Payment Ratio

Order Payment Ratio refers to the percentage of the total order amount that the buyer actually pays. It is a core indicator in foreign trade for measuring payment progress and credit risk. Common scenarios include: advance payment (e.g., 30% deposit), balance payment, installment payment, partial payment under a letter of credit, etc. Using this ratio allows clear stipulation of payment obligations at each stage, such as '30% advance payment ratio, balance paid before shipment.' Notes: It is necessary to clarify the calculation base (whether freight and taxes are included), currency, and exchange rate risk; it differs from 'Payment Terms,' which specify the time and method of payment, while payment ratio emphasizes the amount proportion; it overlaps with 'Deposit Ratio,' but a deposit usually specifically refers to advance payment. In practice, the payment ratio directly affects cash flow and risk exposure. Exporters should strive for a high advance payment ratio, while importers prefer to lower it. At the same time, tools such as credit insurance and bank guarantees should be used to prevent buyer default.