Terms of Payment in Export and Import

 

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The information provided here is part of Online export import business guide course

4 Different types of terms of payment in International Trade.

If we do not go in detail about definition and deep parameters, I will call this slogan – ‘ Business is money’. Although business man enjoy his day to day life in trade, if a loss occurs in business, everything collapse. So payment of any sales proceeds plays a very important role than any other roles in business.

Terms of Payment in Export and Import copy

Most of the beginners of exports may worry about the terms of payment. Because, unlike other domestic business, you are dealing with a buyer who situates thousands of miles away from your place crossing borders of your country.  You may or may not know the financial condition or credit worthiness of  your buyer.  You may not be meeting the buyer personally at initial stage, may not be  aware of the specific policy of trade of buyer’s country, no idea about political status or natural calamity chances of the region etc.etc.

Payment term in any business is a major part of sales contract. Terms of payment in exports and imports plays an important role in international business. What are the different types of mode of payment in exports and imports?

Let us discuss different type of terms of payment in international trade.

The Major ways of making payment in export and import are given below:

How to make payment to overseas seller in International trade of exports and imports? 

Advance payment

With a seller’s point of view, an advance payment is the safe mode of payment for any business including export business. Receiving amount of sales in advance helps exporter in various ways to plan his financial activities smoothly. However with a buyer’s point of view, advance payment carries little risk, as he advances payment before dispatch of goods. Advance payment of term in exports and imports is opted by a buyer only when he knows the seller in details on genuineness as a seller. Also read   Advance payment the best way of terms for business 

Letter of credit.( L.C.)

Letter of credit is another type of payment term opted by importers and exporters. I have explained in detail about Letter of credit and its mechanism in a couple of articles in same website. The details about letter of credit includes advantages of LC to an exporter, advantages of LC to an importer Disadvantages of Letter of credit to an exporter, disadvantage of letter of credit to an importer, different types of letter of credit etc.. You may read the same to have a clear knowledge on Letter of credit. Although letter of credit has some advantages and disadvantages, it is a safe mode of payment in international trade for both exporter and importer. So LC is one of the safe types of mode of payment in international trade.    Also read

    Letter of credit - How does LC work?      What are the advantages of Letter of Credit to Exporter? How LC is benefited to Importer?   Are there any disadvantages to importer for a consignment under Letter of Credit?   What are the disadvantages of LC to an exporter?   Who are the parties involved in Letter of Credit?   How to check authenticity of LC? What is Prime Banker?    

D.A.P or D/P basis - Documents against Payments

Documents against Payment – DP/DAP is another term of payment in international trade. The documents under consignment are delivered to buyer/importer only after collecting payment of goods by buyer’s bank. A detailed article has been written in same website about DP/DAP terms of payment. You may go through the same to know more about DP/DAP terms of payment in exports and imports.  Also read

  Is DP terms of payment safe in export business?   How does Bill of Lading work in DP payment terms?

D.A terms means Documents against Acceptance

Documents against Acceptance are another term of payment in international payment. I have written a detailed article about DA terms of payment in same website. You may go through the same for further read.

Can a Buyer (Importer) make part payment in Advance and balance on credit basis in exports and imports?

Yes, In an international trade, a Buyer can effect  part payment  as advance and balance amount with a credit period or under DP terms.  Also read    Documents against Acceptance. - How reliable the terms of payment in exports    How to make DA mode of payment safe

I believe this article is only a window to have deep knowledge about terms of payment in international trade. I know, some of you may have a good experience in handling different types of terms of payment in exports and imports.

Terms of Paymnet  in International BusinessI request you to share your experience about terms of payment in exports and imports.

Comment below your thoughts on payment terms in international trade.

