Money first, goods later
In a perfect world, you could collect on your order, deliver the goods and move on. Chances are customers won't jump at the chance to part with sizable amounts of cash without even seeing what they've paid for.

In the case of new exporters, you have yet to prove that you can deliver the goods problem-free. "[This scenario as a new exporter] is the hardest to negotiate, unless the purchaser is really looking for your goods and your goods only. You have a little more leverage at that point in time," says Derral Moriyama, Senior Vice President of Sales and Services for Small Business Banking with the Bank of Montreal (www.bmo.com).

Make the banks work for you
Next to advance payment, a letter of credit is likely the safest option. After the contract has been settled, the customer will advise his or her bank of the deal. The foreign bank will contact your bank to confirm the sale. Once this confirmation occurs, your bank will pay you according to the contract terms. The responsibility to collect from the customer transfers to the bank.

This method is more common when doing business with international markets. Moriyama says that most of the bank's exporting clients prefer this arrangement. A letter of credit also assures you will get paid regardless of the political situation in a particular country.

Document collection
If a letter of credit is too much hassle for the foreign buyer, documentary collection could be the way to go. With this method, you will send the goods to the buyer and the bill to the customer's bank. Once the buyer has paid in full, they will receive full ownership of the goods.

You might be concerned about losing the upper hand in the transaction process. "There's a business process to this obviously, and you have to weigh the pros and cons of how restrictive you're going to be in selling your product," says Moriyama. "But at the same time it's always nice to get paid."

High risk in the open
Having an open account means you ship both the goods and the bill of sale to the exporter and wait for payment. While this method is common among Canada-US export deals, it carries the highest risk for you as a seller.

This open method is best reserved for customers who have proven themselves reliable during previous transactions. "If you have a very strong and established track record with a foreign company, you might feel a little more relaxed in providing that kind of method," says Moriyama.

Plastic cash
For some exporters, credit card payment is the only way to go. "It works well for the retailer with small orders, and it works very well for the vendor," says Barbara Newton, president of Vincent Van Dough. "Even if you lose the percentage, you have the security of the transaction being completed right away. You never have to put more effort into collecting." The percentage refers to the fee associated with having the card; retailers already pay a fee to complete credit card transactions in their domestic locations.

Moriyama agrees that credit card payments are a practical solution for companies making export profits of $10,000 or less. "There is a trend going to a smaller payment for goods and services of small businesses through that mechanism."

Weigh the risks
Being aware of the risks involved with getting paid will lead to better preparation. As you become more familiar and more comfortable with the export side of your business, you will learn which payment methods work best for you.