Top 4 Safest Payment term in export -ExportPillars.

In today's booming international business world everyone want to do it. But majority people frustrate about payments in Import and export business. Because, we hear everyday in International business people loss their money.

They loss the money because they don't know about payment term in export and import business. In International business you may don't know about your buyer and also don't aware about their financial situation. So, how can you do trust on them. 

Payment terms is main part of any local or International business. If you follow the terms of payment in International business there are majority chance to you get your payment easily without facing any problem.

So, now you excided to know what are the four methods of payment for the international transaction? 

So, lets we discuss the payment term in export and import business.

Advance payment

This Advance Payment term in export is also known as a Telegraphic Transfer(TT). If we see it seller's point of view, an advance payment is the safe way of payment for any local or international business. After receiving payment seller can transfer of ownership of good. But in buyer point of view, Advance payment create little risk for buyer. Because he transfer payment before dispatch goods.

Advance payment term in wire transfer and credit card are the most commonly used cash-in-advance option available to exporter.

Letter of Credit(L/C)

Letter of credit is one of the safe way of payment term in export and Import business. while buyer not give you full payment in advance. That time Letter of credit is a commitment by the bank on the behalf of the importer that payment will be made to the exporter. Importer's bank generate L/C after buyer will submit all the require documents and then on his creditworthiness bank will provide L/C.

 Exporter is satisfied with the buyer creditworthiness of the buyer's foreign bank. An L/C also protect the buyer payment until the goods have not shipped as promised his bank not transfer payment to Exporter.

D/P or CAD - Documents against payment OR cash against documents

In Document against payment (D/P) term in Exporter have to transfer the soft copy of  Bill of Lading to Importer by Bank. After receiving Bill of Lading Importer will transfer payment to Export by Bank. After get payment seller should transfer all real documents through Bank to buyer.

In Cash Against Documents(CAD) term Exporter have to send real copy of Bill of lading to buyer through Bank. Once buyer Bank receive all document they transfer all payment to seller bank after that Bank give documents to buyer.

D/A - Documents Against Acceptance

In DA term, Exporter send Bill of Exchange to and buyer bank receive it. The buyer have to inform to buyer bank of receiving to the documents by buyer bank. Buyer accepts documents by signing bills of exchange which sent by exporter, he agreed to pay of goods shipped as per agreed period of time. And this time is 30,60,90 or 120 days.

Importer receive all documents after accepting of bill of exchange. Then he complete the custom clearance process and then transfer the goods to his warehouse.

CONCLUSION

After read this all payment terms you know what is the importance of it. I strongly  recommend to you follow this payment terms for International business. 

Because, using this terms you never lost money or minimum chance to lost of your payments.

First, you discuss with you buyer or seller about payment method and do final anyone which with you comfortable and then do further procedure.