Zach Selch breaks down payment methods for international sales: letters of credit for new buyers, wire transfers for established ones, and credit cards only for orders under $50,000. He covers payment insurance through the U.S. Export-Import Bank or private brokers, which charge 2-3% to guarantee payment on large orders.
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Avant in Zurich, am Bahnhofskasse. And let's talk a little bit about what you need to know about international finance to sell internationally. Okay, do it. When you're selling something domestically or a normal sale, unless you're maybe dealing with a car or a house, it's pretty simple. You give somebody goods, they give you money. Maybe you're dealing with a credit card machine, something like that. Sometimes there's a little bit of financing to deal with. International sales, there's always some type of a complication revolving around finance and payment because I'm sitting in New York, somebody else is sitting in São Paulo. I need to send them goods, they need to send me money. We're dealing with different currencies, we're dealing with different time frames, those type of things. How do we do it? So I talked some in a different video about letters of credit, and that's really important. I'm going to put that aside. What else do we have? 90% of sales I make internationally now are either letters of credit or wire transfers. And typically the way I do it is if I've been doing business with the distributor, with a customer for a year or so, I know they have good credit, I know they're gonna pay me, I have a feel for them, they want my products, I'll shift from letters of credit to wire transfers. But in the beginning, I'll typically do letters of credit. They're just a lot safer. Years ago, there were different types of things. We do cash against Or we do a variety of other types of payment modes, which have pretty much fallen by the wayside. I don't remember the last time I did cash against documents or I did anything like that. Typically it's wire transfers or it's letters of credit. Every now and again, somebody will just bring out a big heap of cash from some third world country. That happens. I recommend that if you have items in your catalog that are under about $50,000, you have the ability to run a credit card for that amount, more or less. I wouldn't go above $50K, but it's not uncommon. I've sold a lot of little demo units and stuff like that, accessories, things like that, for $25K, $30K. People want to pay with credit cards, but typically it's going to be a wire transfer. Now, it used to be that pretty much every company doing business internationally on their letterhead would put their banking details, the, the number that you have to use, sort of like a telephone number. It's a transfer number. You can go to your bank and get that It'll tell you exactly what your account is, and then the bank number, and how essentially somebody can transfer money to you. Now what I do, we don't put that on letterhead anymore. Nobody uses letterhead pretty much anymore. But what I do is I have a file for that, and when somebody asks me, well, I have to make a payment to you, what do I do? I can send it. I also have that file on my phone, in the files I've saved on my phone to be able to send easy access to people, and also on my computer so I can send it quickly. I put it in my playbook, so all my distributors They have that banking information from the very beginning. They know how to wire transfer me money. And so I shouldn't have any problem. What you want to make sure of is that they have that number correctly, because if they make a mistake with that number, you're not going to get your money for a while, and maybe for a long time. There might be a lot of additional fees involved, etc., in getting that money. So in terms of wire transfers, what you want to make sure of is that there are very, very clear instructions to your customers and to your distributors how to get money to you. One other element of international finance in terms of selling internationally. One thing to remember is there are companies that will, or companies or organizations or banks that will insure your payment. So for instance, let's say you're selling a large order and you're not quite sure you're going to get. You're a little uncomfortable. It's millions of dollars. You're a little bit uncomfortable about. There are people, especially the The Ex-Im Bank in the United States works— they don't actually do it themselves, but they guarantee and they work with different private banks. So you can go to the Ex-Im Bank, they will recommend somebody to you, a broker, and that broker will work out the paperwork. They'll charge you 2 to 3%, and they'll guarantee that you'll get paid. So what will happen will be you'll basically give them the name of the customer, they'll check them out, they'll give you a quote, they'll tell you that they can't do it, or if they can do it, how much it'll cost. It'll be just a couple percent. Then once the goods are shipped and the customer gets them, if the customer doesn't pay you, the bank will pay you. And then what'll happen will be they'll, they'll go after the bank. Remember, when you're ready to grow your international sales, reach out to us. We can help. When you decide it's time to grow your international sales, call us.
