Global Payment Methods for International Exporting

For companies interested in starting international exporting, there are a variety of ways for collecting global payments from an international customer. While advanced payments are ideal, they may not always be viable in an international market, especially when you don’t have a previous business relationship with a customer. While credit cards are also used in the international market, they are typically reserved for smaller purchases, not massive export orders. Here are four of the most common global payment methods for large transactions.


Letter of Credit (LOC) - The most widely used and recommended method of payment is a letter of credit, which provides security for both the buyer and the seller. The buyer contacts their bank and requests a letter of credit, which is sent directly to the seller’s bank. Once the seller is notified that the letter of credit has been received, they will send the items purchased directly to the address provided by the buyer. The seller’s bank sends the shipping documents to the buyer’s bank and the buyer makes payments directly to their bank, which is transferred to the seller’s bank.


Open Account - The open account payment method allows the buyer to pay only after they have received the goods. While the method is recommended only if they buyer is extremely trustworthy since payment is rendered after the goods have been received, it is actually quite common when the buyer is a large, well-established corporation and has a concrete international business history. Using an open account is not recommended for businesses just starting out since they will be left without compensation if the buyer defaults on their payments.

Document Against Payment - Still considered a “risky” method of payment but safer than an open account, this method refers to when the goods are shipped by the seller but the buyer cannot take possession of the goods until they have agreed to their financial obligation of paying the seller. Collecting documents used in this type of transaction include a “document on acceptance” when the buyer accepts the agreement in order to have the goods released and “document on payment” when the buyer accepts responsibility for payment.

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Oil slips back in Asia after strong rise on renewed supply worries

Oil prices inched lower Friday in Asia, after rising overnight the first time in four sessions as investors began to question if supplies of crude and products are sufficient for coming winter demand.

Light, sweet crude for November delivery slipped 18 U.S. cents to US$81.26 a barrel in Asian electronic tradingon the New York Mercantile Exchange by mid afternoon in Singapore. The contract rose $1.50 to settle at $81.44 a barrel Thursday in New York.

"There's been some very minor profit-taking today but it's just part of the volatile trade in oil markets, " said Victor Shum, a Singapore-based energy analyst with Purvin & gertz.

"The crude oil market remains fundamentally tight in the fourth quarter and prices should hold steady above the $80 mark."
the U.S Energy Department reported Wednesday that crude inventories rose by 1.2 million barrels last week, while include heating oil, fell by 1.2 millions barrels. Traders say the increase in crude supplies is inadequate, especially as winter approaches.

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Turkey's Akbank aims for 15-16% loan growth in 2010

Akbank General Manager Ziya Akkurt said the Turkish lender would target 15-16% loan growth in 2010, outstripping banking sector growth as a whole, which he forecast at 12-13%.

The bank, which is Turkey's largest company by market value and in which Citigroup has a 20% stake, would take a more aggressive stance next year and open 50-60 new branches, John Deere Lawn Mower Parts, he told reporters.

Turkey's banking sector has proved highly resilient during the global downturn, benefiting from strict regulations in place since a 2001 domestic financial crisis and a lack of exposure to toxic or exotic assets.

Eleven months of rate cuts by the central bank have also boosted Turkish banks' profits by making the cost of funding cheaper and allowing them to increase net interest income.

Istanbul-quoted Akbank, which reported a 44% rise in second-quarter net profit, is controlled by the Sabanci family, one of Turkey's richest.

The family also controls Aksigorta, Turkey's largest insurer by market value. Akkurt said they could seek a strategic partner for Aksigorta.

Akbank Chairwoman Suzan Sabanci said in May the bank expected loan growth to slow to 5% in 2009 as the country's record economic contraction saps demand. In 2008, Akbank's loan book rose 20%.

Source: Reuters, Balkans.com Business News

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