Methods of payment in foreign trade

1.1. Open accountOpen account

2.2. Advance paymentAdvance payment

3.3. ConsignmentConsignment

4.4. Bills for collectionBills for collection

5.5. Payment of bills under letter of Payment of bills under letter of creditcredit

6.6. Trust receiptTrust receipt

Open accountOpen account

Advance paymentAdvance payment

ConsignmentConsignment

Bills for collectionBills for collection

EXPORTER (1)GOODS IMPORTER

(7)PAYMENT (2)DOCUMENTS DOCUMENTS (4) D/A (5)PAYMENT D/P

EXPORTERS BANKS (3)DOCUMENTS IMPORTERS BANK (6) PAYMENT

Bills purchase (D/P) & Bills Bills purchase (D/P) & Bills discounted(D/A)discounted(D/A)

Payment of bills under letter of Payment of bills under letter of creditcredit

Trust receiptTrust receipt

D/A(usance) No trust receipt required

D/P(sight) trust receipt required

A trust receipt is a document executed by the importer to a bank when documents of title are released to him by the bank .this enables him to sell the goods and repay the bank through the sales proceeds .on the bases of this bank make payment to exporter and take interest from importer. Bank keeps title of goods, trust receipt are generally have tenure between 60 to 180 days .it is non negotiable instruments.