1. COMMON PAYMENT TERMS Cash in Advance Documents against Payment/DA Open Account Letter of Credit

2. CASH IN ADVANCE Receive cash from the buyer before shipping Telegraphic Transfer Demand Draft In case of HUGE payments (importer maydemand a bank guarantee) Followed if exporter is in a strong tradingposition & particular product is not available 3. DOCUMENTS AGAINST PAYMENT When the importers bank sends a collectionnotice to the importer, the importer pays thustaking the possession of documents 4. DOCUMENTS AGAINST ACCEPTANCE When the importers bank sends a collectionnotice to the importer, the importer gives theacceptance to pay at a later date I/O makingpayment upon receiving the collection notice 5. OPEN ACCOUNTShip the goodsforward the shipping docs directly to buyer await payments 6. A LETTER OF CREDITA L/C is A formal document of payment Opened by a party wishing to import Communicated through banking channels Paid by the opening bank within a specified timeframe upon presentation of docs 7. Parties to a letter of credit Applicant/Importer Exporter Issuing Bank Intermediary Bank/Confirming Bank 8. Documentary Credit Cycle(1) Contract EXPORTER- SELLER IMPORTER - BUYER(BENEFICIARY)(5) Shipment(APPLICANT)(4) Advising (6) Documents(2) Application for negotiation (8) Retirement (9) Remit the payment EXPORTERS BANK (NEGOTIATING/IMPORTERS BANK (3) L/C CONFIRMING BANK) (L/C ISSUING BANK) (7) Dispatch of Documents - Claim Reimbursement 9. L/C PAYMENT PROCEDURE 10. L/C PAYMENT PROCEDURE 11. L/C PAYMENT PROCEDURE 12. L/C PAYMENT PROCEDURE 13. L/C PAYMENT PROCEDURE 14. Types of letters of credit Sight L/C Transferable L/C Usance L/C Anticipatory L/C red Revocable L/C clause, green clause Irrevocable L/C Revolving L/C Confirmed irrevocable L/C Deferred payment L/C Unconfirmed irrevocable Transit L/CL/C Restricted & unrestricted With & without recourse L/CL/C Negotiable L/C Back to back L/C 15. RISK vs. TERMS of PAYMENT 16. Comparison of Various Methods ofPaymentGoods Usual TimeRisk toRisk toMethod Available of Payment Exporter Importer to BuyerCash In AfterBefore Very Low Maximum-ReliesAdvance PaymentShipmenton exporter to ship goods as orderedLetter of AfterWhenVery LowAssured ofCreditPaymentdocuments quantity and alsoConfirmedare available quality at at shipment shipment ifUnconfirmedinspection report(Advised)is requiredDocumentary AfterOn If draft unpaid, Assured ofCollectionPaymentpresentation goods must quantity, alsoSight Draftof draft tobe returned or quality, if goodsDocumentsimporter disposed of, are inspectedagainst usually at lossbefore shipmentPayment 17. Comparison of Various Methods ofPayment Goods Usual TimeRisk To Risk To MethodAvailable To Of PaymentExporter Importer BuyerDocumentary Before paymentOn maturity of Relies on importer MinimalCan checkCollection Time Draft draftto pay draft shipment forDocuments against quantity and qualityAcceptancebefore paymentConsignment Before payment, After use; Substantial risk Very Lowexporter retainsinventory andunless throughtitle until goods warehousing cost foreign branch orare sold or usedto exportersubsidiaryOpen AccountBefore paymentAs agreedRelies on importer Very Low to pay as agreed - complete risk