In every international business transaction the issue of payment is uppermost in the mind of the exporter. This chapter introduces the main means by which payment is effected in international transactions. While the emphasis is on payment for the export of goods, payment for services is also discussed.

At the outset, it is necessary to distinguish between payment and price. Payment refers to the process by which the exporter will receive the money. Price refers to the amount the exporter will receive. The calculation of the price that the exporter should charge for the goods usually includes the cost of production and other overheads as well as any costs of the export transaction that the exporter has to bear. The costs specific to export could include freight charges, insurance, inspection costs, and other administrative overheads associated with the transaction and, depending on the incoterm that is chosen, might even extend to import duties, unloading expenses, and internal transport and storage charges in the country of destination. Most firms have detailed costing procedures in place. A discussion of the various alternatives is beyond the scope of this book.

Likewise, there is an ever increasing array of financial arrangements that exporters have at their disposal to obtain the working capital necessary to finance the production of the goods or services. These range from simple bank overdrafts to more complex financial instruments provided by private financial institutions through to government-sponsored initiatives such as those provided by the Export Market Development Grants Scheme administered by Austrade.