International payment methods by Miia Koski https://padlet.com/miiam_koski/tw3d21un6kbi Think and list situations, when each of these payment method is suitable/applicable. en-us 2019-10-24 13:52:14 UTC 2022-10-04 15:21:33 UTC hello@padlet.com Open account https://padlet.com/miiam_koski/tw3d21un6kbi/wish/1784690092 Living or residing in a country in which is longer than 3 months (or the type of visa that a person own for living in that country). The purpose of opening an account could be for using to spend and earn money from that country.]]> 2021-10-01 16:45:39 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/1784690092 This method is most beneficial from exporter perspective as he receives funds in advance. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313370194 2022-09-26 10:17:16 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313370194 Sometimes the seller asks to the buyer an advance payment in order to have an assurance about the trade. A real life example will be if a company would asks the buyer to paid in advance in order for them to have enough capital to produc the goods. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313370209 2022-09-26 10:17:17 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313370209 Finland advance payment https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313370791 An advance payment bond or a performance bond is frequently required by a request for a tender that your business has received or by an export agreement you have signed. Your Finnish bank can give your client an advance payment bond or a performance bond with less risk if you and we have agreed on an export guarantee.]]> 2022-09-26 10:17:45 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313370791 The buyer only pays for goods after the supplier has provided evidence that they have been shipped. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313372392 2022-09-26 10:19:01 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313372392 A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. If the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313373325 2022-09-26 10:19:51 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313373325 An open account transaction in international trade is a sale where the goods are shipped and delivered before payment is due, which is typically in 30, 60 or 90 days. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313373520 2022-09-26 10:20:03 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313373520 Group 14: srshafique https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313375012 It is mostly used payment method in international business & most of the exporter feel it safe when business go under LC term. Under this term they got financial benefit from bank and got payment confirmation upon shipment.]]> 2022-09-26 10:21:13 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313375012 Group 14 : srshafique https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313376886 This is also one of the payment term where exporter get the payment of their shipped goods after submitting documents to importer.]]> 2022-09-26 10:22:44 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313376886 Group 14 : srshafique https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313378984 CAD payment term / DP in export, happens when the buyer needs to pay the amount due at sight. This payment is made before the documents are released by the buyer's bank (collecting bank).]]> 2022-09-26 10:24:39 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313378984 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313379941 For this method you need a long-standing relationship between seller and buyer. The country of the buyer has to be stable and economically sound.]]> 2022-09-26 10:25:27 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313379941 Open account (Group 2) https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313380062 An open account transaction is a sale (international) where the goods are shipped and delivered before the payment of the goods is due. The payment period typically is 30, 60 or 90 days. The exporter should only do this if he's confident that the buyer will pay for the goods before the due date. the open account helps win customers in competitive markets]]> 2022-09-26 10:25:32 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313380062 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313380595 Open accounts are a good way to expand the influence of the company in question, the trades of the products in the said country of choice, and make strong partnerships with a number of companies that work in the same field, or similar.]]> 2022-09-26 10:26:00 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313380595 The importer must pay the face amount mentioned in the shipping documents when dealing with documents against payment. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313380610 2022-09-26 10:26:01 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313380610 Group 14 : srshafique https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313381536 Sometimes when importer and exporter have a great and long term relationship, in such a case, importer is providing some advance payment is of any percentage of the goods such as 30% to 60% , that is considered as Advance payment and this term is applied in very good and robust relationship...
 ]]> 2022-09-26 10:26:51 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313381536 Documents opposing acceptance impose a payment deadline on the importer. The bank releases the documents to the purchase once the buyer approves the time draft. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313382022 2022-09-26 10:27:14 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313382022 If the exporter agrees the payment condition D/P with his customer, the goods will be handed over to his customer only upon the agreed consideration. For this purpose, the exporter first instructs his bank with the collection procedure, which contains the exporter's precise instructions to the bank. The bank checks whether all the documents and records received correspond to the details of the D/P transaction. If this is the case, it sends the documents to an appointed bank in the customer's receiving country. The receiving bank will then present the documents to the buyer to process the payment. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313382261 2022-09-26 10:27:27 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313382261 Risk management https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313382998 It is suitable for trade between close partners and longterm relationships where there is a lot of trust in the other part. Then the advance method can be a quick way to receive payment and still receive goods.]]> 2022-09-26 10:28:04 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313382998 Group 14 srshafique https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313383319 An open account transaction is a sale where the goods are shipped and delivered before payment is due, which in international sales is typically in 30, 60 or 90 days.]]> 2022-09-26 10:28:19 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313383319 Group 15 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313383750 A letter of credit is relevant when there is an importer and an exporter, there needs to be prepayement or confirmation of payment in order for goods to be shipped. 
it is a promise written on a legal document that comes from a bank with the promise to pay . LC are incredibly specific and close attetion to detail is required.]]> 2022-09-26 10:28:40 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313383750 Group 2: Buyers of major purchases may need a letter of credit to assure the seller that the payment will be made. A bank issues a letter of credit to guarantee the payment to the seller, essentially taking responsibility that the seller will be paid. A buyer must prove to the bank that they have enough assets or a sufficient line of credit to pay before the bank will guarantee the payment to the seller. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313384874 2022-09-26 10:29:39 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313384874 group 15 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313386659 Documents against acceptance require the importer to pay on a specified date. Once the buyer accepts the time draft, the bank releases the documents to the buyer.]]> 2022-09-26 10:31:09 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313386659 Group 3 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313388257 Some conditions to open account: 
There is an established relationship between the parties. 

