Export payment terms compared: who carries the risk

When you sell alone, there's no credit department checking the buyer. The payment term is your credit control. This guide lays out the common terms from the exporter's point of view, using the U.S. International Trade Administration's Trade Finance Guide and the International Chamber of Commerce (ICC) rules for collections, and shows how to write the term so a buyer, a bank and a translation tool all read it the same way.

The risk ladder

The Trade Finance Guide ranks the main methods from least to most risky for the exporter:

Most small export deals mix these: a deposit in advance and a balance on one of the other terms. The question is always the same: at the moment the buyer can take the goods, how much do they still owe you?

Deposit plus balance

A common term is "30% deposit by bank transfer before production, 70% balance before shipment". The deposit covers your materials if the buyer walks away. The balance "before shipment" means you're fully paid before the goods leave your control. Buyers often push for the balance later. Here's how the options compare:

• Balance before shipment. Safest for you. The buyer can ask for photos, a video or a third-party inspection before paying.
• Balance against a copy of the bill of lading. Very common in practice. You ship, send the buyer a copy of the bill of lading, and they pay. While you hold the original bills of lading (with an ocean shipment where the carrier releases goods only against an original), you still control who collects the goods. That control disappears if the bill of lading is surrendered or "telex released" at origin, or if a sea waybill is used instead. ICC describes a surrendered bill of lading as one where the shipper authorises release of the goods without an original being presented; and a sea waybill isn't a document of title at all. In both cases the buyer can collect the goods without paying you.
• Balance after arrival, or on open account. You carry the full risk of the balance. Only for buyers with a long, clean payment history, or with credit insurance (see below).

Documentary collections: D/P and D/A

In a documentary collection your bank sends the shipping documents to the buyer's bank with instructions. Collections usually follow ICC's Uniform Rules for Collections (URC 522).

• D/P (documents against payment). The buyer's bank releases the documents only when the buyer pays.
• D/A (documents against acceptance). The bank releases the documents when the buyer accepts a draft, a promise to pay on a set future date. The buyer has the goods before paying.

What the banks don't do matters most. The Trade Finance Guide states that banks' role is limited and they don't guarantee payment. Under URC 522, banks have no obligation to handle a collection at all (Article 1) and no obligation to take any action about the goods (Article 10). If the buyer refuses the documents, your goods may sit at the destination port, building up storage charges, while you look for another buyer.

The Trade Finance Guide also notes collections aren't appropriate for air shipments or for ocean shipments consigned straight to the buyer, because the buyer can get the goods without the documents.

Letters of credit

A letter of credit is a bank's undertaking to pay you if you present documents that comply with its terms. The Trade Finance Guide calls it one of the most secure instruments available, but the security only works if your documents match the credit exactly. That's a separate skill: see letter of credit: what to check before you ship. If you're unsure of the issuing bank or its country, ask about adding a confirmation from a bank you trust.

Open account and credit insurance

Open account is what large buyers often expect, and the Trade Finance Guide calls it one of the highest-risk options for an exporter. If you have to offer it, the guide points to ways to reduce the risk: export credit insurance, factoring and standby letters of credit. Export credit agencies and private insurers in many countries offer cover for small exporters; your bank's trade desk can tell you what's available where you are.

With a new buyer

• Ask for a deposit before production, at least enough to cover materials you can't resell.
• Get the balance before you lose control of the goods: before shipment, or against documents through a bank.
• For larger first orders, a letter of credit is reasonable to ask for. Many serious buyers expect the question.
• Don't move to open account until the buyer has paid several orders on time.
• Confirm your bank details by phone when you first share them, and tell the buyer they will never change by email. See bank detail change fraud.
• Check the buyer is a real company before you produce anything; see fake inquiries and phishing.

How to write it

A payment term should give the method, the amount or percentage, the trigger and the deadline. "30/70" is not a payment term. Compare:

Payment: 30% deposit ([currency] [amount]) by bank transfer within [7] days of this proforma invoice; production starts when the deposit is received in our account.
70% balance ([currency] [amount]) by bank transfer before shipment. Original bills of lading will be released after the balance is received in our account.
Bank charges: each party pays its own bank's charges.

Put the same line in the quote, the proforma invoice and the contract. The payment term is separate from the trade term: "FOB" or "FCA" says where you deliver, not when you're paid. See Incoterms 2020: which rule to quote. And if a buyer reads your English through a translation tool, spell it out; see plain English for non-native buyers.

Plan payment dates around bank holidays at both ends. A balance "due Friday" may not move if the buyer's banks are closed; see working weeks and holidays.

Sources

• U.S. International Trade Administration, Trade Finance Guide (2022 edition) and Methods of payment.
• ICC, Uniform Rules for Collections (URC 522), Articles 1, 7, 9 and 10.
• ICC Banking Commission, Technical Advisory Briefing No. 17: surrendered bills of lading, 27 January 2026.
• Law Commission and Scottish Law Commission, Rights of suit in respect of carriage of goods by sea (1991): a sea waybill "is not a document of title".

Read next

• Letter of credit: what to check before you ship; all of Getting paid.
• Sample requests and delay and price-increase emails, in Samples, orders and documents.
• Quoting and trade terms; Fraud and safety; Working across markets. How we check sources: about this handbook.