The word export usually refers to transactions where goods, in other words, material products, are manufactured in the seller’s country and then transported and delivered to a buyer in a foreign country. Services are also an important part of export, but it is sometimes unclear what is actually delivered by the seller to a foreign buyer in such transactions.
A typical example of a service provided to a foreign buyer is construction work performed by a construction company in the foreign buyer’s country. Another example can be an architectural design created completely in the designer company’s country and then sent to the foreign buyer. Other examples of services that can be exported are selling software technology, providing various financial services, consulting work, granting a licence or copyright, providing medical services, drafting legal documents, etc. The difference between goods and services is sometimes explained in a way that goods are ‘tangible’ things, while services are ‘intangible’ things.
The problem with the export of services is that such export is not always registered by exporting countries, and its volume is often difficult to measure. This is because services do not cross the state borders in the same way as goods. Services are increasingly delivered online, by telephone or by workers who travel to the foreign buyer’s country to perform their work there. Despite difficulties in measuring the export of services, this type of export is growing rapidly in international trade.
The above description of services indicates that small- and medium-sized companies are frequent providers of services for export. A comparison of the payment terms agreed in contracts for the export of services and the payment terms agreed in contracts for the export of goods shows that payment terms in these contracts are remarkably similar. This is because foreign buyers usually request payment on credit, and both the sellers of services and the sellers of goods often accept that. As explained in our eLearning course Risks in International Trade, the payment on credit terms is connected with commercial and political risks that may cause non-payment of credit. Such risks can be avoided or minimised in the ways explained in our eLearning courses.
See our eLearning courses Payment Terms and Risks in International Trade