International trade is growing at a fast rate. More and more international buyers and sellers are getting in touch of each other to fulfill their business objectives. In this era of global village, International boundaries or geographical distances are no barriers to the flow of goods, services or money. But the chances of being tricked by any fraud buyer are very high in International trade because no face to face conversation is being done. Moreover, even if a buyer is authentic, he may not make the payment on time or as promised. So, it is better to ensure timely and correct payment before getting into any international deal. As a seller, be very conscious about the time frame, mode of payment and other cost involved in the entire delivery process. Some of the tips that can ensure correct and on time payment from an international buyer are:
- Select the right and most favorable terms and mode of payment:The best way of ensuring complete on time payment is to select the right mode of payment. Some of the safest modes of payment for a seller are:
- Cash in Advance: Advance payment is always in the favor of the seller. He gets his payment even before transporting the goods. In this method, you need not to worry about the payment. If the buyer do not agree to make the entire payment in advance, at least take major part of the total amount. This will ensure that the buyer have invested some money so, he is not going to run away.
- Letter of credit: Letter of credit is a document that states all the conditions under which the payment have to be made by the buyer. If the supplier fulfills all the terms and conditions and serve the product as mentioned in the letter of the credit than the buyer is legally bounded to make the payment.
- Documentary collection: Documentary collection can be of two types: Document against payment(D/P) and document against acceptance(D/A). In D/P, the importer have to make the payment straightaway to get the shipping documents against which he can get the consignment. Where as in the case of D/A, the buyer gets the shipping documents from his bank by legally committing a date on which he will make the payment in future.
- Take in account all the intermediate cost: While developing a letter of credit or final payment estimate, always include the shipping, custom and other intermediate cost that may occur in the process of transferring the goods from one country to another. Also keep in account the duties, taxes or other legal payments applicable in the importer’s country.
What if a buyer do not pay after receiving the products?
Sometime buyers don’t make the payment even after receiving the entire consignment. Some of buyers pay the half amount in advance and once they receive the products, they stop communicating with the suppliers. In these cases of non- payment, the supplier can launch the complaint against the buyer. Different countries have different authorities that deals with trade related issues. You can launch the complaint to the trade authority of your country dealing with such issues. For example, if an Indian supplier do not get the payment from an international buyer, he can launch a complain to any of the following authorities:
- Indian Missions abroad;
- Government of India, Ministry of Commerce
- Export Promotion Councils,
- Chamber of Commerce & Industry including FIEO;
- Commodity Boards;
- Indian Trade Promotion Organization;
- Export Inspection Council and Export Inspection Agencies
- Directorate General of Commercial Intelligence and Statistics;
These authorities can help you getting your payment through legal ways. Apart from these, as a supplier you should also check the authenticity of the buyer before shipping the product. Cross check the address and contact details, go trough the website of the buyer’s company, ask for company registration number and other legal details before transferring the products. These information will ensure you that the buyer’s company is a trustworthy company and he will pay after receiving the consignment.