Cross Border Credit To do or not is the question
Well that’s a little tricky if you are an SME. Large businesses have lawyers and reps in place . But here you are an Individual Small Medium Enterprise, and buyer is few thousand miles away. First the challenge is to connect with them then to ensure that payments are secure and you and your factories get paid for the hard work. Which in third world is not easy. But then you do get tempted to offer them credit to gain their trust, and this could either take your business to next level or it could boomerang in your face.
After credit is in place and a disagreement would surface concerning a certain delivery. Sound advice would be to resolve amicably and not loose your cool or sleep. Though good businesses would never make you feel insecure, they respect their commitments, but off and on every business will come across certain new buyers that need to be handled with care. Practice will make you identify buyers who mean business. Cross border especially is a dangerous gamble to play, But if you are a good supplier you both need each other as much.
If the order amount is large Banking is an excellent way to secure your self.
One of the conventional is “Letter of credit” an option where clauses are drawn out and the payments are ensured and handled by respective banks. However more businesses are choosing e-payments Forex options, Trust has become a strong drive to do business faster and understand each others needs , tying up buyers and sellers together.
Paypal and similar payment options do give sense of security to small enterprise business, in spite of higher expenses of almost 5% commission, both buyers and choose it for speed and faster settlements.
Paypal is not our first option but it gives our buyers ease, of making payment direct from their handhelds, so its become a good tool to provide service and make a faster sale. For new customers its also provides standing trust to begin a relationship.
So in our experience its good to initiate a business relationship with Paypal, keep your payments secure, study the customer dealings and only then offer credits. In short concentrate on building trust..