Payment of International Orders

When Checklist 1 and Checklist 2 have been completed, the mode of payment for goods must be correctly prepared.

If a letter of credit or document collection is being used as the instrument of payment, these will then be presented to the specified bank. All other documents travel with the shipment, to the buyer, or to the agent, depending on the buyer’s stated disposal directions. A copy of the commercial invoice will be made and sent to both the agent and the export manager of the selling company. On receiving the shipment, the buyer or agent will check that it matches the quality, quantity, time, and other conditions specified in the letter of credit. Pending satisfaction, funds will then be transferred to the seller. The seller’s finance department will acknowledge receipt of the payment, confirm the payment by bank account statement, then adjust and report the export/payments receivable account balance accordingly. A record of the payment might also be transferred to the production department to provide a ready reference in the event of a service or replacement issue arising. All involved intermediaries will then receive their commissions (agents, brokers, freight forwarders, distributors).

Transactions via escrow accounts might also be considered. All forms of payment should be negotiated with the seller prior to agreeing the transaction. Any additional transaction costs must be factored into the total, i.e. “landed” cost of the goods. Never buy on price alone – include any and all sundry costs. Instructions to transfer high value payments to personal bank accounts (or bank accounts in countries other than the country of the goods’ origin) or payment ahead of despatch or receipt should be refused outright. Any goods that are suspiciously cheap will likely be too good to be true. When using an unknown supplier, obtain references from trusted customers or insist on payment upon receipt or pending quality inspection in-country by an independent third party.