Overseas customers - getting paid

Card payment machine being used in a warehouse

Selling to overseas customers can be good for growth, but many businesses are put off by concerns that getting paid will take too long or, worse still, they will not get paid at all. However, taking the right precautions can reduce or eliminate most of the risks

Use Incoterms to protect your business

It's key to use the right terms in your international contracts in the first place. If you are exporting, trade using Incoterms - the internationally recognised standard trading terms. By using the right Incoterm, you minimise the risk of any ambiguity in your contract. Incoterms set out each party's responsibilities for various aspects of the trade including insurance, transport and payment.

Even so, local laws may mean that some Incoterms are not fully effective and confusion can arise. A lawyer with expertise in foreign trade can advise you on the detailed requirements of each Incoterm in relation to exports to your target country.

Export payment options

There are several payment options you can use depending on the nature and size of your deal. You can:

  • Ask for payment upfront. This removes the risk of non-payment but your customer must be prepared to take the risk of non-delivery or goods damaged in transit. Most customers will not agree to take this risk.
  • Sell on open account, as you do here. You should investigate how long local payment periods are, the non-payment risk for that country and the creditworthiness of individual customers. In some countries, payment periods can be significantly longer than is normal in the UK, leaving you with a potential cash flow problem.
  • Use a letter of credit or a bill of exchange. While there are several variations on this theme, these generally reduce your risk and can also improve your cash flow, but will involve bank charges.


When selling to overseas customers, consider export insurance. If you are exporting capital, goods or services, you may be eligible for cover from UK Export Finance. Find out more about UK Export Finance products and services.

You can use credit financing to ensure you get paid as soon as the contract is delivered. A line of credit can cover a series of contracts, rather than just one.

Other options include arranging insurance privately through an insurance broker, or using a bank or trade finance specialist to both finance your exports and cover you against late payment or default.

Exchange rate risk

Take steps to protect yourself against exchange rate risk. Typically, this might be by agreeing the contract in pounds sterling or by arranging a currency 'hedge' (or possibly a currency option) with your bank.

Monitoring debtors

Once you have started trading, keep an eye on your debtors. Immediately query any deviation from normal trading patterns (eg order levels, delivery, settlement, etc). Consider monitoring filings at public registries in countries where your debtors are registered for signs they are in trouble.

If in doubt, take legal advice.

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