1. Pre-Shipment Payment Methods

Payment occurs before goods are dispatched.

• **Advance Payment (Cash in Advance)**
  Buyer pays upfront; goods ship later.
  Example: A European importer transfers full payment for bespoke machinery to a Chinese manufacturer before production begins.
• Letter of Credit (Documentary Credit)
  A bank guarantees payment upon presentation of compliant shipping documents.
  Example: An Australian winery secures export financing from an Italian wine importer via an irrevocable LC, ensuring payment once shipping bills are presented.
• Pro-Forma Invoice Payment
  Seller issues a detailed Pro-forma Invoice; buyer pays per that quote before delivery.
  Example: A U.S. distributor orders electronics from a Singaporean supplier and pays per a pro-forma invoice before shipment.

2. Post-Shipment Payment Methods

Payment occurs after goods have been shipped (and ideally received).

• Documentary Collection
  • D/P (Documents Against Payment): Buyer pays—or provides sight draft—before receiving documents and goods.
  • D/A (Documents Against Acceptance): Buyer accepts a time draft and pays at maturity.
    Example: A Brazilian textile exporter sends shipping docs to a South African buyer’s bank under D/P terms; the buyer pays to collect docs.
• Open Account
  Buyer receives goods and invoices, then pays within agreed credit terms (e.g., 30–90 days).
  Example: A Canadian wholesaler regularly imports packaged foods from Thailand on 60-day open account.

3. Hybrid / Special Trade Methods

These blend features of pre- and post-shipment finance:

• Consignment
  Seller ships goods but retains ownership until sold by the distributor. Payment is only made on the actual sale.
  Example: A German electronics maker consigns inventory to a U.S. retailer; the retailer pays only after selling the products.
• Buy-Back / Compensation Deal (a type of Counter-Trade)
  Seller is paid with goods produced using their own exported machinery or technology.
  Example: A Swiss machinery manufacturer installs equipment in Kazakhstan to produce fertilizer; part of the payment is in the fertilizer produced.