Buying from overseas can be challenging – it usually takes around 2-3 months from the day you place the order till the day you receive the delivery. For this reason, overseas suppliers usually request the following two payment methods:
Advanced Payment
Overseas suppliers usually request a 30% deposit and the balance to be paid upon delivery. Cash-in-advance payments have a high level of traceability but, once issued, it’s impossible to stop them and difficult to recover them if something goes wrong.
Letters of Credit
With letters of credit, your bank guarantees to pay your supplier when they are presented with the relevant export documentation. Arguably, this is one of the safest ways to make overseas payments, as credit notes balance out the risk for both the buyer and supplier. However, you will spend extra time on paperwork and the bank guarantee may increase the cost of the transaction – due to the interest and other expenses.The bank makes the payment based on the paperwork instead of the actual products delivered. You may still receive the wrong products and have to go through all the troubles to issue a claim to the overseas suppliers.
Both payment methods tighten up your cash flow, and provide no guarantee for the product quality.
With a small fee applied, Hanwood will take on all the risk by paying on your behalf and assuring you the product quality; you will only pay us after receiving and inspecting the products.
Hanwood also offers Project Financing, enabling an extension towards the payment period by up to 90 days.
