Traders and businessmen in international trade deal with various issues such as supply or production of goods, marketing, transportation, financing and payments, which also face various risks in this environment. Therefore, before making any decisions, businessmen should be familiar with the risks in international trade and the methods used to minimize these risks.
For this purpose, we must deal with things like payment methods and financial affairs in international trade, issues related to payments and financial affairs, financial risks related to payments, which include risks related to exchange rate fluctuations and currency transfers, exchange rates between currencies of different countries, Learn how to determine the exchange rate as well as the methods that exist to cover exchange rate fluctuations in the financial markets.
At the international level, according to the payment conditions that are agreed between the buyer and the seller, different payment methods are used, and in each of these methods, the buyer and the seller are exposed to different risks, and each method has advantages and disadvantages for both parties. Will have. The transaction parties may also use different methods to reduce their risks. Some payment methods have the same international rules and regulations, so it is necessary to be familiar with all types of international payment methods, their risks, advantages and disadvantages, with related international rules and regulations.
The main payment methods that are usually agreed upon by the parties in international trade include the following. However, some of these methods have subsets, and in some cases, these methods are used in combination, which you will become more familiar with as you increase your experience.

Account Open

In this method, after the goods are given to the buyer for delivery, the buyer will pay the price to the seller at the agreed time. The tools used by the buyer in this method have changed due to the advancement of technology from the past until now. While payment tools have changed over time from cash payment, financial documents such as bill of exchange, telegraphic transfers and telex, and today the most important tool used for payment in the open account method is the SWIFT system.

Payment In Advance

This method is the opposite of the open account method, where the buyer pays the seller before receiving the goods, and the seller sends the goods to the buyer after receiving the advance payment. The tools used in payment are similar to the tools used in the open account method.

Collection

In transactions using the collection method, which is known as the bill payment method in our country, it includes the following:

1. Simple collection of Clean Collections: in which only the bill of exchange is used as a financial instrument for the purpose of payment.
2. Collection of Documentary Collection documents: which is used in two ways according to the conditions of visual and long-term payment:
A) Collection of visual documents or documents against Payment Against Document
b) Collection of long-term documents or documents against the acceptance of A/D (Acceptance Against Document).
In document collection, commercial documents and shipping documents are mainly provided to the bank, and the buyer will have the possibility to receive documents for customs clearance and possession in exchange for settlement or acceptance of the term bill.

LC- Credit Documentary
In this method, banks as a reliable financial institution play an important role, because they will undertake the obligation to pay the transaction amount in an irrevocable way in front of the seller. Fulfillment of the payment obligation by the bank is against the presentation of commercial and shipping documents that are in accordance with the conditions previously determined by the bank. In addition to letters of credit, the guarantee of bank letters (Credit of Letter BY-Stand) can also be used in international trade as a commercial payment guarantee.

Bank Payment Obligation

Due to the advancement of technology and the popularization of e-commerce, the bank payment commitment method based on speed and data transfer replaces paper documents. In this method, like letters of credit, banks undertake the payment obligation to the seller, but what is required to be delivered and exchanged to fulfill the banking obligation will be electronic data that will be registered, checked and matched by electronic systems.