How will I receive the export payment?

There are various ways to send goods and receive payment. Each method varies in terms of security, cost, and procedure.

There are four main payment methods:

1. T/T (Telegraphic Transfer) - Direct transfer to a bank account

2. L/C (Letter of Credit) - Bank guarantees payment

3. D/P, D/A (Documents against Payment/Acceptance) - Bank mediates the exchange of documents and payment

4. O/A (Open Account) - Payment received later on credit

Which option is right for our company? Let's compare them at a glance.

T/T is the most commonly used method. Simply put, it means 'receiving money directly into a bank account.'

An L/C is the safest method for guaranteeing payment by a bank. It is suitable for transactions with uncertain buyer credit or high-risk countries.

Here's how it works:

1. The buyer requests the opening of an L/C at their local bank.

2. The issuing bank → notifying bank → notifies the exporter of the L/C.

3. The exporter ships the goods as per the conditions and submits the documents.

4. The bank reviews the documents and makes the payment.

Collection is a method where the bank acts as an intermediary for the exchange of documents and payment. It's simpler than L/C, but the bank does not 'guarantee' the payment.

How should you respond if a buyer requests payment after delivery?

We need to prepare for the worst-case scenario. What should we do if we can't receive payment?