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4 Common Payment Methods in International Trade

4 Common Payment Methods in International Trade

By GAP Polymers Team - On Dec 28, 2022 12:35

Have you ever wondered what are the best payment methods in international trade? How to guarantee to choose the method that provides no risks and further guarantees for your business? That’s why we authored this article for you to make the right decision. In this article, we will go over the most important methods of payment in international trade by answering the following questions:

 

  • What are the most important payment methods in international trading?
  • What are the pros & cons of every payment method?
  • What are the main factors that help you to choose the right payment method?
  • Why is GAP Polymers your perfect partner whatever the payment method?

 

If you want to sell or buy polymers internationally, you might need to answer this question:

 

1- What are the most important payment methods in international trade?

 

There are many payment methods you can depend on. Bankers recommend “letter of credit” as it generates the most income for their bank. You must decide the method that lets you complete the transaction and receive the polymers.

The perfect method is the one that satisfies both buyers and sellers. When it comes to companies, they should consider some variables such as the strength of the relationship with their customers.

 

2- What are the pros & cons of the top payment methods in international trading?

 

  •  Open Account

To the importer, it is considered the best option for the importer. It is the most advantageous one for the exporters.

Let’s explore open account terms Pros & Cons:

 

 

  • Cash in Advance 

Cash in advance is the most desired method by exporters as there is no risk of non-payment. There are various ways to make a cash payment in advance, including wire transfers and credit card transactions.

To be accurate, it is a method much less desired by clients. That’s why clients insist on more flexible payment terms.

The only exception is dealing with trustworthy companies such as GAP Polymers 

It becomes the only option for GAP Polymers in these situations:

  • When we are dealing with a customer for the first time.
  • It will be appropriate when the product is unique or in heavy demand.
  • When there is a commercial or political risk in our client’s country

 

The table below shows the pros & cons of this payment method

 

 

  • LC ( Letter of Credit)

Letters of credit payment method is one of the most credible payment methods. It represents a payment guarantee from one bank to another bank on behalf of the exporter and importer.

Letters of credit are considered the perfect method for buyers. They don’t have to pay until they receive the goods.

 

Whatever you are a seller or buyer, you have to be aware of its pros & cons:

 

  • CAD (Cash Agaisnt Document)

 Documents against payment is used for the favor of both buyers and sellers. In most cases, CAD is initiated by the seller and the cost is shared between both buyers and sellers.

In the documentary collection sellers provide documents to the importer's bank in order to transfer ownership of the items.

Once the buyers receive payment, they provide all the documents which accompany the shipping.

 

 

 

There are other types of payment methods, such as 30/70 payment terms, considered standard. The default is that the buyer will pay 30% upfront and 70% upon receipt of the polymers.

 

3-What are the main factors that help you as an exporter to choose the right payment method?

 

There are many factors that can help you taking the right decisions, here are the most crucial factors:

  • The economic situation of your company (stable or not)
  • Price & currency changes risk
  • Cash flow control
  • Your competitors term
  • The political situation
  • Your relationship with the buyer

 

4- Why is GAP Polymers your ideal partner?

 

All these concerns can vanish when dealing with reliable distributors. Here are some reasons that make GAP Polymers your top choice:

We guarantee Professional delivery services that you can trust. So, when depending on payment methods such as “LC”, you will have full confidence that you will receive the requirements on time.

When it comes to “Quality” when choosing payment methods such as “CAD,” we assure you the best quality. We know that quality affects every stage in the manufacturing process.

After all, you have to deal with a company that provides “Long Term Support.” GAP Polymers customer support team is what differentiates our company from other market distributors. Let me count upon a real case that happened recently.

  • One of our clients who had already purchased raw materials. Then he found out that this type of material doesn’t match with his machine. He contacted our customer support team. Our customer support team reported that to our technical support who went directly to the factory and solved the problem by advising the client to add some additives.

 

Ready to begin a long-lasting Relationship? Contact Us Now!

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