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