chapter  9
18 Pages

Foreign payments

WithMarlies Harlaar, Otto de Leeuw

In this chapter authors discuss the various ways of making of international payment and measures people can take to hedge against currency risks. Dealing with foreign payments is likely the most challenging part of the export endeavor. Foreign payments involve, for instance, long waiting times and less guarantee that payments will occur. The best way of securing payment is to get our money in the bank prior to commencing customization. To deck the risk, people can of course use a bank guarantee, whereby the bank declares it will repay the pre-payment if delivery does not take place or happens in the wrong way. The sight draft is most commonly used in international trade. In a sight draft, the payment is on demand or on presentation of the negotiation documents to the paying bank or the importer. If the buyer asks to make payment in a foreign currency, the exporter should consult an international banker before negotiating the sales contract.