Methods of Payment in International Trade for Export & Import (2020)

4 Methods of Payment used in International Trade are Open Account, Advance Payment, Documentary Collection & Documentary Credit

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For Importers that want to know How to Import and for Exporters that want to know How to Export, it is important to understand what are the methods of payment in International Trade.

Also, this video walks you through the movement of 3 items between the Exporter and Importer in International Trade. From the Exporter to Importer, there are movement of goods and shipping documents. From the Importer to Exporter, there are movement of money.

From these 3 movements of goods, shipping documents and money, there are 4 methods of payment which are
o Open account
o Advance payment
o Documentary Collection
o Documentary Credit

The video talks about when the goods are available to the Importer, the timing of the payment & the risks to the Importer under the different method of payment.

If the Exporter & Importer are new to each other and there is no trust between both parties, they need the bank to come into the picture and for this the bank had invented
o Documentary Collection Method - Sight(D/P- Documents Against Payment) & Usance (D/A-Documents Against Acceptance)
o Documentary Credit Method

This video is designed to provide those operating within International Trade : Exporters, Importers, Bankers & Insurers, Freight forwarders and Carriers an opportunity to broaden their understanding of methods of payment in International Trade.

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This video was produced by
1. Mr. Billy Fong Goon Poy, ACIB, MITD, Master Trainer
2. Ms Sook Ling, Online Content Creator

Tradelinks Resources conducts public training programs for the following International Trade courses in Malaysia
1. Incoterms 2010
2. Letters of Credit
3. Bills of Lading - Correct Preparation To Avoid Rejection by Banks