Home About Contact  
Export Assistance
Guides to Exporting
Finding Export Finance
EMIA
Export Consultants
Export Documentation
Register as an exporter
Proforma Invoice
Commercial Invoice
Letters of credit
UCP600
Packing Lists
Exchange Control Forms
Insurance Forms
Customs Documents
Document Completion Guide
Export Training
Training providers
Training calendar
Export Guide
Export Marketing
What is involved in export Marketing?
Export Marketing Channels
Using Export Agents
Finding Export Agents
The Role of Trade Fairs
Preparing to participate in a Trade Fair
Finding Trade Fairs
Inward Bound Missions
Outward Bound Missions
The Internet and Exporting
Website internationalisation
E-marketplaces
Export portals
Overseas Trade Missions
Embassies and Consulates
Financial Assistance for Export Marketing
ETO Systems
Dealing with Export Environments
Trade Agreements
Export Tools
Export Readiness Checker
Export Checklists
Export Business Planner
Export SWOT Analyser
Country Risk Evaluator
Trademap
Product map
Translation Resources
Currency Converter
Export Documentation
Document Completion Guide
SA and Foreign Tariff Databases
Export Software & Technology solutions
Tracking tools
Exporting & the internet
Export e-Newsletter
Export Law
Laws affecting Exports
Maritime Insurance
Exchange Control
SA Export Regulations
Trade/Maritime Lawyers
ITC Services
Trademap
Productmap

Step 19: Getting paid

You are here:Step 19: Getting paid > Payment methods >Payments in advance


 

 

Payments in advance

 

Introduction

This is certainly the most preferred form of payment from the exporter's point of view; it not only eliminates the risk of not being paid but also eliminates the need to verify the creditworthiness of the importer or the ability of the importing country to remit the foreign exchange to the exporter. Unfortunately, importers are seldom willing to pay for goods in advance because the entire financial burden and associated risks rest with him and he can only hope and trust that the exporter will deliver the goods as ordered. However, if you are in a very strong baragaining position (for example, you are the only supplier of the goods or the only company that currently has stock), you may be able to negotiate payment in advance for all or part of the shipment.

Alternatively, an understanding importer (but be aware that there are not many of them around) may be prepared to pay for part of the contract price in advance as evidence of goodwill. This provides you with some security that you will be paid and helps to fund the cost of your production and shipping. At the same time, it allows the buyer the opportunity to check the quality of the goods before parting with the rest of their money. This will need to be negotiated with the importer, but don't count on it in the competitive environment we operate in.

The benefits of payment in advance

With payment in advance, you have no risks and bear none of the financing costs. There is no additional cost to you beyond the costs involved in any export transaction. Payment or part payment in advance is typically used for low value sales to individuals or new customers. Payment in advance is also common when selling over the Internet. If you wish to buy a book from Amazon.com, you would by credit card and only once you have paid, would the books be dispatched to you. It is a realistic alternative payment method for small exporters that sell rather unique items such as art work, and most overseas buyers will be willing to use this method of payment if the amounts involved are small (and hence, the risk is small).

 

 

When is payment in advance appropriate?

Importers may consider payment in advance and exporters can generally ask for payment in advance, when:

  • There is a strong seller's market for the product in question or when the products are being manufactured to non-standard specifications.
  • It would be impossible to sell the goods onto a third party if the importer were to cancel the order.
  • Relatively small amounts of money are involved which the importer may feel would not warrant the expense of arranging payment by a more formal method such as a letter of credit.
  • Large capital projects are undertaken. In these circumstances, it is often the practice for an importer to make a down payment and subsequently to make progress payments as the work reaches specified stages of completion.
  • In order for the exporter to achieve this method of payment it would be necessary for the importer to have complete trust in the exporter; knowing that he would supply the product/s in strict accordance to his order.

Alternative ways of making cash payments

There are essentially six ways of making a cash payment. these are:

  • Importer's own cheque
  • Banker's draft
  • Mail transfer
  • Telegraphic transfer
  • SWIFT payments
  • Credit card payment

 
Top of page


next

Step 19: more information

Step 19: Getting paid
      Payment methods
            .Open account
            .Documentary collections       
            .Documentary credits       
      Payment terms

Click where you want to go

© Interactive Reality

More information on Step 19
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
Export Reference
HS Codes
SIC Codes
TARIC Codes
Incoterms
Country Codes
Airline Codes
Airport Codes
Port Codes
Telephone Codes
Industry specific export control
Electricity Voltages
Transportation Types
Container Types
Hazardous Cargo Symbols
International Trade Agreements
Country Info
Export Documentation
E-marketplaces
Trading cycle
Export Articles
Export Glossary
Export Acronyms
Export Opportunities
Export portals
E-marketplaces
Export calendar
Inward Bound Missions
Outward Bound Missions
Trade Fairs SA
International Trade Fairs
Country Info
Country Help
SA Missions Abroad
Missions in SA
SA Representatives
Bilateral Chambers
Export Network
SA Economic Representatives
SA Missions Abroad
Missions in SA
Export Councils
Export Consultants
Export Trainers
Export Agents
Customs Clearing Agents
Trading Companies
Export Financiers
Chambers
Bilateral Chambers
Government Departments
Trade Associations
Freight Forwarders
Airline Companies
Shipping Lines
Road Haulers
Courier companies
Spoornet
Trade/Maritime Lawyers
World Trade Point Federation
South African Translators
Libraries
Universities with international Expertise
International Trade Statistics
Import and Export Statistics
Main Trading Partners
Main Export Products
Economic Statistics
SA Statistics
SA Reserve Bank
Trademap
Productmap
Data Mapper®
UNCTAD Statistics


SAinfo

     Our sister sites:

Indexing the World

CountryHelp

Trade Training

FreightForwarderHelp

CourierHelp

AssociationFinder

LearnTheNet

     Other useful links:

Freight & Logistics Gateway

Freight quotes