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Choosing the payment method

The payment method is chosen and formed so that it satisfies both partners. If you are the seller of the goods, you will probably want to get payment before delivery. Then again, as the buyer you would like to get possession of the goods before you pay them.

Choosing the payment method

The following affect the choice of payment method:

  • confidence between the trading partners
  • competition
  • traditional trade practices
  • willingness to eliminate risks related to the buyer's country
  • local legislation
  • need for financing
  • how rapidly and reliably you can receive the payment

The most common methods of payment in foreign trading are:

  • payment order
  • foreign collection
  • documentary credit