Question

Advantages of clean payments to importer

Answer 1

A crucial part of any transaction is ensuring you get paid. Different payment methods, and the risks involved whether you are an importer or exporter, are explained in this section.

The Risk Ladder

International trade can seem a complex activity with a long order-to-cash transaction cycle. The key to successful international trade is understanding and managing the risks you face. For importers and exporters, the amount of risk involved in a transaction fluctuates depending on what payment method you use.

Importers’ Risk

As an importer, you want to ensure you receive the goods you’ve ordered. The most common option for importers is open account trading, as it poses the least risk, ensuring you receive the goods before paying for them.



Exporters’ Risk

For those exporting, cash in advance is always the least risky option, where you receive payment before shipping the goods. In this case, the importer is essentially funding your working capital and leaves no payment risk to you.