Our Articles

Enjoy,comment and share

RSS World Trade Organization — Latest news

  • WTO issues 2020 Annual Report May 28, 2020
    The WTO’s Annual Report, published today (28 May), provides a comprehensive account of the organization’s activities in 2019 and early 2020. The Report opens with a message from Director-General Roberto Azevêdo and a brief overview of the year. This is followed by in-depth accounts of the WTO’s main areas of activity over the past 12 […]
    WTO
  • 2020 WTO Public Forum cancelled May 28, 2020
    After careful consideration of COVID-19 related uncertainties and health concerns, the WTO has decided to cancel this year’s WTO Public Forum, scheduled for 29 September to 2 October. This decision responds to the complexities around planning to host thousands of people from around the world for a public event under the WTO roof, as well […]
    WTO
  • DDG Wolff: This is the time to consider the future of the multilateral trading system May 27, 2020
    The outbreak of the COVID-19 pandemic has heightened the urgent need to examine the underlying principles and values of the WTO and whether the organization needs change, Deputy Director-General Alan Wolff said on 27 May. Speaking at a webinar hosted by the Korean International Trade Association, DDG Wolff called for immediate action to control the […]
    WTO
  • Members discuss impact of COVID-19 on developing economies’ participation in world trade May 26, 2020
    On 26 May, WTO members assessed the impact of the COVID-19 pandemic on the trading capacity of developing countries in a virtual meeting of the Committee on Trade and Development. The new chair, Afghanistan’s WTO Ambassador, Mohammad Qurban Haqjo, said: “Trade must form part of the solution in assisting and supporting recovery in developing countries.”
    WTO

International trade Payment Methods



 

 

International trade transactions tend to be characterised by a higher level of risk and complexity. While, the risks resulting from the transport of the goods could be managed by relying on the Incoterms rules, the risks associated with the payment requires a specific approach.

Indeed, the risk of non-payment is probably one of the most sensitive aspects of cross-border trading, and as such, it requires a central attention.

Whereas for domestic trade the buyer and the seller have to comply with their respective national laws, things are quite different for cross-border transactions since there is no supranational jurisdiction.

From this perspective, adopting an open account method, where the buyer can pay between 30 to 90 days after the reception of the goods, might be risky especially with new buyers with whom no relationships has been built. Needless to say that in case of non-payment issues, the procedure is likely to be costly and time consuming.

Conversely adopting an upfront payment or cash in advance method, could be a risk-free option for the Seller. However, this could impact adversely the Exporters’ competitiveness since it increases cash-flow needs for Importers who will be more likely to look for other suppliers with better conditions. Furthermore, importers are usually reluctant to make upfront payments in foreign countries, by fear of not receiving the ordered goods.

Fortunately, overtime many tools have been developed to address those shortcomings, which enabled the international trade to experience an unprecedented growth.

It is of paramount importance to have a broad perspective of the international trade payment methods available in order choose the best option.

Indeed, there is no one size fit all way of organising payment in international trade, which is why most of the methods developed below have their own advantages, drawbacks and limits.

Now let’s see each International trade payment method in more details