If you are selling to a foreign buyer, there are three possible options for you to get paid:
* Either you get accreditation from credit card companies like Visa and Mastercard.
* You open a 30-60 day letter of credit or L/C where payment is contingent on your ability to ship your goods before the L/C's expiry date.
* You get paid via a bank draft opened by your supplier in his or her own bank.
Without a credit card, how do I get paid by a foreign customer?
You can try securing a credit card account, opening a letter of credit, or be paid by bank draft.
Q: I have a prospective buyer from another country. My problem is I still can?t accept credit cards, something that I need in order for him to pay me. I want to make sure that I?ll get paid. What will be the best option for me?
— Franz Barreno
A: We don?t know what your product is, but we can think of three options to make sure you get paid.
* If you are selling on the Web and want to get paid via credit card, then you have to be accredited by the credit card companies. In this case, you have to approach a card company, such as Visa and MasterCard. Since we are not familiar with the specfic requirements and mechanics, we suggest you discuss these directly with the card companies.
* Via a 30-60 day letter of credit or L/C, where the minimum amount is US$1,000. Payment time depends on your ability as an exporter to ship your goods to your foreign buyer on or before the expiry date of the L/C. The pertinent steps are as follows:
o You prepare and send a pro-forma invoice (indicating your quantity and price) to your buyer abroad.
o Your foreign buyer, upon receipt of and based on your pro-forma invoice, opens an L/C, through his bank, say Saudi National Bank (SNB).
o SNB, through its local correspondent bank, say PNB, requests that the exporter, which is you, be advised of the L/C that was opened in your favor.
o Based on the L/C advised by PNB, you prepare and ship the goods to your buyer. Be sure you follow what?s written on the L/C.
o You present the L/C prior to its expiry, along with your shipping documents, to PNB and claim payment.
o PNB, based on the documents that you presented, claims reimbursement from SNB.
Local banks normally charge a commission for this service.
* Still another possibility is to be paid by bank draft. In this case, your buyer abroad goes to his bank and purchases a bank draft payable to you. However, the purchase of a bank draft is subject to local banking regulations (e.g. there must be an underlying transaction with supporting documents, such as pro-forma invoice, etc.)
Your buyer sends the bank draft to you, the exporter—but takes the risk of not receiving the goods if you do not follow through on the shipment.
We hope you find these points useful to start from. You may approach a commercial bank for more details. Don?t be afraid to ask. They'll be more than willing to accommodate a first-timer like you. Remember, they need your business.
Ask a Question
Got questions for our UP ISSI experts? Email us at smallbizclinic@eyp.ph. Replies will be posted in future columns.
“SmallBiz Clinic” is a joint project of EYP and the UP Institute for Small-Scale Industries (UP ISSI) that aims to provide free online consultancy and information services to small and medium-scale enterprises. A team of expert consultants from UP ISSI answers questions sent in by SME readers and advise them on general actions to take to better manage their businesses.
The UP ISSI is a training and research organization created in 1966 to help promote the development of small enterprises in the country. It has trained generations of successful Filipino entrepreneurs via comprehensive development programs in management, marketing, and finance, as well as other innovative development strategies such as the training of small business consultants.
UP ISSI brings to the “SmallBiz Clinic” over 35 years of frontline expertise in the day-to-day challenges and issues of running a Philippine-based enterprise.
Source: Philstar.com
* Either you get accreditation from credit card companies like Visa and Mastercard.
* You open a 30-60 day letter of credit or L/C where payment is contingent on your ability to ship your goods before the L/C's expiry date.
* You get paid via a bank draft opened by your supplier in his or her own bank.
Without a credit card, how do I get paid by a foreign customer?
You can try securing a credit card account, opening a letter of credit, or be paid by bank draft.
Q: I have a prospective buyer from another country. My problem is I still can?t accept credit cards, something that I need in order for him to pay me. I want to make sure that I?ll get paid. What will be the best option for me?
— Franz Barreno
A: We don?t know what your product is, but we can think of three options to make sure you get paid.
* If you are selling on the Web and want to get paid via credit card, then you have to be accredited by the credit card companies. In this case, you have to approach a card company, such as Visa and MasterCard. Since we are not familiar with the specfic requirements and mechanics, we suggest you discuss these directly with the card companies.
* Via a 30-60 day letter of credit or L/C, where the minimum amount is US$1,000. Payment time depends on your ability as an exporter to ship your goods to your foreign buyer on or before the expiry date of the L/C. The pertinent steps are as follows:
o You prepare and send a pro-forma invoice (indicating your quantity and price) to your buyer abroad.
o Your foreign buyer, upon receipt of and based on your pro-forma invoice, opens an L/C, through his bank, say Saudi National Bank (SNB).
o SNB, through its local correspondent bank, say PNB, requests that the exporter, which is you, be advised of the L/C that was opened in your favor.
o Based on the L/C advised by PNB, you prepare and ship the goods to your buyer. Be sure you follow what?s written on the L/C.
o You present the L/C prior to its expiry, along with your shipping documents, to PNB and claim payment.
o PNB, based on the documents that you presented, claims reimbursement from SNB.
Local banks normally charge a commission for this service.
* Still another possibility is to be paid by bank draft. In this case, your buyer abroad goes to his bank and purchases a bank draft payable to you. However, the purchase of a bank draft is subject to local banking regulations (e.g. there must be an underlying transaction with supporting documents, such as pro-forma invoice, etc.)
Your buyer sends the bank draft to you, the exporter—but takes the risk of not receiving the goods if you do not follow through on the shipment.
We hope you find these points useful to start from. You may approach a commercial bank for more details. Don?t be afraid to ask. They'll be more than willing to accommodate a first-timer like you. Remember, they need your business.
Ask a Question
Got questions for our UP ISSI experts? Email us at smallbizclinic@eyp.ph. Replies will be posted in future columns.
“SmallBiz Clinic” is a joint project of EYP and the UP Institute for Small-Scale Industries (UP ISSI) that aims to provide free online consultancy and information services to small and medium-scale enterprises. A team of expert consultants from UP ISSI answers questions sent in by SME readers and advise them on general actions to take to better manage their businesses.
The UP ISSI is a training and research organization created in 1966 to help promote the development of small enterprises in the country. It has trained generations of successful Filipino entrepreneurs via comprehensive development programs in management, marketing, and finance, as well as other innovative development strategies such as the training of small business consultants.
UP ISSI brings to the “SmallBiz Clinic” over 35 years of frontline expertise in the day-to-day challenges and issues of running a Philippine-based enterprise.
Source: Philstar.com
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