0:00Every international payment method sits somewhere on a spectrum.
0:04At one end the buyer carries the risk.
0:07At the other end, the seller does.
0:10One hundred percent advance payment is the riskiest for the buyer,
0:14since money is sent before anything ships.
0:17Open account, which means paying after delivery,
0:21is the riskiest for the seller,
0:22and is rarely offered to a new buyer with no track record.
0:28In between sit three options.
0:30Documentary collection,
0:32where a bank releases shipping documents to the buyer only against payment,
0:36or a signed promise to pay.
0:39Letters of credit,
0:41where a bank guarantees payment once agreed documents are presented.
0:45And escrow or platform-based protection,
0:49such as Alibaba's Trade Assurance,
0:51where a neutral third party holds the funds until both sides confirm the deal
0:57is complete.
0:59A first order with an unfamiliar supplier justifies more protection,
1:04even at extra cost.
1:06A tenth order with a supplier who has delivered reliably nine times can
1:12reasonably move toward faster, cheaper payment terms.
1:17Match the protection to the trust.