IMPORT Payment Procedures

Import means purchase of foreign goods and or services. Hence it needs exchange of money and goods or services. The importer makes payment for the goods and or services he imports. import procedure differs with different means of payment. Different payment procedures are:


1. Cash in Advance:

Importer pays full, partial or progressive payment by a foreign DD, MT or TT. After receiving payment , exporter sends the goods and the transport receipt to the importer. Importer takes delivery of the goods from the transport company.


2. Open Account:

Exporter ships the goods and sends transport receipt to the importer. Importer takes delivery of the goods and makes payment by foreign DD, MT or TT. at some specified date.

3. Collection Methods:

Collection Methods are either clean or documentary. Again documentary collection is of two kinds:

                              a) Documents against payment.
                              b) Documents against Acceptance

In this method the exporter ships the goods and draws a draft/bill on the buyer. The exporter then submits the draft/bill (only or with documents) to the Remitting Bank for collection and the bank acknowledge it. The Remitting Bank sends the draft/bill (with or without documents) and a collection instruction letter to the Collecting Bank notifies the importer upon receipt of the draft. The title of the goods is released to the importer upon full payment or acceptance of the draft/bill.

4. Letter of Credit:

Letter of credit is well accepted and the most commonly used means of payment. It is an undertaking for payment. It is an undertaking for payment by the issuing Bank to the beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit.