The appropriate selection of international payment methods - some suggestions for enterprises

Abstract

There is a wide range of payment methods used in international trade. The selection of any method of payment depends on a number of factors including the relationship between the exporter and the importer; the ability to comply with certain regulations on payment procedures by the commercial bank; the banking fees; the characteristics of the counterparty’s market; the characteristics of the merchandise, etc. Yet it is certain that whichever payment method is advantageous for the importer puts the exporter at greater risk and vice versa. In fact, that companies tend to employ remittances and collection more than letter of credit (L/C) poses a number of potential risks to companies themselves.The tendency arises from reasons of enterprises, banks, and the international payment methods. In order to prevent and mitigate risks during payment process, this article makes some suggestions that companies should consider when selecting international payment methods.