Imports (Advance, Documents-against-Payment, Open Account, L/C)

This is a payment method in which the importer pays the price of the goods in advance, before the exporter actually ships the goods. This method is generally preferred by parties who have traded with each other before and have established a relationship of trust. While the importer faces the risk of not receiving the goods for which they have paid or receiving goods of poor quality, the exporter, who collects the purchase price in advance, bears no risk.

Documentary payment is a method of payment in which the exporter ships the goods and sends the documents representing ownership of the goods to the importer’s bank through the exporter’s bank, subject to the collection of the document fee; the delivery of the documents to the importer is contingent upon payment of the document fee.

Documentary credit transactions are governed by the International Chamber of Commerce’s Publication No. 522, titled “Uniform Rules for Collections.”

“Goods against Payment” is a payment method in which the exporter ships the goods and sends the documents representing ownership of the goods directly to the importer, and the purchase price is paid within a predetermined timeframe. Since the buyer receives the goods without making payment, the primary risk in this payment method lies with the exporter. It is a payment method that may be preferred when there is a relationship of trust between the exporter and the importer.

A letter of credit is an irrevocable payment commitment made by a bank (the issuing bank) to the exporter (the beneficiary) at the request of the importer (the applicant), subject to the presentation of documents that comply with the terms specified in the letter of credit. Since banks facilitate the relationship between the applicant and the beneficiary, it is considered a more reliable form of payment compared to other payment methods.

Letter of credit transactions are governed by the International Chamber of Commerce’s (ICC) publication titled “Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600.”