Payment and delivery

The secret to success is to identify potential risks and ensure that you are properly protected. For instance, in an increasingly untrustworthy world, you may be concerned about shipping goods before receiving payment or getting some form of guarantee of payment, or you may need working capital to manufacture goods to fulfil an order. If so, HSBC EasyTrade has solutions, which can mitigate the risk yet still accommodate your buyers' needs and help you finance the deal.

Whether you’re in the import or export business, our professional team at HSBC understands that you will have unique requirements. That’s why we have developed a range of solutions to provide you with what you really need now and over time as your business evolves. So whether you are already trading internationally or just starting out you will no doubt be considering:

• How to make sure you get paid
• How to avoid non-delivery of goods
• How to mitigate the risks associated with trading with unfamiliar partners who are many miles away
• The challenges of conducting business in new markets or countries with complex regulatory requirements
• Dealing with the foreign currency risks resulting from market movements which can impact on your profitability
• How to protect your goods in transit
• How you will deal with the impact on your cash flow resulting from the longer credit periods typically associated with trading internationally
• Where to get professional advice you can trust, easily and quickly
• How to cope with the increased administrative, logistical and technical demands on your resources that trading overseas will bring

If you are concerned with any of the above then “EasyTrade” has the solution.

Selling overseas for the first time

If you are considering selling to customers overseas for the first time then there are a number of issues which you will want to consider.

If you have clients/customers overseas and will be collecting payments, there are a few options depending on your requirements.

The following are all questions which you will want to consider:

• I want to sell abroad, how can my overseas customers pay me?

  If you are selling abroad the simplest methods of receiving payments are:

  • Bank Draft
  • Cheque
  • Electronic Payment
  • Card Payment

  A Bank draft is obtained by your customer and sent to you. The simplest way to describe this is it is a cheque issued by a UK Bank payable to you. If you accept a normal cheque from your customer you will incur additional costs and there might be a delay in receiving funds as the cheque is processed. Electronic payments are likely to be the easiest way for you to receive payment but they have to be arranged by your customer which may be costly for them. Card payments are simple for both parties but are not always guaranteed. There are a few different options for how your payments will be received.

• I have a cheque from abroad, what can I do with this and how much will it cost?

  Overseas cheques can be taken to your bank and paid in as normal. Your Bank will normally charge you for processing a foreign cheque. This charge usually varies with the amount of the cheque. Two methods of processing can be used:

  • Collection: This is where you pay a foreign cheque into your account and the bank will wait until the funds are cleared and received before they credit your account. This can take up to 8 weeks.
  • Negotiation: The bank will credit the value of the cheque into your account without receiving advice that the cheque has been paid. This is similar to paying a UK cheque and your account will be debited if the cheque is subsequently returned unpaid. Cheques can be returned a considerable time after paying in and you may be debited a different amount due to foreign exchange rate changes. Negotiation is subject to status
• My customer wants to send me an electronic payment – what do I need to tell them?

  For you an electronic payment inwards is the safest way of payment, provided you do not send out any goods until you receive the funds. For an electronic payment to be received into your account you will have to advise the payer of your bank details. You should quote your IBAN and the BIC (or Swift) code. For example HSBC’s BIC is MIDLGB22, each bank has their own code. The IBAN is specific to your account whether it is in GBP or a foreign currency. Your bank will be able to advise you of your BIC and IBAN. In many cases your IBAN is quoted on your bank statement.

• Should I convert to pounds?

  This decision will vary for different customers and your business model – if you need the money now to pay UK bills then conversion immediately is required. However if you will be paying out the same currency in the future you may consider holding accounts in currency so as not to convert into pounds. Currency accounts operate similarly to a normal bank account but in currency. They are UK based and usually do not offer ATM access though. You may also want to talk to your bank about how they can help with mitigating exchange rate risks by using foreign exchange contracts. Click here for more information.

• I will be selling a lot in this country – should I have an account there?

  Having an account overseas will make it much easier and usually cheaper for your customers in that country to pay you. You will have additional costs from having an overseas account and will need to comply with the regulations in that country. If you have need of a bank account in country, e.g. you are running an office from there, people want to pay you by cash, you have suppliers in the same country to pay, then an in-country account can be useful, however, if not, a UK based account will probably be sufficient.

• My customer wants to pay me by card? What can I do?

  HSBC offers a range of solutions for accepting payment by card through Secure ePayment. This could be the right solution for you if you sell goods and services by phone, mail order or via the internet. More and more people are choosing these options as a convenient way of shopping. If your business currently accepts, or wants to accept these types of payments, our Secure ePayments product offers you an effective solution, making it safer and easier to process Card Not Present (CNP) transactions.

