International trade can offer fantastic opportunities, but dealing with overseas partners also presents challenges. This includes finding payment methods that are acceptable to you and your buyer.
As an exporter you will want the highest price for your goods, payment as soon as possible (preferably before manufacture and shipment) and control over the goods until payment is received.
Your buyer will want to minimise costs, defer payment as long as possible and receive and examine the goods before making payment.
In your negotiations with your buyer, these constraints and the risks involved need to be balanced. There are several solutions to help you arrive at a fair and acceptable commercial compromise.
Clean payment/open account
A buyer makes a clean payment to you by telegraphic remittance or by purchasing a bank draft.
An open account transaction is a negotiated agreement between you and your buyer, with terms specifying how much the buyer can order, when and how they will make payment.
A documentary collection consists of a bill of exchange and various shipping documents – e.g. invoice, transport document, insurance policy – that your buyer needs in order to clear the goods. These documents are released to the buyer in exchange for the buyer’s payment or the buyer’s endorsement of the bill of exchange, as a promise to make payment at a future date.
A documentary credit is a bank guarantee of payment to the supplier. The buyer’s bank provides credit to them in order to issue the documentary credit.
The payment is made immediately by the buyer’s bank when you present the relevant shipping documents and meet all conditions stipulated, or at a future date as specified in the documentary credit.
International money transfer
An International Money Transfer is a quick and secure means for importers and exporters to settle trade debts. The importer authorises an electronic transfer from their account and we send the amount to the exporter. Funds are usually received same day and with the Commonwealth Bank’s trusted and superior international partner bank network you can send funds later in the day for same day clearance to most major destinations.