Doing Business In - International Franchise Association

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Chapter 7: Trade and Project Financing
• How Do I Get Paid (Methods of Payment)
• How Does the Banking System Operate
• Foreign-Exchange Controls
• U.S. Banks and Local Correspondent Banks
• Project Financing
• Web Resources
How Do I Get Paid (Methods of Payment) Return to top
Most Czech firms use prepayment or partial prepayment with the balance due upon
delivery or net 30-day terms. On shipments under US$2,000, consider asking the buyer
to pay by credit card. Czech firms are familiar with letters of credit, documentary
collections, and wire transfer/cash in advance. Most would prefer not to use a letter of
credit due to its high cost.
Although smaller sales of U.S. goods up to about US$50,000 are common, above this
threshold many small Czech businesses cannot afford or secure financing. An U.S.
firm's ability to provide or arrange financing is often key to building significant market
share.
The most attractive solution for exporters of consumer goods and industrial components
may be to offer your distributor a container of product on consignment, and to enable
your distributor to use proceeds from the first container to finance additional containers.
For higher-value items, financing is tricky, yet crucial. Lease finance is an increasingly
popular approach for equipment, vehicles, and other large capital items. Exporters
should contact the U.S. Eximbank and Small Business Administration for information
about their trade financing programs. In addition, a number of U.S. states and port
authorities may offer financing assistance.
How Does the Banking System Operate Return to top
U.S. firms will be able to choose between a number of foreign banks and large local
banks offering highly professional service. Foreign and large domestic banks (such as
Komercni and CSOB) offer corporate checking accounts and debit cards. Internal bank
transfers take one day; domestic transfers take three days; transfers between major U.S.
and Czech banks usually take less than a week. The top Czech commercial banks offer
brokerage, investment advisory and underwriting services.