Payment Method

Prepayment
GROUP 1
GROUP 1
Đinh Thanh Hằng 71706269
Trần Lâm Mỹ Duyên 71706033
 1. Prepaid payment method – Prepayment

What is Prepayment ? Time of payment: Participants:

o An international
payment method o When signing the o Importer - remitter
whereby the buyer contract or paying (Remitter)
accepts the seller's with the order.
goods by a firm order o - The exporter -
and transfers a partial or o After a certain time the beneficiary
full payment to the since the contract (Beneficiary)
seller. takes effect. o - Importer's Bank -
o Payment before a Remitting Bank
o Current remittance certain time (after o - Exporter's Bank -
methods: T/T, M/T receiving a certain
Corresponding
time to deliver the
Bank
money).
 2. Advantages and disadvantages of the method:
For Customers Brings many risks
- Simple payment, easy to buyers  the
business process importer to fall into
- Fast speed if done by T / a passive situation
T
- The cost of paying TT via
bank is more saving than
LC payment

This method causes

many difficulties in
cash flow and
For the bank increases the risk
The Bank only participates for the buyer so
as a pure payment they usually rarely
intermediary to receive accept to pay before
fees receiving the goods.
 3. Risks

For importers:

 Trustworthiness and effect of the seller: After receiving the money, the
exporter may purposely fail to deliver, deliver deficient, inability to
deliver as agreed, or even bankruptcy

 To avoid this risk, the importer may request a performance guarantee or

another form of guarantee from the bank serving the exporter.

 Goods are fully insured during transportation. The beneficiary of the

insurance must be the importer even if the exporter buys cargo insurance.
 3. Risks

For exporters:

 After the order, the importer does not carry out the money transfer in
advance, while the goods are purchased by the exporter, so the
exporter may repay managerial costs, storage costs, insurance
money. , or if the goods have been sent, they must return the goods
and find other very expensive buyers or have to reduce the selling
price.

 The seller must deliver the goods upon receipt of the service bank's
confirmation that the payment has been credited to the seller's
account.