Click here to know latest update on  Export Benefit Schemes in India 

 

 


The above information is a part of Guide on howtoexport and import

Other information about Export import tutorial

Disadvantages of LC (letter of Credit) to Importer.
Documents against Acceptance. - How reliable the terms of payment in exports
Is D.A.P terms of payment safe in export business?
What is LC Letter of Credit in export import business
Advance payment the best way of terms for business
CNF,C&F or CFR. Which term is correct.
How to start Export Business?
How to get Export Orders?
What are the risks and solutions in Export Business?
Click here to know India Trade Classification(ITC)
Service Tax - Click here to read complete notification under Budget 2014
What is Bank post shipment credit to exporters?
Types of export containers
Measurement of export containers
Export Import Policy of India 2015-2020
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

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Migration procedures for existing VAT payers to GST online in India 
Refund of GST paid in India, FAQ
4 Conditions when applying for refund of Input Tax Credit (ITC) under GST
Enrolling an existing VAT taxpayers at the GST Common Portal 
Difference between types of goods and services and types of GST
4 types of Goods and Services in India for GST rate
Difference between IGST on International goods and IGST on domestic goods.
Navigation controls to enroll with GST in India for existing VAT payers in IndiaHow is IGST calculated under Imports?
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How to register a Digital Signature Certificate under GST in India.GST and e-Commerce Business, FAQ
Definition of E-Commerce under GST
How to identify the steps in enrolment process of a tax payer at the GST common portal. 
TDS under GST, Frequently Asked Questions
Does Interest attract on GST Tax payment delay?
Step by step procedure to login with GST common portal in India
Mechanism of Payment of GST tax in India
Levy of late fee for GST Tax returns filing in India
I pay Service Tax on my services. But I am not sure how do I pay the new GST?
Notice to GST return filing defaulters
When to file Annual Return of GST online?
Procedures to claim reduction in output tax liability of GST in India
Process to issue GST Provisional ID to existing VAT payers in India

 



Comments


Qazi Faheeem: I want to know about terms of Payment in Export and Import.

NAVED: SIR, YOUR WEBSITE IS QUITE WONDERFUL FOR BEGINNER IN THIS BUSINESS AND ALSO THANKS TO FOR YOUR IMPORTANT ARTICLES. BUT ONE QUESTION I HAVE KNOW THAT IF ONE IMPORTER HAS FILLED BILL OF ENTRY AND EXAMINE THE GOODS BUT UNFORTUNATELY THERE DISPUTES ARISE BETWEEN IMPORTER AND EXPORTER AND GOODS WERE NOT NOT RELEASED FROM IMPORTER. NOW IMPORTER CAN GET CANCEL BILL OF ENTRY WHICH WAS FILLED.

surendran: Hi Naved, Please read my article 'uncleared' goods procedures in same website

Armaan singh: Hello Administrator.. You have done very nice work on your site. I am going to start export business in India. Will you please give me some information, I will be very thankful to you. Some confusions in my mind are- 1. How to get strong and real buyers offline because through internet we get mostly fraud buyers. How to identify fraud buyers ? 2. What if buyers do not pay and he want to return our goods because of quality because quality is the main issue for buyers in international trade. So how can we get payment from this type of buyer.Is it a loss for exporter? Will he notify us before return our goods or Any legal aggrement happens before contract if this type of problem arises? 3. I have heard about complaint about quality through buyer against exporter. I think mos fraud buyers may do that. Is it a harmful situation for exporter or any action against exporter ? Please give me proper knowledge. I am waiting for you reply. Thank you

Surendran Kollerath: Hi Armaan Singh, You may gently go ahead in setting up an export business. I have clarified all your doubts in different articles in this web blog. You may read all.

