| It is impossible to be in international trade without | | | | 3. Wire transfer is by far the fastest and the |
| involving your bank for all the services they provide | | | | cheapest option in which the importer will instruct his |
| such as advice on financial issues and the potential | | | | bank to transfer the amount to the exporter's bank |
| risks involved. It is true that one critical hurdle for | | | | account. The first time, the transfer happens in about |
| SMEs is the lack of information on international trade | | | | 10-15 days depending on the destination country and |
| processes, documentation and banking procedures | | | | the routing bank. International wire transfers are |
| necessary to carry on with business abroad. For | | | | made through intermediary banks/correspondent |
| result oriented and cost effective international trade, | | | | banks. |
| you will very definitely need access to accurate and | | | | 4. Although not in a big way, some China |
| timely information and a sound knowledge of banking. | | | | manufacturers accept Paypal for smaller amounts |
| Payment Options in International Trade | | | | such as US$5,000 but require 3% extra to |
| Quite obviously all payments in an international trade | | | | compensate for the charges. Paypal is the quickest |
| are made through bank either by way of wire | | | | and easiest mode of payment in international trade. |
| transfer or check with the latter not being preferred | | | | Banks that are serving international trade, understand |
| for not being the quickest. The following are some of | | | | the crucial role they are required to play. Many large |
| the common ways of payment modes in international | | | | banks maintain worldwide correspondents to provide |
| trade. | | | | quick delivery of actual currency, wired money or |
| 1. Banker's Draft is a cheaper option and easier to | | | | drafts. You may choose your bank for international |
| obtain but there is a risk of loss in transit. The only | | | | trade account on the basis of whether the bank can |
| advantage it has against check is quicker credit that | | | | extend advances against the account receivables. |
| the exporter gets. | | | | Bank may, however, require your account secured |
| 2. Letter of Credit. This international trade instrument | | | | through export credit insurance provided by Export |
| is mutually convenient for both the parties. The | | | | Import Bank of United States. Banks also let you |
| exporter gets paid once he produces the copy of | | | | enter into forward exchange contract with your bank |
| BoL (bill of lading) which he receives from the | | | | and fix the amount of the foreign exchange you |
| shipping company and the LoC, to the bank, | | | | receive when you are dealing in convertible |
| regardless of whether the consignment as arrived at | | | | currencies. You need your bank to be with you as |
| destination or not. | | | | long as you are in international trade. |