Methods and Tools of Payment
in Exporting and Importing
The process of exporting is incomplete without receipt of payment. Export income is considered earned only when payment has been received.
Letter of Credit (L/C)
The most popular and a safer method of payment is by a confirmed irrevocable letter of credit at sight. Please see Documentary Credits (Letters of Credit) for detail explanations.
Documentary Collections
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Please click here for the detail information about documentary collections.
Documents Against Payment (D/P)
Documents Against Acceptance (D/A)
Cheque and Bank Draft
In exporting to the offshore countries, payment by cheque and bank draft occur more often in a small order, ranging from a few hundred to a couple of thousand U.S. dollars. Cheques and bank drafts are often used in open account and consignment trade arrangements.
Both large and small companies may default in their payments, regardless of the amount involved. In times of economic uncertainty, both large and small companies may go out of business. It is important to receive the cheque or bank draft before releasing the shipment. Unless the integrity of the importer is known, it is very important to wait until the cheque or bank draft has cleared before the shipment. International clearing of cheques and bank drafts takes 3 to 4 weeks usually (except in a sight draft with a paying bank in the sellers country).
