Managing Payments as an Exporter

Struggling with your buyers to find a payment solution? Ideally, you’ll look to retain control over your goods for as long as possible, but the commercial reality of doing business demands compromise. 

This means finding a payment method that’s acceptable to you and your buyer.

As an exporter you’ll seek:

• the highest price for the goods
•  payment as soon as possible, preferably before manufacture and shipment
• control over the goods until payment is received

Your buyer will seek:

• the lowest cost overall
• payment deferred as long as possible
• receipt and examination of goods before committing to payment

In your negotiations with your buyer, these constraints and the risks involved need to be balanced so that an agreement can be reached. There are several solutions to help you arrive at an acceptable commercial compromise.

Clean payment/open account
A buyer makes a clean payment to you by telegraphic remittance or by purchasing a bank draft.

An open account is a negotiated agreement between you and your buyer, with terms specifying how much the buyer can order and when the buyer will make payment.

Documentary Collection
A Documentary Collection consists of a bill of exchange and various shipping documents – eg invoice, transport document, insurance policy – that your buyer needs in order to clear the goods. These documents are released to the buyer in exchange for the buyer’s payment or the buyer’s endorsement of the bill of exchange, as a promise to make payment at a future date.

Documentary Credit
A Documentary Credit is a bank guarantee of payment to the supplier. The buyer’s bank provides credit to them in order to issue the documentary credit.

Before payment is made, you must present the relevant shipping documents and meet other conditions as negotiated with the buyer and stipulated within the documentary credit.

The payment is made by the buyer’s bank immediately upon you meeting all conditions stipulated, or at a future date as specified in the documentary credit.

Important information about advice
As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. View our Financial Services Guide (PDF 56kb).