The most common payment methods in exporting are:
- Payment in Advance
This is certainly the most preferred form of payment from the exporter’s point of view. However, it is the hardest to negotiate.
- Letter of Credit
Other than Payment in Advance, this is the safest method of payment in exporting. The customer arranges a letter of credit with their bank – known as the issuing bank. The letter of credit contains the instructions that must be followed and documentary evidence that must be supplied to a correspondent bank in South Africa.
- Bill of exchange
Documentary collections are probably the safest method. This is when an overseas bank, acting on your bank’s behalf, only releases the documents necessary for your customer (i.e. the importer) to take possession of the goods once they formally accept the terms of a bill of exchange. In accepting the bill of exchange, the customer essentially pays the overseas bank.
- Open Account
This is an agreement you should only enter into with a very good client – one that you trust. This is because you agree with the buyer that they only need to pay 30 days after receiving your invoice. With an open account, the exporter carries all the risk.
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Types of business insurance in south africa
From the day an entrepreneur starts a business, he exposes himself to certain risks. Even before the first employee is hired, a business is at risk, making it important to have the right insurance in place.
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