payment is only made once the goods have been received.

Before you even start to negotiate terms of the trading contract with your overseas counterparty, it would be worthwhile finding out the options that are available to you for arranging payment. As well as advising you on the different ways of arranging secure payment products and services such as financing options for international trade, credit insurance, invoice financing and discounting, some banks will also be able to offer trade introductions, market research and other information on trading with specific countries.

Secure method of payments

The most secure way of making payments to a beneficiary in another country is to arrange this through your bank using an international transfer. This can be made in either sterling or virtually any other currency and will be made from your bank account to the beneficiary’s bank account in the country concerned. All bank account statements throughout Europe carry international bank account numbers and branch identifier codes. Not unnaturally, your own bank will charge for making the transfer, but the foreign bank will sometimes make a charge too. However, you can choose whether to pay all the bank charges yourself, for all bank charges to be deducted from the amount you send or to share charges. Charges will vary between banks and some banks will have special rates for European transfers.

Documentary collection

Letter of Credit

A more secure version of the documentary collection is a documentary credit. The Letter of Credit is an undertaking by the importer’s bank to pay a specific amount within a specified time provided the exporter supplies the bank with documents that conform to those listed within the Letter of Credit prior to its expiry date. If the documentation is not exactly in accordance with that specified, the bank will refuse to pay without prior authority from the importer.

Documentary credits and underlying procedures are governed by the globally recognised International Chamber of Commerce Uniform Customs and Practice for Letters of Credit.

Use your bank

Your bank has the expertise and the connections. The British Bankers’ Association (BBA) is the principal non-profit trade association for banks operating in the UK.