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Contents for: How to Get Payment for Exporting?


"There is no point in selling if you are not going to be paid and the only reason that the bank's collection services are needed because the exporter does not trust the foreign importer..."

"If trust exists, there is no need to use and pay for the bank's services"

How to Get Payment for exporting?
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Export Collection Procedure
The collection procedure involving the use of a documentary draft. The exporter delivers the draft to his bank, together with all the shipping documents, bill of lading, insurance certificate, consular invoice, etc.

The bank sends the draft and documents, to its branch or correspondent bank in the city nearest to the foreign importer in the foreign country.

Another reason for the use of a draft is that the exporter can fund sooner, even though it has granted credit
terms to the foreign importer, by
discounting the draft with its own bank.

If the sales agreement between the exporter and the foreign importer has stipulated payment by sight draft (i.e., no credit), the bank in the foreign country will ask the importer to accept the draft and pay the amount indicated.


A confirmed, irrevocable letter of credit, means that the exporter's bank undertakes to pay the importer, should the foreign bank fail to do so. 

How to get paid for exporting
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Documentary Drafts, export collection procedures & trade open account
What are Letters of Credit and Trade Consignment?
Letters of Credit Collection Procedures
Online Internet Electronic Letters of Credit

There would be instead the same payment terms as adopted by most commercial transactions within a country - whereby one firm sells goods to another, sends them the invoice, and in due course receive payment...

This type of payment arrangement is known as open account.

Confirmed versus Unconfirmed Irrevocable letter of credit from a bank -- is still not a cast-iron guarantee of payment. Not every foreign bank is scrupulous or financially solvent. See Trade Consignment

Sometimes a foreign bank, for one reason or another, will not honor its own financial commitment or perhaps due to, the sudden imposition or alteration of foreign exchange controls in the importing country may make payment impossible, even though the foreign bank wishes to honor its commitment.

The exporter's bank may be reluctant to confirm a letter of credit if it has any doubt as to the trustworthiness of the foreign bank.





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