United Exports

Getting Paid for Exports

Export payment methods trade security for competitiveness: the more protection you take, the more friction the buyer accepts — so the right method depends on how much trust the relationship has earned.

At a glance

Payment method choice is a risk decision, not an administrative one.
New relationships justify secure methods; open account is earned over time, not offered at the start.
A letter of credit shifts payment risk to banks, but only pays when your documents match its terms exactly.
Agreeing the method during quotation — before production — is the only time you have full leverage.

The four main methods, from most to least secure for you

Cash in advance: Payment before shipment, usually by wire or card. Maximum security for you, maximum risk for the buyer — so buyers typically accept it only for small orders or samples.
Letter of credit: The buyer's bank commits to pay when you present documents that match the credit's terms exactly. Bank-grade security, but documentary precision is absolute — discrepancies delay or void payment.
Documentary collection: Your bank forwards the shipping documents to the buyer's bank, which releases them against payment or a promise to pay. Cheaper than a letter of credit, but the banks do not guarantee payment.
Open account: You ship and invoice on terms such as net 30 or net 60. Most competitive for winning business, least protection — the goods are gone before the money arrives.

Matching the method to the relationship

1
Assess the buyer before the method
Confirm the company is real, check references and credit information where available, and screen the party as part of routine compliance. Payment method cannot fix a counterparty you should not be shipping to.
2
Start secure on the first orders
Advance payment, a letter of credit, or a split such as partial advance with the balance against documents. Frame it as standard practice for new relationships, because it is.
3
Ease terms as payment history builds
Move gradually — from letter of credit to documentary collection to limited open-account terms — as the buyer demonstrates they pay. Document the progression so it is a policy, not an improvisation.
4
Consider credit insurance before open account
Export credit insurance covers non-payment for commercial and certain political reasons, and is what makes open-account terms survivable for a smaller exporter.

Currency and practical details that catch first-timers

Quote in U.S. dollars unless you have a deliberate reason and a mechanism to manage another currency.
Confirm with your bank which international payment methods it supports and what it charges — letter-of-credit fees sit on both sides.
Bank charges, intermediary fees and currency conversion can consume several percent of an order; price for them.
State who pays which bank charges in the quotation so settlement surprises do not sour a good shipment.
Keep payment records as carefully as shipping records — they matter for tax, audit and any later dispute.

Warning signs in payment negotiations

Pressure to ship before any payment arrangement is documented.
A buyer who resists every secure method on a first order but promises large volumes later.
Requests to route payment through a third party or a different country than the buyer's.
Letter-of-credit terms that require documents you cannot produce, or that expire before your realistic ship date.

Continue learning

Export Pricing & QuotationsWhere the payment method belongs in the quotation itself.Export Documents LibraryThe documents that letters of credit and collections actually move against.How to Export from the United StatesWhere payment fits in the full export sequence.