Many American businesses new to selling U.S. products overseas expect or prefer to be paid in full in advance. While there is zero risk of non-payment if you do business this way, you risk losing business by overlooking competitors willing to offer buyers better payment options. Consider more attractive payment methods like those discussed below. But first, view Methods of Payment, the first of two videos in the Get Paid and Finance Your Export Transaction set.
Last Published: 3/16/2018

Selling U.S. Products Overseas

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Five Export Payment Options to Consider

  • With cash-in-advance payment terms, an exporter can avoid credit risk because payment is received before ownership of the goods is transferred. For international sales, wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. With the Internet, escrow services are becoming another cash-in-advance option for small export transactions. However, requiring payment in advance is the least attractive option for the buyer, because it creates unfavorable cash flow. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors offering more attractive payment terms.
  • Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer establishes credit and pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. Depending on the seller’s terms, the LC could also protect the buyer since no payment obligation arises until the goods have been shipped as promised. 
  • A documentary collection (D/C) is used primarily for ocean shipments. It’s a payment mechanism whereby the exporter entrusts the collection of the payment for a sale to its bank (remitting bank). The remitting bank, in turn, sends the documents that its buyer needs to the importer’s bank (collecting bank), with instructions to release the documents to the buyer for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The collection letter gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment. D/Cs are generally less expensive than LCs.
  • An open account transaction is a sale where the goods are shipped and delivered before payment is due, which in international sales is typically in 30, 60 or 90 days. While the most advantageous options to the importer in terms of cash flow and cost, it is consequently one of the highest risk options for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. Exporters can offer competitive open account terms while substantially mitigating the risk of non-payment by using one or more of the appropriate trade-finance techniques covered later in this Guide. When offering open-account terms, the exporter can seek extra protection using export-credit insurance.
  • Consignment in international trade is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. It is based on a contractual arrangement in which the foreign distributor receives, manages, and sells the goods for the exporter who retains title to the goods until they are sold. Exporting on consignment is very risky as the exporter is not guaranteed any payment, and its goods are in a foreign country in the hands of an independent distributor or agent. Consignment helps exporters become more competitive on the basis of better availability and faster delivery of goods. Selling on consignment can also help exporters reduce the direct costs of storing and managing inventory. The key to success in exporting on consignment is to partner with a reputable and trustworthy foreign distributor or a third-party logistics provider. Appropriate insurance should be in place for consignment shipments to mitigate the risk of non-payment. In fact, insurance should be used for all transactions.

Get Help, the U.S. federal government’s export assistance portal, links to many resources, including the following:

  • The Trade Finance Guide provides guidance on how to get paid. as verified through the presentation of all required documents. 
Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting

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