Must to know Payment term when you will import tools from China
Commonly Payment methods
In international trade, there are several commonly used payment methods that provide a framework for conducting transactions. These methods include:
TT (Telegraphic Transfer) / Bank Wire Transfer:
This is a common international payment method where the buyer transfers funds to the seller's account through a bank. It is fast and secure, but it may involve transaction fees.
This is a fairly common method payment for small- to medium-sized transactions. In many cases, international wire transfers are made before the delivery of goods.
Letter of Credit (LC):
A letter of credit is a payment guarantee issued by the buyer's bank to ensure that the seller receives payment upon presenting compliant documents. It offers trust and security to both parties.
Documentary Collection:
Documentary collection is an intermediary payment method where the seller sends goods and related documents to the buyer's bank, and the buyer's bank forwards the documents to the buyer for payment. This method provides some flexibility but comes with higher payment risk for the seller.
Open Account:
Under an open account arrangement, the buyer receives the goods first and delays payment. This is favorable for the buyer but carries higher risk for the seller.
Cash in Advance:
This is the most secure payment method, where the buyer makes payment in advance before the goods are delivered. However, it may not be very flexible for the buyer.
Online escrow. This payment method works like a letter of credit and is commonly used for smaller transactions, including those less than $5,000. You might find that online importers tend to prefer this method of payment.
if you are interesting B2B business,only T/T,L/C is the most popular in general.