Methods of payment

• Payments in advance:

  • least desired option for the importer, as it has all the risk of the goods not being sent
  • the exporter bears the least risk
• Letter of credit:

  • issued by the importer's bank promising payment once the exporter has delivered the goods to the dock / airport
• Bills of exchange:

  • the exporter draws up on a bill that arranges for the importer to pay the amount in full on a particular day
  • this arrangement, managed by the respective banks of each party, allow thee risk of the risk to be borne equally by the parties
• Clean payment:

  • an arrangement whereby the exporter ships the goods to the importer. Payment is made once the importer receives the goods. Risks > exporter?