A good way to mitigate risk and potentially improve terms is to use letters of credit when both importing and exporting. The key risks to consider when importing will the goods be on time and are they the right quality, by paying upfront or giving a deposit will you get your goods.
If you're exporting will you get paid on time will you lose control of the goods and never hear from the buyer again. A letter of credit is a promise by a bank the payment will be made as long as the right goods are shipped at the right time with the right paperwork it therefore protects both the buyer and the seller to mitigate potential risks.
How can letters of credit save you money? If you're importing against a letter of credit you may be able to extend the payment date as the supplier has a bank promise. This may reduce the need to borrow. If you are exporting a letter of credit can help exporters enter new markets and sell to new buyers which can help cash flow, without the need for a facility. At Barclays, we have specialist teams that are available to help you structure the instrument that will best suit you and your client’s needs.