International payment methods in import and export

International payment in import and export is one of the bank's operations in the payment of the value of shipments between the importer and the exporter in the foreign trade sector. What is the international payment in import and export? Then please follow the article below.

1. First is the method of letter of credit (L / C)

- Letter of credit is one of the safest international payment methods for importers and exporters. Because letters of credit involve support from financial institutions such as banks as intermediaries. Payment will be made through the exporting party's bank and the importer's bank. After confirming the terms and conditions of trade, the importer will ask its bank to pay the agreed amount to the exporting party's bank. Next the importer's bank will send a letter of credit as proof of having given sufficient funds and legally to the seller's bank. Payment is only transferred when both parties meet all agreed conditions and the shipment has been shipped.
- Letter of credit is also abbreviated as LC (full name is Letter of Credit), also known as commercial banking credit or documentary credit.
- The method of letter of credit has the advantage that the bank functions as an intermediary for revenues and expenditures but also acts as the representative for the importer to pay the exporter, ensuring that the exporter can receive the money. To make sure that the importer receives the goods as well as the quality of the goods that they have paid for.

2. Second money transfer method (English name is Remittance)

Money transfer method is an international payment method in which a customer asks his or her bank to transfer a certain amount of money to a receiver at a certain location, in the form of money transfer before and after payment. Because if the goods are transferred first, the exporting party will be in a disadvantage position, because when the goods are transferred to the importer, for some reason, the importer delays the money transfer to the bank leading to the exporter. will receive money long time. Therefore, thanks to the method of money transfer, the unfavorable position will be transferred to the importer in that the importer will have to transfer the payment to the exporter before receiving the goods.

3. The third method of collection (in English name is Collection of payment)

- The collection method is an international payment method through collection of bills of exchange plus documents to ensure benefits for the exporter. After exporting, exporting goods to the importing party, the bank will entrust the bank to collect money on behalf of the importer on the basis of draft established by the exporting party.
- The collection method of the international payment method includes two types: smooth collection and voucher collection.
+ Thanks for smooth collection: the exporting party will ask the bank to collect money on behalf of the draft and the documents will send directly to the importer. As a result, the bank only plays the role of the intermediary for payment (in which documents are sent to the importer, so the bank will not be able to force the importer to make quick payment) and that will cause disadvantages for the importer. Export because the document is covenant before receiving the money, so the importer may delay the payment.
+ Thanks for collection of documents: the exporting party will not transfer the documents directly to the importer but will send it to the bank, request the importer to pay immediately or accept payment to the bank, the new bank will deliver the documents. to receive the goods.

4. Four recording method (open account in English)

- The recording method is an international payment method in which the exporter will open an account to debit the importer that the payment will be made to the exporter at a certain time in the future. This international payment method is only guaranteed and safe when the two parties really trust each other, have traded together many times and the importer has a reputation in making money payment.
- When using this international payment method sometimes contains many risks, the bank will not participate in opening an account and making payments. Only when the agreed payment time is reached, the importer will use its bank to pay the debt owed to the exporter. Note in this transaction, only the exporter can open an account to record the amount of goods and the importer will not open the account, and if there is, the account is only for monitoring, not for bar value. math on both sides.

5.The fifth method of trust purchase (in English is Authority to purchase)

- The method of trust purchase is method make an international payment at the request of the importer's bank to issue a written request to the agent bank of the exporting party delivering the consignment of goods to commit to buy the drafts from the exporter to sign the bill, provided that they are present. the term conforms to the terms of the consignment purchase and must be verified by the importer's representative of the purchase.
- The method of entrusting purchase is often used in contracts for the sale of equipment, machinery, and hi-tech products. The nature of this method of international payment is that the importer, through its bank in the country of importation, transfers money to a bank in the exporting country to authorize this bank to pay the draft of the exporter to sign. play.

And that is what I have gathered and searched for about import / export payment methods that I can share with you. I will be very happy that this article will assist you in understanding payment methods.