What is an Advance Payment in International Trade?

Explain an Advance Payment.

Advance Payment is a payment done by an importer to the exporter before shipment.

This method is most beneficial from exporter perspective as he receives funds in advance. The payment may be received either as soon as the order is confirmed or any time before shipment. The exporter may be willing to impose the term as a pre-condition only when he knows that the goods are in overwhelming demand and the goods are of rare-nature. Advance payments may be also used to negotiate a reduced price or to cover initial supply costs.

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 picked by a purchaser only when he knows the seller in details on genuineness as a seller.

For international sales, wire transfers and credit cards are the most commonly used cash-in-advance options accessible to exporters. With the advancement of the Internet, escrow services turning into another cash-in-advance option for small export transactions.


Comments


Xahid: I need to export Leineaphate Herbal Extract Oil from india to the Europe. What is the procedure? Do i have to obtain permission from the wild life or NOC.

Saravanavenkatesh: when a seller refuse to send neither goods nor the buyer money , how can the buyer get their money back which is made as advance payment ?

Arifulla khan: leineaphate herbal extract oil suppliers in india

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