The exporter wants to establish a long-term partnership with the importer. 

There is a binding sales agreement. 

The exporter has obtained a credit insurance to cover the potential losses. 

The importer is a reputable and trustworthy company with a high credit score.

The goods are of small value.]]> 2022-09-26 10:32:34 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313388257 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313388702 In documents against payment we have the exporter as the principal and we have the importer as we draw. We both of them have entered into a self contract and must know and trust each other.]]> 2022-09-26 10:32:58 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313388702 risky for the exporter since the importer might fail to pay the account balance (on time); therefor, it is mainly used if exporter has complete trust in impoert [preferably part of the same corporate family or at least long relationship with satisfactory payment history] https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313389111 2022-09-26 10:33:19 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313389111 Open account (Group 15) https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313392686 -goods are shipped and received before payment -> payment is done by the importer due within 90 days
-very common in cross-border trade transactions
-simplest form of trade finance
-safest financing methode for importers

]]> 2022-09-26 10:36:37 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313392686 open account method yousrarifki https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313394639 Open account method is advantageous to the importer in terms of cash flow and cost, but it is consequently a risky option for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms. ]]> 2022-09-26 10:38:23 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313394639 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313397167 a letter of credit is meaning an assurance from a bank that a buyer will make the right payment to a seller on time and in full. The bank will be obligated to pay the full or remaining balance of the transaction]]> 2022-09-26 10:40:31 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313397167 Group 15: https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313397602 Documentary colletion sight: called D/P, used in a situation where the Principal and the Drawee both have agreed for a sales contract. The goods are shipped by the exporter who also prepare the trade documents: bills of landing, site bill of exchange and collection instruction. 
Then the exporter sends the documents to his remitting bank, which is responsable of forward the documents to the collecting presenting bank. 
The importer, in order to obtain the Trade docs, has to pay the prearranged amount to the bank.]]> 2022-09-26 10:40:56 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313397602 -commercial & political risk for exporter https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313398138 2022-09-26 10:41:19 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313398138 Group 💯 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313399337 Prepayments are recognized as accrual under the accrual accountingof the entity making the advancepayment. Advance payments madeare recognized as assets on the balance sheet.]]> 2022-09-26 10:42:21 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313399337 Group 15 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313399680 With payment in advance the goods are being paid for prior to the seller shipping them. This results in advantages for the seller and some risks for the buyer. Advance payment may be required when the buyer has a bad credit or in the case of insurance companies in order to extend coverage to the insured party. In manufacturing businesses, payment in advance is required to show the buyer's commitment that they are willing to buy from the company in the future]]> 2022-09-26 10:42:39 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313399680 D/P yousrarifki https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313401411 A D/P essentially refers to an arrangement that involves the exporter giving the key title documents to the importer only when the importer has paid the full amount due in accordance to the Bill of Exchange.

]]> 2022-09-26 10:44:02 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313401411 D/A yousrarifki https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313401995
A D/A on the other hand is a different form of arrangement where the importer does not have to pay in order to receive the title documents.]]> 2022-09-26 10:44:28 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313401995 The letter of credit can be used in international transactions, when the buyer and seller may not know each other and each other's credit-worthiness https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313403472 2022-09-26 10:45:42 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313403472 A letter of credit, or "credit letter" is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313405660 2022-09-26 10:47:36 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313405660 Group💯 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313409652 A letter of credit or letter of credit is a letter from a bank assuring thatpayment from a buyer to a seller isreceived on time and in the correctamount. If the buyer is unable to pay for the purchase, the bank must cover the full or remaining amount of the purchase.]]> 2022-09-26 10:50:57 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313409652 Group 10 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313412675 Advance payment is a type of payment made ahead of its normal schedule such as paying for a good or service before you actually receive it. These payments are sometimes required by sellers as protection against nonpayment or cover costs for supplying.
The most common example for this type of payment is prepaid cell phones.]]> 2022-09-26 10:53:29 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313412675 Group 10 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313422509 With this payment method, the exporter must first submit documents to the remitting bank. Based on them, the collecting bank demands money from the importer. After payment, the importer receives both the trade documents and the goods. ]]> 2022-09-26 11:02:18 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313422509 Group 10 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313428463 D/A is an arrangement in which an exporter instructs a bank to discharge shipping and title documents to an importer only if the importer accepts the accompanying bill of exchange or draft by signing it. In this case, the documents required to take possession of the goods are released by the clearing bank only after the buyer accepts a time draft drawn upon him. 
For example, the Program is a combined effort throughout the organization with the goal of preventing illegal and unethical activity.]]> 2022-09-26 11:08:04 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2313428463 Group 10 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2314030714 Open Account is a favorable payment method from an importers perspective, because the importer receives the goods before paying. From an exporters perspective it is just a useful method it certain criteria are met, e.g. the importer is a long term customer, otherwise the potential business risk is relatively high. ]]> 2022-09-26 16:49:00 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2314030714 Group 6 https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2325930166 A letter of credit refers to a written document issued by the bank to the exporter (seller) at the request of the importer (buyer) to guarantee the payment of the payment for the goods.  In the letter of credit, the bank authorizes the exporter to draw a bill of exchange not exceeding the specified amount under the conditions stipulated in the letter of credit, with the bank or the bank designated by it as the payer, and attach the shipping documents as required.  The place to pick up the goods.]]> 2022-10-04 15:21:33 UTC https://padlet.com/miiam_koski/tw3d21un6kbi/wish/2325930166