Understanding Payment Terms

Understanding Payment Terms in International Trade

Payment terms are essential in global trade, ensuring secure and transparent transactions between buyers and sellers. At Lion & Lotus Group of Companies, we follow internationally recognized payment methods to facilitate smooth trade operations.

Common Payment Methods

Telegraphic Transfer (T/T) – A direct bank transfer made before or after shipment. It is fast and widely accepted but requires trust between parties.

Letter of Credit (L/C) – A bank-guaranteed payment method where funds are released once shipping documents meet agreed conditions. It offers high security but involves complex documentation.

Cash in Advance – The buyer pays the full amount before shipment, eliminating seller risk but requiring buyer trust.

Open Account – The seller ships goods before receiving payment, which benefits buyers but carries risks for sellers unless a credit agreement is in place.

Choosing the Right Payment Terms

Factors such as trust, order value, trade history, and speed of transaction determine the most suitable payment method. New buyers often use L/C or advance payments, while long-term partners may opt for T/T or open accounts.

Stay Informed & Trade Securely

Understanding payment terms helps businesses manage risk and build strong trade relationships. Stay updated with our blog for expert insights.

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