How to settle bills at international trade

The manner to settle bills at international transactions are practically the same as in domestic trade, although they have some differentiating factors.

The way of settling bills can be classified according to whether or not are subject to both, financial and commercial management of documentation:

1. Simple alternatives of payments.

There is a part that anticipates the obligation (The exporter sending goods or importer advancing payment)

• Cash.
• personal check or bankers draft.
• Bank transfers.

2. Documentary payment way ( Letter of Credit).

A letter of credit is a document from a bank guaranteeing that a seller will receive payment in full as long as certain delivery conditions have been met.

They produce a larger security to both the buyer and seller, as the transfer of funds is linked to trade in commercial activity.

• The shipment:

1. Simple shipment: management subject to financial documents.

2. The documentary shipment: subject to business management and / or financial documentation.

• The documentary credit: affected to business document management and / or financial.

The best method of payment will be the one that at the lowest cost, best meets the needs of the importer and the exporter.

The documentary letter of credit.

The documentary letter of credit is an obligation of the bank that opens the letter of credit (the issuing bank) to pay the agreed amount to the seller on behalf of the buyer, upon receipt of the documents specified in theletter of credit.

This is the most important form of payment at international trade.

Do not hesitate to contact our Spanish law firm in Marbella for any legal tax advise that will arise in your international trade transactions. The lawyers, accoutants and fiscal advisers of our multi lingual law firm in Spain will be pleased to answer your tax and legal inquiries.

Cecilio Sánchez, lawyer in Spain