BDC | Jan 17, 2023
Canadian exporters make more money, grow faster, stay in business longer and are more productive and innovative than non-exporters. To take advantage of international opportunities, your business can prepare by understanding and using trade tools designed to help finance export growth and mitigate risk.
“The first thing exporters need is a solid business plan that includes an international growth strategy,” says Amesika Baëta, Senior Account Manager at Export Development Canada.
“An export plan helps you understand how your business is structured and what available resources you have. It determines where you should spend money, identifies opportunities and foreign markets for growth, and outlines how you will compete internationally.”
Growing internationally generally entails important upfront investment. You may need cash for travel, or fees for distributors, agents, legal services, international manufacturing, licensing of products or intellectual property, or money to hire more people. There may also be costs associated with bidding on new projects. Doing your due diligence and having a plan prepares your business for growth. Securing working capital before you make your first international sale is an important consideration.
Even if you expect to start selling right away in a new market, you may not immediately get paid for your goods or services. To be competitive as an exporter, you may consider extending payment terms to your international customers, allowing them to pay after a shipment or service is delivered. This can affect the working capital you need to finance your international growth.
Most companies hope to generate cash flow with payments they receive from sales, using that money to pay suppliers for materials, services or inventory, and as working capital for business expansion. But expenditures and payment terms in international trade can lengthen cash flow cycles and challenge growth.
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