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Govt. Certified Intl. Logistics Professional

Sale and Payment terms

A spectrum of risk is being represented by the international trade, causing uncertainty over the timing of payment between the seller(exporter) and the buyer(importer). Any sale is a gift for the exporter until payment is received, therefore exporters preferably want payment before the goods are sent to the importer. On the other hand for importer any payment is a donation until receiving goods, so, the importers or say receiver preferably want to receive the goods soon but delay payment until goods are resold for generating income to pay back the exporter.

 

 

in this global marketplace of today succeeding in terms of sales and payment – sales against foreign competitors, using an appropriate method of payment exporters must offer their customers attractive sales terms. Because the ultimate goal of each export sale is getting paid on time and full. while to avoid risk an appropriate method of payment must be chosen and accommodating the needs of the buyers. There are primarily five methods of payment for international transactions.

Cash-in-Advance 

one of the five methods, with this method, an exporter can avoid credit risk because of the payment being received before the ownership of the goods transferred. Wire transfers and credit cards are the most commonly used cash-in-advance by the exporters, for international sales. However, for buyers, the least attractive option is paying in advance, creating unfavorable cash-flow. Foreign buyers fear of paying in advance due to goods may not be delivered. This makes competition stronger because there are exporters offering better and attractive payment terms making the exporters stay at loss demanding advance payment.

In brief, these are the conditions of the seller making the payment procedure complete a sale, basically, the specifying the allowed period to a buyer paying of off the due amount, demanding advance payment in some cases else a deferred payment period od 30 or more days.

 

 

 

 

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