Short answer
Exporters protect cash flow by agreeing payment terms that suit them, taking deposits, using secure payment methods such as letters of credit for new or higher-risk buyers, insuring against non-payment and managing currency risk. Where a gap remains between paying costs and being paid, working capital or trade finance can fund it.
Key facts
- Agree payment terms before you ship
- Deposits and staged payments reduce cash tied up
- Letters of credit protect against buyer non-payment
- Currency moves can change what you receive
Payment methods, from safest to riskiest for the exporter
| Method | How it works | Risk to exporter |
|---|---|---|
| Cash in advance | Buyer pays before shipment | Lowest |
| Letter of credit | Buyer's bank pays once documents are presented | Low |
| Documentary collection | Banks exchange documents for payment | Medium |
| Open account | Buyer pays after delivery, on agreed terms | Highest |
Practical steps
- Credit-check new buyers before agreeing terms.
- Ask for deposits or staged payments on large orders.
- Use letters of credit for new or higher-risk markets.
- Consider export credit insurance against non-payment.
- Hedge or invoice in sterling where you can, to manage currency risk.
- Chase overdue invoices quickly, with clear terms in every contract.
Financing what's left
Even with good terms, growing exporters usually carry more working capital. See funding working capital for export growth.
Related: Export Finance →
Related questions
What payment terms are normal for exports?
It varies by market and sector; 30–90 days is common for open account trade.
Does UKEF offer credit insurance?
UKEF offers some insurance products, and private insurers also provide export credit insurance.