(1) Collection:

Collection is referred to as entrusted collection. It is a way for the exporter to entrust the bank of the importing place to collect payment on its behalf through the local bank. After shipping the goods, the exporter prepares the invoice and other documents, entrusts the local bank, and requires the bank at the place of import to pay according to the amount on the invoice or the amount prompted by the bill of exchange.

According to whether the goods title certificate is attached, it is divided into documentary collection and clean bill collection. Documentary collection is further divided into documents against payment (D/P) and documents against acceptance (D/A).

Function: It is extremely beneficial to the importer. The importer does not need to advance funds in advance, or only needs to advance funds for a short period of time.

Characteristics: It is commercial credit and poses greater risks to exporters. In the collection business, banks only provide services and do not provide credit. Generally, it can be used for trading partners who have had cooperation experience but have yet to be inspected.

(2) Letter of Credit:

A letter of credit is a certificate issued by the bank to the exporter at the request of the importer to guarantee payment responsibility. This is the most common method of international trade settlement. According to the effectiveness, it is divided into two types: revocable and irrevocable; according to the time, it is divided into two types: sight and forward.

Function: To a certain extent, it solves the conflict of mutual distrust between buyers and sellers, and enables both parties to obtain the convenience of bank financing in the process of using letters of credit to settle loans, thus promoting the development of international trade. .

Characteristics: L/C is bank credit, the payment method risk is small, but the cost increases. For the exporter, the collection cycle is longer, and the risk of soft terms of the letter of credit requires higher document production requirements.

(3) Remittance:

According to the different remittance tools used, remittance is generally divided into: letter transfer (M/T), wire transfer (T/T) ) and draft (D/D). Currently, wire transfer is commonly used for settlement. During the negotiation process, the two parties agreed on payment in advance, payment on collection, or payment against documents.

Function: Remittance is an international trade settlement method with the simplest payment, the lowest settlement fee, and the fastest collection, but this payment method is based on the commercial credit of the buyer and seller.

Features: Prepayment is beneficial to the exporter but carries great risks to the importer. Cash on delivery is beneficial to the importer and exporter but carries high risks to the exporter. In actual operation, this settlement method is generally only used by long-term trading partners or multinational companies, or for small loans such as deposits and balance payments.