Advance payment the best way of terms for business

The information provided here is part of Import Export course online

Best method of terms of payment in exports


Advance payment the Best method of terms for an exporter/seller/shipper.



Which is the best method of payment in an export trade? What type of terms of payment I can adopt under an Export business?


Under any kind of sales, obviously advance payment is the best option of payment.


Ok, now the terms of payments are concerned, you are very happy if you get payment in advance. Right? Yes, the 100% safe business in any business especially in export business is nothing but receiving advance payment. However, in this present competitive world, you do not expect advance payment from the buyer in all cases unless your product attracts some specific reasons to pay you advance payment by your buyer.


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Next option of payment term under export sales could be a combination of advance payment and on credit basis. Here, the seller/exporter receives amount of his invoice partly by advance and balance with a credit period of some time mutually agreed between buyer and seller.


Opening a Letter of Credit at sight is also a safe mode of payment after the option of advance payment, as the exporter receives amount immediately up on receipt of shipping documents at buyer’s bank. The mechanism of movement of documents from seller to buyer has been explained in a couple of articles in same website. You may kindly go through the same to have a good and clear idea on the subject.


Opening a Letter of credit with a credit period of say 30 days, 60 days, 90 days etc. also can be opted as payment terms under export trade. Here, the seller/exporter gets his invoice value of goods from buyer’s bank on maturity date agreed between exporter/seller and importer/buyer.

I can say, DP terms of payment also can be included up to some extend as safe mode of payment in international trade. However, some of the buyers/importers do not accept documents from their bank immediately up on receipt of shipping documents at their bank. These buyers/importers prolong to accept shipping documents till arrival of cargo at final destination.  Also read Letter of credit - How does LC work?    Is DP terms of payment safe in export business?         Documents against Acceptance. - How reliable the terms of payment in exports


I have explained safe mode of payment terms in serial order under exports business. Do you wish to share your experience and knowledge on this subject about safe mode of payment in export trade?

The above information is a part of Online Export Import course 


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Write below your comments about best methods of payment terms in exports.


Other information about Export import tutorial


Mode of payments in international trade
Documents against Acceptance. - How reliable the terms of payment in exports
Is D.A.P terms of payment safe in export business?
How Letter of Credit (LC) works
Is ON BOARD CERTIFICATE required for LC negotiation
CNF,C&F or CFR. Which term is correct.
Excise and Customs - Click here to read complete notification under Budget 2014
How to get Export Orders?
How to settle dispute in Exports and Imports?
Click here to know India Trade Classification(ITC)
Pre shipment bank finance to suppliers for exports through other agencies
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

 The role of Export Inspection Agency in Pre-shipment Inspection & Quality Control
The role of Reserve Bank of India
The Role of the International Chamber of Commerce (ICC)
Negotiation procedures and formalities of export bills
Non receipt of Cargo Arrival Notice, Can importer sue against shipping company

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Payment procedures in Triangular exports
Who is Stevedores
Who receives the amount of auctioned / resold imported unclaimed/un-cleared goods?


Aung Kyaw Moe: Information on your website is most useful for us.

vikram .c : iam doing import&export business how can handel payment can please help me. because the buyer need credit for 1 month how can i do

Hitesh: As i am the beginner for pharmaceutical export business, How can i find the buyers from other countries ? can anyone have idea ?


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