Common IP

Common International Payment Methods

Cash in Advance (trả trước)

The greatest security for the seller and the greatest risk for the buyer. Asking for high trust and willingness. Advance payment may be required in certain situations: + Small company, big order, need support cost. + People with unique and exclusive products.

Documentary Letter of Credit (LC)

The security and risk are equally between the seller and the buyer. The added cost for the buyer to handle documents. => An LC is an undertaking by the bank to pay the seller on behalf of the buyer a specified amount under a specified condition. LC is very popular because there is a high degree of protection. The seller must provide the buyer with the necessary documents from which the new bank can confirm the payment, including: +Bill of lading +Title document

Documentary Collection (Thu hộ)

• Security and almost equal risk for both buyer and seller
• Less costly and easier to use than LC
• Documentary collections focus on the transfer of title documents to goods rather than on immediate transfer of the goods themselves.
• Banks involved in the transaction do not guarantee payment but act only as collectors of payment

Open Account (ghi sổ)

• Buyer agrees to pay for goods ordered within a designated time after their shipment, 30,60,or 90 days.
• Provides the least risk for the buyer, and the greatest risk for the seller.
• open account terms are utilized only when:

+Goods are shipped to a foreign branch or subsidiary of a multinational company. +When there is a high degree of trust between seller and buyer. +The seller has significant faith in the buyer's ability and willingness to pay