Payment
Payment Terms for Export
How to write export payment terms — milestones, Incoterms alignment, L/C clauses, and T/T schedules.
Clear payment terms state method, timing, currency, bank charges, and consequences of default.
Essential Elements
Method (L/C, T/T, D/P, OA), currency, amount or formula, timing triggers (order, shipment, docs), bank charge bearer, and dispute resolution.
Align with Incoterms
FOB seller should not pay import duty — payment terms should not contradict who pays freight/insurance on L/C docs. DDP seller may embed duty in price but still define when buyer pays seller.
L/C Clauses in Contract
Reference latest shipment date buffer, allowed transshipment, third-party docs, and inspection before presentation if needed.
T/T Schedules
Define exact trigger: "within 3 days of copy B/L email" vs "upon customs release". Ambiguity causes shipment holds.
Default and Remedies
Late payment interest, suspension of shipments, retention of title, and applicable law. Export credit insurance assignment if used.
Examples
Clause
Payment: 30% T/T deposit within 5 days of PI sign; 70% T/T within 7 days of on-board B/L date.
Conflict
Contract says OA 60 days but L/C at sight — bank pays before buyer wanted credit.
FAQ
- PI binding on payment?
- PI starts process — final terms in signed contract prevail.
- Multiple currencies?
- State invoice currency and FX source if split payments.
- Partial shipment payment?
- Pro-rate or per-shipment triggers — define upfront.
- Retention money?
- Common in projects — separate from trade L/C unless structured.
- Net terms on export?
- Open account possible for strong buyers — see Net 30 guide.
Conclusion
Put payment terms in sales contract and PI. Link to Incoterms and Payment Terms.