Wednesday, April 17, 2013
If your customer won't pay you in advance for a an order from a foreign country, follow the procedure below. It is the safest way to receive payment from overseas.
Ideally, asking for payment in advance is most secure. But that won't work in 99% of cases.
Your customer will want to safeguard that they receive what was ordered and you will want to get paid when you ship.
The solution is the Irrevocable Confirmed Letter of Credit. In effect what happens is the customer puts in escrow the funds for the value of their order with their bank. The customer's bank holds these funds to be paid to you when proof of shipment is presented.
Let's look at the words: "Confirmed" means the customers' bank has actually deposited the escrow money with your bank here in the U.S. "Irrevocable" means the customer cannot change their mind about payment. You ship - you get paid by your bank.
The controlling paper work are the shipping forms prepared by the logistics company who ships your merchandise to the customer's destination. Generally it is the Bill of Lading. A Bill of Lading is a form just like the one you complete when you send a parcel via UPS or FEDEX.
What assures your customer that they are getting what they ordered is the description of the merchandise on the Bill of Lading. Your bank receives the Bill of Lading, confirms that the goods are in accordance with the order and pays your invoice. Done deal!
Hank Samuel, SCORE Counselot
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