The following payment procedures are listed from the less safe to the safest:

Direct Payments

This is the easiest payment procedure, and the cheapest due to the limited participation of the banks in the operation. This payment can be done by checks (own or belonging to a third party), travellers checks, bank transfers or drafts, or international credit cards. It is usually used by parties having a permanent commercial relationship, based on a high trusting level. Excluding the bank draft, it is usually used for paying small amounts of money.

Simple Payment Orders

The importer issues the order for the exporter, through the issuing bank. No commercial documents are needed for making the payment, just by giving a receipt. As this kind of payment is irrevocable, it is only used by persons having a tight economical and commercial relationship.

Documentary Payment Orders

The payment is only completed when the exporter shows the commercial documents established in the payment order.

Clean Collection

Unlike the payment orders, where the operation is started by the importer, the clean collection is started by the exporter and it is needed the intervention of the bank in the importer's country. To complete the payment, financial documents must be shown (check or bill of exchange accepted by the importer).

Documentary Collection

Financial and commercial documents (Commercial Invoice, Bill of Lading, Certificate of Payment of Transportation and Insurance), given by the exporter to the importer after the payment or acceptance, must be presented in order to complete the payment.

Documentary Credits (Letters of Credit are one kind of documentary credit).

Due to the distance between the exporter and the importer, it is impossible to pay cash, instantly enforcing the contract. Therefore, the exporter must either charge the goods in advance or run the risk of charging after loading. Documentary credits reduce risks for both, the exporter and the importer, by using banks.

Steps

ALADI's Agreement on Reciprocal Payments and Credits

The Agreement on Reciprocal Payments and Credits, in force within the framework of the ALADI, is a system created by the member countries' central banks in order to keep and expand their reciprocal commerce as well as the financial relation between their countries.

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