Import and export payments

If you are going to import or export, you can use different payment methods. These differ in the timing of payment, additional costs, and risks for you and your customer. Payments can vary by sector and country.

Blank payments

There are 2 kinds of blank payments:

• Blank payment before delivery The buyer pays the supplier in advance, ensuring that the supplier gets their money – but the buyer runs the risk that the supplier does not deliver
• Blank payment after delivery (open account) The supplier sends an invoice after the goods have been delivered. You agree upon a payment term beforehand. In this case, the buyer is certain to receive the goods, but the supplier has no guarantee that they will get paid

Bank guarantee

With a bank guarantee, the importer's bank guarantees payment. Does the importer fail to pay as agreed? Then the importer's bank pays the exporter. A bank guarantee is not a payment method, but a security deposit.

The exporter can enter into a penalty clause with the importer and the bank. If the exporter fails to deliver as agreed, the importer can receive financial compensation. The exporter's bank then acts as a guarantor.

Documentary collection

With a documentary collection, the banks manage the payment. The exporter opens a documentary collection with the bank and sends trade documents. For example, the transport documents, invoice and insurance policy. The bank then sends these documents to the importer's bank. The importer needs these documents to dispose of the goods.

Documentary collection gives both the exporter and the importer more security. This form of payment is often used when business partners do not yet know each other well.

There are 2 types of documentary collection:

• Documents against Payment (D/P) The importer gets the trade documents only when they have paid
• Documents against Acceptance (D/A) The importer gets the documents after accepting the corresponding bill of exchange. The bill of exchange is a document stating that the importer promises to pay when due.

Letter of Credit (L/C)

A Letter of Credit (L/C) is an obligation by the bank to pay out a certain amount on a certain date. Importers open a Letter of Credit with their bank. The bank waits for the exporter's bank to fulfil the conditions in the L/C. For example, sending the trade documents. Then the bank pays the amount to the exporter's bank.

A Letter of Credit includes:

• price agreements
• date of shipment
• transport documents
• time of payment

This payment method is also known as documentary letter of credit or documentary credit.

A Letter of Credit is the most reliable, but also the most expensive form of payment. Therefore, it is often used in large transactions. Or when importing from a country with a less stable economy. Read more about the Letter of Credit on KVK.nl.

Payment by cheque

When paying by cheque, the exporter submits the importer's cheque to the bank and gets paid. Payment by cheque has risks. For example, the importer does not have enough money in their bank account. The cheque turn out to be forged. The bank can then reclaim the amount paid from the exporter.

Not all banks process cheques. Check with your bank about what is and is not possible.

Foreign currencies

If you trade with a country that uses a different currency than the Euro, you incur a currency risk. The other currency may suddenly go down in value. Check with your bank what measures you can take to limit the negative consequences of currency changes. For example, with a currency clause in your price quotation or a currency term transaction.

Read more about limiting currency risk.

Payment methods vary from country to country

Payment methods vary from country to country. So check in advance how the payment system works in the country you are doing business with. And ask your bank what the most commonly used payment methods are in that country.

The Netherlands Enterprise Agency (RVO) had tips for international payments (in Dutch).

Disputes about delivery or payment

Do you have a dispute about the delivery of the goods or the payment? There are several ways to try and solve these business disputes.