Payment Terms

Payment Terms are core clauses in international trade contracts that specify the buyer's payment method, timing, currency, and conditions, directly relating to the financial security and risk sharing of both parties. Common payment methods include T/T, L/C, D/P, D/A, and O/A. In practice, exporters usually prefer advance payment or sight L/C to reduce collection risk, while importers tend to prefer O/A or usance L/C to ease cash flow pressure. Key points include: clarifying payment timing (e.g., XX days after sight of B/L copy), currency, bank charges bearer, and whether partial payment is allowed. Payment terms differ from trade terms (e.g., FOB, CIF), which specify delivery location and risk transfer, while payment terms focus on fund flow. Additionally, payment terms should be coordinated with other contract clauses (e.g., inspection, claims) to avoid ambiguity. Properly designed payment terms can balance risks and facilitate deal conclusion.