Credit Term refers to the period of time granted by the seller to the buyer for deferred payment in international trade, i.e., the buyer may pay for the goods within a certain period from the date of delivery or invoice date. It is essentially a commercial credit provided by the seller to the buyer, commonly in forms such as '30 days payment' or '60 days after sight'. It is often used in long-term cooperation, highly competitive markets, or buyer's markets, where the seller promotes transactions by relaxing payment conditions. Precautions include: assessing the buyer's credit risk, possibly combining with letters of credit, factoring, or credit insurance; clarifying the starting date (e.g., invoice date, bill of lading date, or arrival date); avoiding confusion with 'payment method' (e.g., T/T, L/C), as credit term is a payment timing arrangement while payment method is a settlement instrument. In contrast to 'sight payment', a credit term extends the buyer's cash flow time but increases the seller's capital occupation and bad debt risk. Similar to 'account period' but more formal, often used in contract clauses.
📝 Examples
1. According to the contract, we agree to grant you a 30-day credit term, i.e., payment within 30 days from the invoice date. (Note: The seller grants the buyer a 30-day deferred payment period, starting from the invoice date.)
2. Given our long-term cooperation, we can extend the credit term to 60 days, but you need to provide a bank guarantee. (Note: The credit term is extended to 60 days, but with additional guarantee conditions to control risk.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner