Timely, secured, and sufficient payments are one of the main pillars of operating a profitable international business and the most efficient way of expansion in the global market with satisfied clients. Irrespective of an established firm or a new one, importers and exporters often opt for third parties like banks or financial institutions to mitigate their global payment risks. These intermediaries provide payment guarantees and develop trust between parties to the contract regarding initiate transactions.

Being in an international business, you often need global trade finance to support your import or export payments in the different corners of the world but often struggle with dilemmas regarding the type or method of trade finance that would fit best for your business. In this blog, we have covered some of the most popular methods of global trade payments you can choose from depending on your business’s requirements. Let’s have a look:

1. Advance Payment (Cash Advance) - Cash-in-advance or Advance payment is a pre-payment trade finance method where the importer pays the exporter before the shipment of the goods. But it is not considered the appropriate method of import financing as the importers assume all the risks. While on the other side, exporters get the benefits of the availability of advanced working capital to further the production and shipment of goods. In other words, it is the least favorable method for importers and therefore recommended to use only in low-value orders. It may cause cash flow issues for the buyers.

Read more: https://www.emeriobanque.com/blogs/effective-payment-methods-in-global-import-export-trade-finance