New insights for Freight Brokers; How much method of payment rules out in this market climate? -How to make sales terms desirable for buyers? -Overview of donation (payment) vs gift (sales): does it make a difference? -How can we apply this global view in US market? I believe showing up, being responsive, over communication and delivering as promised might not be adequate solely as delayed payment can have a long term damage over business relationship. The graph in this post is a quick snapshot of the spectrum from the least secure to the most secure for both exporters and importers! We can help companies that are new in the game in Middle East. Credit by Farzin Lotfi #Transportation #Freightforwarding
Foreign Commercial Head/Logistics/Freight Forwarding(BDM) at an INT'L company Master of Strategic Marketing IMI
?Methods of Payment International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer). To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by the appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown in figure 1, there are five primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for you and your customer. The Logistics of Things For exporters, any sale is a gift ?? until payment is received.? Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer. For importers, any payment is a donation ?? until the goods are received. Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate?enough income to pay the exporter.