  Key benefits

  • Access into the fastest growing sector in the card transaction market – providing you with new business opportunities.
  • Up to the minute security features – from both Verified by Visa and MasterCard SecureCode™ for internet transactions.
  • Added security – from Address Verification Service (AVS) and Card Security Code (CSC) for mail and telephone orders.
  • Simple and Secure payment processing – easy to use administration functions including online transaction reporting.
  • Protects you from potential fraud – our fraud management department identifies potentially fraudulent items, allowing you to make an informed decision on what action to take.
  • Accepts all major debit and credit cards.
  • Multi-currency – accepts payments in a variety of international currencies.
• I will be buying from overseas too, how can I pay my suppliers?

  You have the same options as your customers – Draft, Cheque, Electronic payment and Card.

  There are many routes and systems available for you and your business to enable it to make electronic payments overseas. The services available to you will depend on your Bank’s systems and whether you wish to make the payment in GBP or in a foreign currency.

  Making payments over the phone

  Your Bank may offer a telephone service for making payments. You will need to call your bank and give them your instruction.

  Your Bank may have a maximum it allows over the phone.

  Making payments electronically

  Electronic payments have the advantage of being far quicker to receive than manual and can be far cheaper to send.

  Electronic payments can be made via Internet Banking. Charges are usually much cheaper than phoning or visiting your branch in person.

• What is the Single European Payments Area and what does it mean for my business?

  The introduction of the single currency created the need for a Euro area-wide integrated infrastructure, which would not differentiate between a “domestic” and a “cross-border” Euro payment within the Euro-zone. There are currently 16 EUR countries comprising Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain. With the number of countries joining the European Union expected to rise and the likelihood of a further six countries adopting the EUR over the next few years (Estonia, Lithuania, Latvia, Czech Republic, Hungary and Poland), this initiative has taken priority throughout the region.

  The impact of SEPA will not be felt immediately although we already know this initiative brings several important changes:

  • Harmonised pricing across all countries
  • Harmonised scheme for credit transfers with new standardised technical standards
  • New EU wide Direct Debit scheme, expected in Q4 2009 with standardised rules and guidelines
  • Withdrawal of national payments schemes (date to be confirmed)

  The benefits these changes will bring are:

  • Clearly defined execution times
  • Delivery of the full amount to the beneficiary
  • Structured remittance data
  • Harmonised standard for exception reporting

  What does the above mean for businesses like you?

  We are already beginning to see the demise of traditional payment instruments, such as cheques and cash, with a move towards electronic means, such as credit cards and greater use of the low-value payment systems. The longer term expectation is that through SEPA, payments and reconciliation data will be delivered in a standardised format and that the collection process of instruments like Direct Debits will be streamlined in terms of format and scheme rules. For many businesses this change could ultimately lead to a reduction in bank accounts across Europe and could also enable the centralisation of accounts to a single centre such as London, creating a natural pooling of funds arrangement and potential cost savings. For more information click here

• Can I see all my transactions over the Internet?

  Your Bank will certainly offer an Internet Banking package. Some Banks will have a choice of internet banking solutions and others still offer dialup software solutions. The advantage of an Internet solution is that it will allow you to access account information in real-time from any PC/laptop with internet access. These services will also enable you to make and receive payments and provide the necessary information so you can update/reconcile your account information. Specialised modules can usually be added, for Trade Services, FX and Money Markets, and liquidity. To find out about HSBC’s award winning online banking platform HSBCnet click here
  The key functions which you may be of use to you are -

  Visibility and Control

  • Ability to view real-time balances on-line and download statements
  • Generation of standard and bespoke reports
  • Statements can be drilled-down to view credit advices
  • View historical statements on-line
  • Audit trails of transactions through the detailed activity log tools
  • Key administrative and transactional events available for viewing via the activity query tools

  Payments

  • The ability to make high and low-value payments and inter-account transfers
  • Capability to upload transaction from back office systems
  • The automated e-mail delivery of remittance data to business partners

  Security

  • Security provided by the use of a security device
  • Systems administrators, nominated by you, allocate access to banking information and services giving you full control over the entitlement of each user
  • All information that passes between you and the bank should be fully encrypted

Research* suggests that the delivery experience is second only to price in customer importance and that 96% of customers would shop again from an online retailer if they were happy with the delivery of their goods. Ensuring your customer receives their goods quickly and in good condition is particularly important when exporting as you are often competing against other companies located in the customer’s own country.

Cross border fulfilment options largely fall into three main categories:

• mail (for items weighing less than 2kg),
• parcels and express (for items weighing up to 30kg or requiring express delivery)
• specialist logistics (for large volumes or specialist requirements)

If you are new to sending goods overseas, you may want to start with mail or parcel services as they are widely available and easy to access. The tips below may help you get started, however, if you are already familiar with overseas despatching you can buy mail and parcel services here.

The following are some of the things which you will want to consider:

* Royal Mail Delivery Experience Research 2007