International Methods of Payment

Method of Payment

When You are Paid

When Goods are Available to Buyer

Your Risk

Buyer’s Risk

Advance Payment

Prior to shipment of goods

Upon arrival of shipment

No payment risk

Goods not shipped. Late arrival of goods. Goods not as ordered.

Confirmed Sight Letter of Credit

Upon the presentation of correct documents after shipment by confirming bank

Upon payment of drawing under LC and arrival of shipment

Inability to produce correct documents. Inability of confirming bank to pay.

Goods not as called for in LC

Confirmed Term Letter of Credit

Upon maturity or discounting of accepted draft by confirming bank

Upon acceptance of draft and arrival of shipment

Inability to produce correct documents. Inability of confirming bank to accept or pay draft at maturity.

Goods not as called for in LC

Unconfirmed Sight Letter of Credit

Upon the presentation of correct documents after shipment by issuing bank

Upon payment of drawing under LC and arrival of shipment

Inability to produce correct documents. Inability of issuing bank to honour LC.

Goods not as called for in LC

Unconfirmed Term Letter of Credit

Upon maturity or discounting of accepted draft by issuing bank

Upon acceptance of draft and arrival of shipment

Inability to produce correct documents. Inability of issuing bank to accept or pay draft at maturity.

Goods not as called for in LC

Documentary Sight Collection (Documents Against Payment)

Upon payment of draft by buyer after shipment by collecting bank

Upon payment of draft and arrival of shipment

Failure of buyer to pay leading to warehousing and insurance expenses.

Goods not as ordered

Documentary Term Collection (Documents Against Acceptance)

Upon maturity or discounting of accepted draft by collecting bank

Upon acceptance of draft and arrival of shipment

Failure of buyer to pay at maturity. Loss of title to the goods, leading to legal expenses.

Goods not as ordered

Open Account (Open Credit)

Upon receipt of goods or at an arranged future date by buyer

Upon arrival of shipment

Full reliance on buyer to pay. Loss of title to the goods, leading to legal expenses.

No payment risk