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  • Members give US green light to impose countermeasures on EU in aircraft subsidy dispute October 14, 2019
    WTO members agreed at a meeting of the Dispute Settlement Body (DSB) on 14 October to authorize the United States to impose countermeasures on European Union goods and services trade with the US up to a value of USD 7,496.623 million annually. The authorization was granted in line with a WTO arbitrator decision issued on […]
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  • Online registration opens for conference to mark 30 years of Trade Policy Review Mechanism October 14, 2019
    Online registration is now open for a conference to be held on 27 November 2019 at the WTO to mark the 30th anniversary of the WTO’s Trade Policy Review Mechanism (TPRM). The conference will focus on the role of the TPRM in providing enhanced transparency, accountability and monitoring of the multilateral trading system.
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  • DDG Wolff: The multilateral trading system will endure and will adapt October 14, 2019
    Speaking at a conference on global trade held at Chatham House, London, on 14 October, Deputy Director-General Alan Wolff said that at a time of slowing global economic growth and political uncertainty the WTO is even more essential, with its rules providing fairness and preventing discrimination. He stressed the importance of discussions aimed at strengthening […]
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  • New book shares lessons learned from helping labour markets adjust to globalization October 11, 2019
    A WTO publication on policies implemented by governments to help labour markets adjust to globalization was launched at the Public Forum on 11 October. It examines case studies on labour adjustment programmes and provides an extensive review of literature on this topic to highlight how governments are working to make international trade more inclusive.
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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