An overview from the New Zealand Export Credit Office (NZECO) on key areas to keep in mind around export credit when doing business in Spain.
- Typical terms of trade sought by Spanish buyers are on open account terms with a range between 90 - 120 days. However, a weak domestic economy combined with a tightening of credit access, has resulted with some buyers delaying their due payments to conserve cash. New Zealanders exporting to Spain should closely monitor their buyer payment behaviours, and be cautious of any trends of increasing delayed payments.
- If an exporter cannot negotiate better payment terms, such as cash against documents, then the NZECO recommends seeking a letter of credit as a means of transferring the repayment risk from a Spanish buyer to a Spanish Bank. Exporters may then seek their New Zealand bank to confirm payment of the letter of credit, and also advance the related payment. New Zealand banks currently have a good level of credit appetite for quality Spanish banks, while the NZECO is also open to underwrite creditworthy Spanish banks in the event New Zealand banks reach their credit limits.
- Another benefit of trade credit insurance is that it may enable a proven exporter to obtain a trade finance facility from its bank to help fund the period between paying its suppliers upon shipment of the goods and receipt of the final payments.
