Exporter Payment before delivery

1. Advantages
- eliminate credit risk
- Guaranteed payment before delivery
- Least risky form of payment for the exporter—and get your money at the time
of the sale.
- Cash in advance provides the working capital exporter need to process the
order; there’s no strain on cash flow.
- to cover the exporter's out-of-pocket costs for supplying the service or product.
2. Risk
- This is considered the least attractive and competitive from the buyer’s point of
view, as cash in advance is the riskiest way for them to do business—they part
with their money upfront but have no guarantee you’ll deliver the goods.
- This method can also tie up a buyer’s cash while they’re waiting for delivery.
- If the buyer has to borrow all or some of the amount, this adds another step to
their process and, with interest payments, could increase their total cost to buy
seller’s product as well.
- As a result, few international customers will agree to cash-in-advance
purchases.

→ loses of potential customers

→ reduces advantage competition

3. How to minimize the risk

- Payment Terms 30% Advance Payment 70% on delivery