Mode of payments in International Trade Business

March 25 02:20 2015

Introduction: There are various modes in which you can pay in the international trade market whether it is import or export.

Options related to the payment in international trade:

Step 1: The most popular and utilized way of payment is to pay in advance. This is the safest way if you are a seller. Burt you need to satisfy your customer. You have to be ready with the advance payment forms that are filled prior to the payment by the customers.

Step 2: Letter of credit is another mode of payment. Letter of credit to the supplier reduces the credit risk. Moreover, the buyer cannot refuse or deny paying the dealer.

Step 3: DP basis is another way. It means Documents against payment. It is the safest mode of payment in the export business.  Under the DP payment terms, the original shipping documents are collected by the buyer and the seller has to comply with that.

Step 4: D.A. that is Documents against acceptance is another option for making payments in trade.  As per its rules, once the buyer’s bank receives the bills of exchange and the documents related to shipping, the buyer is told that he has to accept the documents. He does so by signing bills related to exchange. Once he signs it and agrees to pay, the goods are delivered to him as per the negotiated time between buyer and seller.

Conclusion: All the modes of payment are genuine and widely accepted in the international trade.

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