Dhaya: U done a great job, Thank u administrator for your useful concern and references, i am planning of import electronic goods and toys from china or from Japan. still confused on where to choose. please let me clear in this issue.

v.Jayakumar : Sir`iam Jayakumar i want to export metriyal packing detils

mohanan: sir, want to export fresh tapioca to middle east, please help

Ayaz Ahmad: sir, what is the meaning of T/T in export payments. Please elaborate

Mohd Sajid: sir, want to export ladies garments, please help

krishna kumar: Sir I want export a lady garments please help is this possible if yes please advice how can start.thanks

Md Ashikuzzaman Janu: Hello Administrator.. You have done very nice work on your site. I am going to start export business in India. Will you please give me some information, I will be very thankful to you. Some confusions in my mind are- 1. How to get strong and real buyers offline because through internet we get mostly fraud buyers. How to identify fraud buyers ? 2. What if buyers do not pay and he want to return our goods because of quality because quality is the main issue for buyers in international trade. So how can we get payment from this type of buyer.Is it a loss for exporter? Will he notify us before return our goods or Any legal aggrement happens before contract if this type of problem arises? 3. I have heard about complaint about quality through buyer against exporter. I think most fraud buyers may do that. Is it a harmful situation for exporter or any action against exporter ? Please give me proper knowledge. I am waiting for you reply. Thank you

subramanian: please clarify Once the Importer Bank sent an acceptance for a D/A Bill with due date, is there any chance to the importer to dis honor the payment on Maturity? in such situation will the importer Bank honor their acceptance given to the Exporter? please clarify. Regards

Amit Kumar: Sir material export to dubai but importer company not release any payment till now. B/L date- 03.02.2015 and party not receive my call, not give answer on my mail please give me suggestion to release payment from this company regards Amit Kumar Mob- 09825995847

R. L. Dhingra: please educate me what are of credits in custom and import can be availed or taken for excise credit by industry in India when import goods received in factory.

bimaldas: I want to export flower in middle east country.pl.help me.

Mahamoudou Cisse: Hi I would like to different mode of maritime transport, Like danger cargo. What does it stand for. Best regards, Cisse

Gopinath: Hi sir iam going to start export of vegetables from chennai .How can i trust importers.

anuvika jain: Sir our team exported onions from india to dubai...nd now that buyer is not giving our payment...tha main issue is that neither we have Insurance by ECGC nor any other typee of security..what we can do now...what are the options available..????plz rply..thank u..

Anuvika jain: Sir our team exported onions from india to dubai...nd now that buyer is not giving our payment...tha main issue is that neither we have Insurance by ECGC nor any other typee of security..what we can do now...what are the options available..????plz rply..thank u..

anuvika jain: Sir our team exported onions from india to dubai...nd now that buyer is not giving our payment...tha main issue is that neither we have Insurance by ECGC nor any other typee of security..what we can do now...what are the options available..????plz rply..thank u..

vishnu: I amplanning to export coconut to singapore malasya dubai how can i search buyer

usman : i wan to export handmade bags how can i start this n i wan to importers for my electronic goods how can i get?

ashok shah: I m dealing in poly propline rope.i want to know that in wich of the country are use it...and wt is the importence in dealing and if i want to became in exporter then wt can ido......plase gidence me.....to became succeful exporter...

Md.Adnan: What is the maximum time period Exporter can give in DA Payment terms ?

Sujith Sugunan : However I have a doubt in our real business life or we facing a problem with one of our new buyer from Dubai. We got an export order for Coconut from Dubai and the buyer saying that the payment will be after arrival of goods(Not willing to do the LC also). Also they inviting us or our representative to visit their office for business confirmation. But now a days its not possible for us. In the above matter any possible and risk free way to do a business with this buyer? If after arrival of goods the buyer didn't pay, is have a way to extract our money?

salim: Wich is best pyment method credit export?

Joshua V Abraham: Mr. Sujith Sugunan, You can deal with CIF. It stands for cost, Insurance and freight should paid by you. So he cannot get the product before showing NOC paper to the shipping agent. You can issue the NOC after get paid.

Jeevan Karuppasamy: We have exported Semi-husked Coconuts to Dubai.The payment term is '100% on scan copy of shipping documents’.We have sent scan copy of documents to the buyer/importer. Believing the buyer's information that the payment was made by him, we have sent all the original shipping documents directly to the buyer.The buyer has informed that the consignment was received in good condition.But even after nearly 3 months lapsed, despite frequent reminders by e-mails and over phone calls, so far we have not received any payment.We are having all the documentary evidences Please guide us how to proceed for realisation of the payment from the buyer?

