Moving into international markets is the key to success for many businesses within the United States. The addition of foreign buyers and moving into new territory can often give a business the first opportunity to corner the market, allowing for large scale growth potential in a very short time.
Unfortunately, many companies fail to take advantage of financing in international trade or make other common mistakes in getting started that can turn this opportunity sour. Avoiding these errors and oversights in business and financing in international trade will be critical.
- Moving too fast – one common error in international trade, is for a company in the United States to try to move into too many different markets at one time. This creates financial stress as even export financing programs may not be able to provide the working capital needed to expand the business to meet the sudden demand. Choosing one area and building up the market while scaling up production will be more effective and less likely to create challenges.
- Not using an export financing program – it is essential for a business to understand the significant delay in the time of shipping the goods to the international market to the time of receiving payment. The buyer will have a set number of days from the receipt of the merchandise to pay, which can easily create 60 to 90 days or more until you receive payment. In many situations, this payment delay can extend well beyond this amount, particularly if terms were modified to make the sale more favorable for the buyer.
- Not asking for help – there are many companies and agencies that will assist companies in options for financing in international trade. All a company needs to do is ask, but often not understanding what is available or possible becomes a limitation.
Take the time to learn about the new market, work with a company experienced in international transactions for financing options and maintain a structured business plan for success.