Connect2India provide best advisory services for the processes to be followed right after the Import of goods and products, distribution in the local area, branding for product, documentation, payment terms etc.
Making the payment
The time and mode of payment is specified in the contract along with terms and conditions in the very starting point. The payment should be done usually within 30 to 90 days after the import of goods. Following are the methods could be followed in import export.
Methods of payment
Cash in advance: The first choice of exporter as they are paid before the shipment and avoid credit risk. The used options for this method include credit cards and wire transfers. On other side, this method is least attractive to importer because it causes cash flow problem for the buyer. Also there's no guarantee if the goods will be sent once the payment is made.
Letter of Credit: It's the most secure method of payment in international trade. LC is issued by the buyer's bank and ensures the payment to exporter as per the terms and conditions stated on it. In this method exporter doesn't have to worry about the importers financial stability. Also importer doesn't have to face any payment obligation until the products have been arrived.
Documentary Collection: In this method exporter receives his payment from its bank, which sends his documents and related instructions to importer's bank. Thus payment is collected from the importer by the involvement of banks which collect it in exchange for documents. It uses draft which provides the required instructions about the documents. This method is less expensive than LCs.
Open Account: This method is advantageous for importer and least attractive to exporter. In this, goods are sent to importer before the payment is made. It requires payment 30 to 90 days later of shipment. Though, it contains high risk for exporter, many exporters agree on this due to the increasing competition in global market. However they can also use the terms like export credit insurance and mitigate the risk of non-payment.
Closing the Transaction
The final step of import procedure is closing the transaction. There may be some issue with products quality received by importer. In such case, importer can write to exporter and solve the matters. If products have been damaged during the transition, the insurance company will be accountable for the payment.