Page 72 - Export and Trade

Sponsored by

• Private individuals. F ,Q UHVSHFW RI EDQNLQJ FRVWV XQOHVV FRQWUDFWXDOO\
• The failure by the seller to obtain an import or agreed to be part of the amount owing from the
export licence. Buyer;
• Third country risk – where goods are dispatched G ,Q UHVSHFW RI DQ\ FRVWV ZKLFK WKH 6HOOHU LQFXUV LQ
or services performed in a country other than the resolving disputes between it and the Buyer or in
buyer’scountry.Ifrequired, this covermustbe defending any proceedings brought against it or
VSHFL¿FDOO\HQGRUVHGRQWKHFUHGLWOLPLW initiated by it;
• Radioactive contamination – loss arising directly or H 7KH 6HOOHU PD\ VXVWDLQ ZKHUH DQG WR WKH H[WHQW
indirectly therefrom. that such loss is (or would be but for the
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Cover shall also not apply to any loss: by any other insurance held by the Seller or from
D ,QUHVSHFWRIDQ\LQWHUHVWDFFUXLQJDIWHUWKH ZKLFK LW PD\ EH HQWLWOHG WR EHQH¿W RU UHFHLYH
original due date of payment; payment.
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contractual or otherwise, which a Seller may be Finally, there are the obvious exclusions such as
entitled to be paid by the Buyer in addition to the sales with cash-on-delivery terms or cash-in-
amount owing; advance terms, as these do not constitute ‘credit’.

Why buyers don’t pay
CAUSE POTENTIAL SOLUTION

• Insolvency. * • Credit Insurance.
• Payment Default. * • Credit Insurance.
• Political issue preventing payment. • Credit Insurance.
• )RUHLJQ H[FKDQJH ÀXFWXDWLRQ • Banks – forward contracts.
• Goods arrived damaged. • Transit or Marine insurance.
• Goods contain production defects. • Dispute resolution.
• Wrong goods delivered. • Replacement order sent.
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What are Credit Terms? What are Credit Methods?
This applies to the number of days a debtor takes to pay This is the way in which a buyer pays. From lowest risk
for goods or services delivered. to highest risk, in ascending order they are:
Terms should match the type of goods being sold – e.g. ‡ &DVKLQ$GYDQFH QRWFRYHUHGXQGHUFUHGLWLQVXUDQFH
perishable food stuffs have a short payment term, unlike ‡&RQ¿UPHG LUUHYRFDEOH OHWWHU RI FUHGLW &,/&
capital equipment which has much longer terms. ‡ ,UUHYRFDEOH OHWWHU RI FUHGLW ,/&
Generally, terms for short term credit insurance go to a ‡ 7HUP GRFXPHQWV DJDLQVW DFFHSWDQFH ELOO RI H[FKDQJH
maximum of 180 days but there are some exceptions. ‡6LJKW GUDIW FDVK DJDLQVW GRFXPHQWV 6' &$'
Terms over 360 days are considered medium to long • Partly Cash in Advance and balance on credit terms.
WHUP DQG UHODWH WR VSHFL¿F SURMHFWV ZKHUH SD\PHQW • Open account.
stream is dependent on completion of project rather Terms and methods are usually found in the contract of
than straight sale. sale itself.

70 NZ Export & Trade Handbook 2018