Balance Payment refers to the remaining amount, excluding the Down Payment or Deposit, that the buyer pays after the seller has completed delivery or met the conditions stipulated in the contract in international trade. It is commonly used in installment payments or settlement methods combining Letters of Credit and Telegraphic Transfer. Use cases include: export of large equipment, production of customized products, long-term cooperation orders, etc. To reduce risks, the seller requires the buyer to pay part of the amount first, and the balance is settled before shipment, after arrival, or after acceptance. Precautions: The payment time, proportion, and conditions of the balance must be clearly stated in the contract to avoid default due to disputes over goods quality or delivery time; balance payment is often linked to documents such as Bills of Lading and Inspection Certificates. Compared with Down Payment and Deposit, the balance is larger and is the seller's main source of payment collection; unlike payment under a Letter of Credit, the balance is mostly completed via Telegraphic Transfer (T/T), which is flexible but also higher risk. It is recommended to combine with credit insurance or bank guarantees.
📝 Examples
1. According to the contract, the buyer has paid a 30% down payment, and the remaining 70% balance must be paid via T/T within 7 days after receiving a copy of the Bill of Lading. (Note: The balance payment is linked to the Bill of Lading, a common foreign trade settlement arrangement.)
2. Since the equipment passed acceptance inspection, the buyer settled the full balance last week, and the cooperation between both parties ended smoothly. (Note: The balance is paid after acceptance, reflecting its nature as the final settlement payment.)
💡 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