It is one of the most widely used means of payment in foreign trade, due to its easy operational treatment and its cost compared to other payment or collection options.
In an international transfer, the importer instructs their financial institution to make a demand payment in favour of the exporter.
They can be made in any convertible currency quoted in international markets and in which the exporter and importer have expressed the debt.
Sometimes, its use is derived from the demands of the selling party in the negotiation, which obliges the payment, in whole or in part, prior to the shipment of the merchandise.
On the contrary, if a situation of mutual trust prevails or is derived from the bargaining position of the importer, the merchandise can be dispatched in advance of receipt of payment. In this case, the exporter takes the risk that the importer will not order the transfer once the merchandise has been removed.
The circuit is as follows:
1. Signing of the sale and purchase agreement, reflecting, among other issues, the means of payment used.
2. The exporter ships the merchandise together with the necessary documents to remove it.
3. The importer instructs their institution to make the payment by transfer in favour of the beneficiary, according to the terms included in the sale and purchase agreement.
4. The importer’s institution issues the transfer order.
5. The exporter’s institution credits the funds to its account.
On the other hand, in the event that payment has to be made before receipt of the merchandise, the circuit would be as follows:
1. Sale and purchase agreement.
2. The importer instructs their institution to make the payment in favour of the exporter, totally or partially, according to the conditions agreed in the sale and purchase agreement.
3. The importer’s institution issues the order in favour of the exporter.
4. The exporter’s institution credits the funds to its account.
5. The exporter ships the merchandise together with the necessary documents to remove it.
