International Trade Payment Methods

Foreign trade payment terms (terms of payment) is a vital part of the international trade contract, which provides for the buyer and seller in the transaction process of payment methods and conditions. The following are some common foreign trade payment terms:

1, remittance (remittance), also known as remittance, refers to the payer entrusted to the bank in the country, the money will be paid in a certain way to the payee, is the simplest way of foreign trade settlement. According to the use of different payment tools, remittance can be divided into telegraphic transfer (T / T), letter remittance (M / T), ticket remittance (D / D) three ways. Among them, telegraphic transfer (telegraphic transfer, T/T) is the most fast and safe and generally applicable remittance method. (There will also be before and after the TT, or mixed with other payment methods)

2, Letter of Credit (Letter of Credit, L/C), is a safe, reliable foreign trade payment tools, by the bank (issuing bank) according to the importer (issuing applicant) request, issued to the exporter (beneficiary) of a guarantee to bear the responsibility of payment of the written documents. Its main feature is the bank credit, that is, the bank with its own credit for both sides of the transaction to provide payment security. Roughly speaking, it should go through several links such as application for issuance of certificates, issuance of certificates, notification, delivery, payment, redemption and so on. (The operation process of letter of credit will also be described in detail later)

3, Collection (Collection) is the full name of the commissioned collection, is the exporting party entrusted the bank to the importing party to collect payment of a payment method. Collection is divided into light bill of collection and documentary collection, in foreign trade, most of the use of documentary collection. Its basic practice for the export side first shipment, and then ready, including transportation documents, including the relevant commercial documents, the full set of documents to the exporting bank, entrusted to the importing branch or agent bank, to the importing party to collect the payment, with the importing party's payment or acceptance to the importing party to deliver a full set of documents.

In the case of documentary collection, according to the different conditions of delivery, can be divided into payment delivery (documents against payment, D/P) and acceptance delivery (documents against acceptance, D/A) two kinds. Payment can be divided into on-site payment delivery (documents against payment at sight, D/P at sight) and forward payment delivery (documents against payment after sight, D/P after sight) two kinds.

Payment at sight (D/P at sight) and forward payment (D/P after sight) of the main difference is that the payment time is different. Payment on demand requires the importer to pay immediately after seeing the documents, while the forward payment is allowed to pay the importer on the due date of the bill of exchange.