George Melendez: Is it true that Indian banking regulations do not allow for extended terms, must be t/t at site ?

Ghulam Rasul Nasir: After careful and deep study of the Article I am of the firm opinion that the material therein is very informative and supportive not only for the businessmen interested in Importers & Exporters but for the Bankers as well.

abhishek bajaj : We Want to start the exports to middle east countries and got to know that you ar the good advisors for the export.

Rishank Pandey: I saw your website, which is very encouraging for understanding the concept of export and imports. I'm working in a bank in Delhi as a Relationship Manager in Corporate Banking, can you please advise the consultants who are dealing in import / export business.

Ajay Kumar : Can u tell me what is different in export and import.

gaurav dugar: Our buyer wants DEP30 as payment terms. Please let me know what he means by that

manojkumar: hello sir, i am rack manufactuer.i need export order

Rajalingam Industry: Dear Sir, I am manufacture and supplier of Cotton Knitted and Hoisery Hand gloves in India. I would like to do export of my products. I need export orders. Please let me the prodcedure to get export orders.

naveen kumar shakya: Dear Sir, I am manufacture and supplier of cotton dress in India. I would like to do export of my products. I need export orders. Please let me the prodcedure to get export orders

PETER : Hi Admin I am in Botswana(Africa) I want to start exportation of cattle hides but cant just find serious buyers please help. email:prserunya9@gmail.com

Abdul Rasheed: Sir I Would Like To Know Which Payment Term is More Effective And Suitable For Me. AS Iam The Exporter From Dubai And Also Iam The Importer in india.so the seller and buyer is me. or is it possible to go with out any payment terms.Please Advise Me Which is more Suitable For Me..thnx

Akash Agro Industries : Dear Sir Hope you are in good health, Further to inform, you that we have done one shipment to the mexican buyer and we have given material on credit of 90days but after 90days buyer haven't paid us and its now 150days and we havn't got any payment from the buyer. Please suggest us what we can do to get the payment.

Tejas Shah : We are facing a problem as have shipped a consignment where we are facing payment issues from our buyer. 1) Our export sales is against sight LC to Bangladesh. 2) We shipped consignment by sea. 3) We have submitted all documents in our bank. 4) We have proof that buyer has already released the documents and take delivery of the goods. 5) We have not received any payment nor any swift copy of payment. 6) Now buyer is raising quality complain for this cargo after taking the delivery. Please let us know your view in this matter.

Rodolfo: Dear Sir, Greetings. Kindly explain the difference between net 30 days PDC and 30 days PDC only. Thanks

Emmanuel: thanks for this great job

hummer rock : Thank you so much for your articles which has helped very much for beginners like me in Export and Import. I am into import business currently, I import raw materials of Agarbathi from China and Vietnam. I am now stuck in a dilemma, I have found a supplier in China who has offered us competitive price and thus I proceeded further with the same. The bank account details he has provided is of a Bank in Hong kong, when asked him about it he said that he has other company in Hong kong for foreign exchange, he does not have account in China because of tax evasion. He has to say that having company account in China will cause them more taxes and hence they cannot offer the competitive price which he has offered us. So my question is 1) Can i make the payment to Hong kong and get goods from China ? The company name in China is different and in Hong kong its different, he has invited me to China to visit their factory and then make payment. He has to say that his other Indian customers does it in same way(i.e pay to hong kong and get goods from China). I would be very grateful to you if you could please advice me if this kind of system is permissible.

Kanaiya: I want to make import payment from my two different bank partially as a buyer, whether it's possible as per RBI guidelines ?

Suleiman Abdulkadir : Quite interesting and informative.

Chandar Prakash: Sir, I want export business so, how can I cash up new customer

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