PAYMENT

Export andMETHODS
import financing methods are
designed to reduce the risk to which importers
and exporters are exposed.
1.
2.
3.
4.
5.

Barter
Advanced Payment
Documentary Collection
Letter of Credit (L/C)
Open Accounts

2. Advanced Payment
Export/ import financing in which
an importer pays an exporter for the
merchandise before it is shipped.

3. Documentary Collection
E/I financing in which a bank
acts as an intermediary without accepting
financial risk.
3.1 Draft : Document ordering an importer
to pay an exporter a specified sum of money
at a specific time.
Bill of lading (B/L) or Air way bill
(A.W.B.) : Its the proof that the exporter
has shipped the merchandise.
3.2

3.3 Exporter docs. (Packing list, draft and

B/L) : are given to the exporters bank which

sends them to the importers bank and then
the importer pays the draft to its own bank.

4. Letter of Credit (L/C)

E/I financing in which a
bank issues a document stating that the bank
will pay when the exporter fulfills the terms of
docs.
Types of letter of credits
4.1 Irrevocable L/C: the terms are modified
by the issuing bank with the approval or the
exporter and importer.
4.2 Revocable L/C: can be modified or
cancelled w/o the approval from either the
exporter or the importer.
4.3 Confirmed L/C: Importers bank sends
the payment to the exporters bank.

Payment terms
L/C at sight: The payment is done when
the documents are fulfilled.
A time L/C: the payment is done during the
period of time agreed between the exporter
and
importer.
L/C the
Conditions
Partial Shipments
Allowed /Prohibited
Transhipments
Allowed /Prohibited
Expenses out of Colombia
Exporters account
Importers account

 Shipments
From
To
Latest shipment date
Description of the goods
Incoterms (FOB, C&F, CIF)
Special Conditions
Tolerance in the amount shipped +/- %
Documents Needed
Commercial Invoice
B/L or AWB

Packing List
Letter stating original docs. sent
Certificate of origin
Any other docs. the parts agree upon.

5. Open Accounts
E/I financing in which an exporter ships
merchandise and later bills the importer its
value.

The choise of a Payment Method

depends on :
Buyers solvency.
Speed of the method for both sides.
Trust or previous knowdledge between the
Mr & Xr.
Politic and economic situation of the seller
country.
Costs due to& the
chosen method.
ADVANTAGES
DISADVANTAGES
Payment Method
Time Cost
Advanced Payment
Documentary Collect
More
Letter of Credit

Trust

Risk

High

High

Fast

Med.

Med.

Slow

Low

Low

Slow

Low

Much