Methods of payment in commercial transactions

There are various methods for paying in international trade that companies choose to choose from, based on whether they purchase goods or products or know-how.
1- The methods of selling a seller's risk but the buyer's risk is low.
2. Procedures that take the buyer's risk but the vendor's risk is low.

In the first method, the seller usually sends the goods and then receives the money from the buyer, but in the second method the seller receives the goods before the goods are sent from the buyer.
In general, there are two types of payment methods in international trade:
Currently, the most popular and most important form of payment in commercial transactions is the use of a documentary credit regime that has specific rules that are commonly known as UCP-500.
1- Payment through executive operations with banking system monitoring:
In this way, the banking system as a controlling center tries to defend the interests of both parties while creating the necessary facilities to encourage buyers and sellers in the international arena. There are two main types of payment in this method:
1-1) Documents against payment / acceptance of foreign exchange / documentary collection
2.1 LC Documentary Credit
Documents accepted in this method
(A) Proposition: A formal commitment made in the form of a unified form of exchange or Rials for the purpose of carrying out a commitment. Indemnity is not a means of payment and is only guaranteed
B) Currency Transaction: A bank form in which a certain amount of money from a particular account (buyer) is transferred to the counter (vendor) account. Of course, currency exchange is a means of payment
C) For: A formal commitment that includes a mutual commitment between the buyer and the seller, and in fact a non-disclosure method of credit but has specific characteristics. Types of things are:
C-1 Master: You will be accompanied by documents along with the form
2-C Visiting: The attached document is not a form and only the buyer confirms it.
It has three sides:
- Exporter
- To the receiver (the receiving bank)
- Hold on
2. Payment through executive operations without supervision of the banking system:
If the buyer and seller are very confident about each other (to reduce costs), they will do this. This method consists of two main types of payment:
A. Prepayment method
B) open account method (safe)
Definition of Credits: A commitment by the Bank to open credit to pay repayment or repayment obligations to the applicant for a specified credit. This payment is made either through an exchange (B / E) or through a credential (L / C).
The B / E currency is sent by the issuer or seller and sent to the beneficiary bank and is accepted by the buyer or importer and the exporter can receive the amount immediately by submitting this document to the bank, which is negotiable. .
* The L / C credentials are a contract form whereby the repaying bank, at the request of the buyer or importer of another bank designated by the bank, allows the seller to pay the maximum amount of credit if the seller submits the documents for the carriage of the goods to be traded. Make The Merchant Bank then sends these documents to the buyer's bank. Credentials are not tradable against you.
What is USANCE L / C Credentials?
Auctions means the deadline, the term, the interest on the money, and in the international trade convention, means a guaranteed transaction. The cost of the investment is the same as the interest paid by the buyer of the goods (the applicant for credit) in addition to the price of the goods due to the deadline.
What is finance?
In cases when the seller does not want to accept the credentials of the company, the buyer usually requests a financial company to enter the transaction and pay the deal to the seller, and, at the end of the term, obtain the principal and interest from the buyer of the goods. .
These institutions are called Financer (financial provider or investor).