Advantages and disadvantages of foreign trade payment methods

There are four main payment methods in foreign trade:

1, remittance: the advantages are convenient, fast, flexible, the simplest, the least intermediate procedures, the most direct way. Disadvantages are commercial credit, poor security. If it is as prepayment, then for the importer, there is a risk that the exporter does not deliver.

2, letter of credit: Advantages are bank credit, more secure, when the use of letters of credit settlement, the beneficiary (exporter) of the collection is guaranteed, especially in the exporter is not a very good understanding of the importer, in the importing country has foreign exchange control, the letter of credit superiority is more significant. Disadvantages are complex and cumbersome procedures, more stringent requirements for documents, higher bank charges.

3, collection: the advantages are low cost, simple operation, the buyer is more convenient in the funds to improve the export of competitive ways. The disadvantage is that security is poor, risky, because the export side first shipment, if the importer refuses to pay, even if the property rights documents are still in the hands of the export side, the goods can be stranded in each other's ports and backlogs and transported back to the domestic freight charges, bank charges are not small losses.

4, Western Union: the advantages of Western Union remittance procedures are simple. Utilizing the world's most advanced electronic technology and a unique global electronic financial network, it instantly handles remittances in nearly 200 countries and regions around the world. Within a few minutes, the recipient can receive the remittance as much as he or she wants. The disadvantage is that the remittance fee is charged by pen, and the fee is high for small receipts, which is relatively high compared to other remittance methods.

Expanded Information:

Precautions:

1, 30% T/T deposit + 70% spot, confirmed, irrevocable letter of credit.

2, 100% spot, confirmed, irrevocable letter of credit + CIF terms of transportation.

3, spot, confirmed, irrevocable letter of credit + FOB; (it is best to arrange your own shipping company to the port of destination, and have a good relationship with the shipping company, in order to control the goods).

4, 30% T/T deposit + 70% see the bill of lading facsimile payment; (This payment method is applicable to the trade volume of smaller business. If the trade volume is large, should not apply this payment method. Because there is no guarantee that foreigners on the final demand for goods. May foreigners due to changes in the market and give up the transaction).

Baidu Encyclopedia - International Trade Payment Methods

Baidu Encyclopedia - Foreign Trade Payment

Baidu Encyclopedia - Payment Methods

Baidu Encyclopedia - Remittance

Baidu Encyclopedia - Letter of Credit

Baidu Encyclopedia - Collections

Baidu Encyclopedia - Western Union