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