Czech Republic - Country Commercial Guide
Trade Financing
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Methods of Payment

Most Czech firms use prepayment or partial prepayment, with the balance due upon delivery or net 30-day terms. For shipments under $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 the high cost. While cash in advance is common for smaller sales of U.S. goods (up to about $50,000), U.S. exporters should recognize that many small Czech businesses cannot afford or secure financing above this threshold. A U.S. firm’s ability to provide or arrange financing can be effective in building significant market share.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

The most attractive solution for exporters of consumer goods and industrial components may be to offer a distributor a container of products on consignment and to enable the 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 the Small Business Administration for information about their trade financing programs. In addition, several U.S. state and port authorities may offer financing assistance. Moody’s Investors Service EMEA Limited Czech Branch is the only credit rating agency in the Czech Republic. There are 25 major collection agencies, 80 percent of which are members of the Collection Agencies Association - in Czech only). The Association is a member of FENCA (European Federation).

The main credit cards used in the Czech Republic are MasterCard and Visa which are issued by all major local banks. The most common type is debit cards (about 70 percent of all cards) followed by credit cards (about 28 percent). Charge cards issued by Diners Club and American Express are rarely used by Czechs although they are generally accepted in tourist area shops, large hotels and shopping malls.

Banking Systems

The banking sector is dominated by three banks: Ceska sporitelna, CSOB, and Komercni banks, which are owned by foreign bank financial groups. The Czech banking sector is comparable to most similar-sized Western European economies. Foreign and large domestic banks offer a diverse range of products and services, including investment banking, investment funds and advisory, brokerage, underwriting, insurance, pension funds, and leasing, among other services. The Czech National Bank supervises the banking sector.

Internal bank transfers are completed within the same day; domestic transfers are completed within the next working day; and transfers between major U.S. and Czech banks usually take less than a week. Both commercial and retail banking offer accounts in numerous currencies, including the Czech crown, the euro, and the U.S. dollar.

Foreign Exchange Controls

The Czech crown (CZK) is fully convertible and there are no foreign exchange controls affecting trade in goods. Companies operating in the Czech Republic have free access to foreign currency and there has been no failure by the banking system to provide hard currency on demand. Profits can be repatriated by law including through bonds and securities. Under the terms of its EU Accession, the Czech Republic is required to adopt the euro (EUR) although the government has no fixed date for euro adoption. Between November 2013 and April 2017, the Czech National Bank (CNB) set an upper limit for the Czech crown of CZK 27/EUR and intervened in the foreign exchange markets to prevent further crown appreciation. The rationale for the currency cap was to prevent deflation. On April 6, 2017, the CNB removed the currency cap as the risk of deflation subsided and inflation appeared at or near the Bank’s two percent target (with a range of +/- one percentage point). The CNB has projected a decline in the inflation rate for the second quarter of 2023 which will continue in the following months. For 2024, CNB projects the return of a two percent inflation target.

For additional information, visit the U.S. Department of State Investment Climate Statements.