Getting a recalcitrant customer to pay up is always tough. But at least when you're located in the same country as your customer, you have some legal recourse. You can hire a collections agency, or, in the worst-case scenario, sue. 

Overseas, it's a lot harder. That doesn't mean you can't get paid--just that you have to put a little extra effort into it, and that you've got to be well-prepared for things to go south before you ship. Laurel Delaney, author of the book "Exporting: The Definitive Guide to Selling Abroad Profitably," and founder and president of consulting firm, has a number of strategies to help make sure you get paid. Here's what she recommends.


This is where most business owners start, says Delaney, especially if the value of the shipment is less than $5,000. Some even use PayPal for amounts up to $10,000, but bear in mind that Paypal charges 2.9 percent for domestic transactions and 3.9 percent for international ones.

"It's okay, if you don't mind spending through the nose," says Delaney. But as you grow, that 2.9 or 3.9 percent is going to look more and more onerous, and is going to cut into your profit margins. "You don't want to be paying those fees just for collecting money," she says.

Cash in Advance

It's very hard to get cash in advance for anything, says Delaney. On the other hand, "You won't get what you don't ask for. There is a remote chance it can happen. The hungrier they are for your product or service, the more likely it is that they're going to do it."

A decent alternative to cash in advance is to ask the customer to pay in installments. One common arrangement is for the customer to pay a third up front, a third while you're doing the manufacturing, and a third when you release the goods and they receive the products.

Sight Draft 

This is the most common financing tool used by small- and medium-sized businesses that are doing business overseas, says Delaney. You'll need some help from your bank and your shipping company or freight forwarder to set it up.

Essentially, a sight draft allows you to draw a check on your buyer's bank account, although the actual mechanics are a little bit more complicated than that. With a site draft, your international customer won't be able to take possession of the shipment until they sign a document saying the shipment has been made. When they do, their bank will pay you.

By definition, sight drafts are supposed to be paid immediately, but they often take a day or two to be processed (not unlike checks). 

Letter of Credit

Delaney refers to these as the Maserati of payments. In effect, a letter of credit substitutes the creditworthiness of your customer's bank for that of your customer itself. You'll have to work hand-in-hand with your banker to get a letter of credit, and they're usually not used for shipments of less than $5,000. Your customer has to draft a letter of credit with his or her bank, too.

A letter of credit is paid (or not) based on the conditions in the letter of credit itself, which often include an inspection of the shipment itself. The contents of a sales agreement or any other contract are not necessarily applicable here.

In general, a letter of credit will cost you about 1/8 of one percent of the value of the shipment, says Delaney. "It brings you peace of mind," says Delaney, "It's worth the price, and it's worth your time." 

If You Didn't Prepare in Advance…

If your customer has possession of your goods, and you've done nothing to make sure you get paid, all is not lost. But you've got a lot of legwork to do. "It's almost as if you're treating the customer as if they're local," says Delaney. In other words, you admit (to yourself, at least) that legal recourse is almost nonexistent, and work to wheedle or shame the money out of your customer anyway.

For a small dollar amount, start with a simple email, says Delaney. Ask: "Is there something we failed to do? Perhaps we do not understand the timeline for payment?" Mention that you'd just love to send someone to their office, in person, to discuss it.

If that doesn't work, send a more insistent email, and say that really, you'd hate to have to ask the U.S. Embassy for help, because you wouldn't want to do anything to tarnish this most valued customer's reputation. If that doesn't work, you absolutely can go to the U.S. Embassy in the customer's country and ask for their help. Often, just the threat of this will get people to pay up.

There are other ways to find government officials who may be able to help. At, pull down the tab for the market your delinquent customer is located in. There, you'll find lists of specialists categorized by industry or product. Find the specialist in your product and country, explain what's going on, and tell them you need help.

"Almost nobody will do this," says Delaney. That makes your odds all the better when you do.