Managing Payments as an Importer

While international trade can offer some fantastic opportunities, dealing with overseas partners also has its challenges. Struggling with your suppliers to find a payment solution?

• the lowest cost overall
• payment deferred as long as possible
• receipt and examination of goods before committing to payment

Your supplier will seek:

• the highest price for the goods
• payment as soon as possible, preferably before manufacture and shipment
• control over the goods until payment is received

In your negotiations with your supplier, these constraints and the risks involved need to be balanced so that an agreement can be reached. There are several solutions to help you arrive at an acceptable commercial compromise.

Clean payment/open account
You make a clean payment to your supplier by telegraphic remittance or by purchasing a bank draft.

An open account is a negotiated agreement between you and your supplier, with terms specifying how much you can order and when you’ll make payment.

Documentary Collection
A Documentary Collection consists of a bill of exchange and various shipping documents – eg invoice, transport document, insurance policy – which you need to take delivery. These documents are released to you in exchange for on the spot payment or your endorsement of the bill of exchange, as a promise to make payment at a future date.

Documentary Credit
A Documentary Credit is a bank guarantee of payment to your supplier. As the Bank provides credit to you in order to issue the documentary credit, security is generally required. Before payment is made, your supplier must present the relevant shipping documents and meet other conditions as negotiated with you and stipulated within the documentary credit.

The payment is made immediately upon your supplier meeting all conditions stipulated or at a future date, as specified in the documentary credit.

Important information about advice
As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. View our Financial Services Guide (PDF 56kb).

Other important information
Applications for finance are subject to the Bank's normal credit approval. Full terms and conditions are included in the Loan offer. Bank fees and Government charges may apply.