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INTERNATIONAL BANKING - International Banking Services

For Importers

There are four primary methods of payment used by importers. Each has pros and cons, but importers increase their risk as they move from an open account toward pre-payment, as explained below. For exporters, the opposite is true. These are your options:

Open Account - This method is the most desirable, risk free option for importers as they have the goods before their payments. It is, however, difficult to negotiate with exporters. Both parties should be familiar with each other as the terms of payment are based primarily on trust.

Documentary Collections - This method gives importers less control than an open account. Exporters retain control of the merchandise while the bank transmits shipping documents to the importer's bank. Merchandise is released to the importer only when payment occurs as agreed. This method is used when the performance of both parties are well established.

Letters of Credit - This method ensures that the importer's obligation to act is in accordance with the agreed terms of the business contract. Importers eliminate the need to make their payment prior to shipment of merchandise. The exporter has to provide all the documents that are in compliance with the Letter of Credit prior to payment. This method is used when the transactions of both parties are newly established.

Pre-payment - This is the least desirable option for importers. The importer pays in advance before receiving the merchandise.

If you have any questions about International Banking Services for Importers, please email us at

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