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Documents Against Payments shall be ask for bank guarantee and that the documents attached to the draft for collection are deliverable to the drawee only against his or her acceptance of the draft. A letter of credit is the most well known method of payment in international trade. Under an import letter of credit, importer’s bank guarantees to the supplier that the bank will pay mentioned amount in the agreement, once supplier or exporter meet the terms and conditions of the letter of credit. In this method of payment, plays an intermediary role to help complete the trade transaction. The bank deals only in documents and does not inspect the goods themselves. Letters of Credit are issued subject .
irrevocable letter of credit at sight payment guaranteed confirmed by a foreign bank in case its a local bank that isn't guaranteed.
payment terms could be changed from sight to30days....etc as agreed.
In case of suppliers, the best payment guarantee is Letter of Credit issued by a reputable bank. However, the supplier must ensure that letter of credit does not contain any conditions or requirements which are: beyond normal trade practices; difficult and un-ncessarily time consuming; or involve expenses on the part of suppliers. Before entering into any contract, the suppliers must first agree to terms of the letter of credit.
On the part of buyers, there are risks invovled in payment through letters of credit. The bank issuing letter of credit, is not obliged to ensure that goods meet the contractual details and there are no discrepancies. The banks' job is restricted to ensuring that documents are complete and in order. In such situations, the buyer must obtain certifications, test results and third party inspection reports involving all stages the goods are passing though i.e raw material, production process, finished goods and loading supervision.
By taking care in the above manner, both buyers as well as sellers would be in a position to safegaurd their respective interests.
I would use Letter of Credit
A letter of credit is the most well known method of payment in international trade. Under an import letter of credit, importer’s bank guarantees to the supplier that the bank will pay mentioned amount in the agreement, once supplier or exporter meet the terms and conditions of the letter of credit. In this method of payment, plays an intermediary role to help complete the trade transaction. The bank deals only in documents and does not inspect the goods themselves. Letters of Credit are issued subject to the Uniforms Customs & Practice for Documentary Credits (UCPDC)(UCP). This set of rules is produced by the International Chamber of Commerce and Industries (CII).
The Best method for both parties is LC with a condition "letter of acceptance from the buyer with a period of time30 days from B/L date" , you can modify the period of time according to the transit time of the shipment.
otherwise, althought it would be extra fees on the buyer, the buyer can ask for a certificate from3rd party just like SGS, to be submited with the LC documents
Something guarantees payments such as Letter of Credit..
L/C is the most common option.
However at times you can also opt for10% advance payment and the balance after your shipper or a3rd party inspects the goods to be in good condition or even after it has recehed the port of destination and once you have the inspection report you can do the balance trasfer. This kind of payment is helpful incase of a monopoly supplier.
irrevocable letter of credit
