FAQ Payment methods

You are certainly familiar with countless payment methods. Classical payment methods, such as bank transfer and credit card. There are also more modern systems, such as Bitcoin and other crypto currencies. In everyday business life the purchase on invoice and the payment term, the letter of credit (L/C) and the down payment still prevail.

Payment methods in the international trade

Which of these payment methods are available in the international trade with metals, we would like to introduce to you in our FAQ. Also to give you an idea of how and with what we work successfully in our daily business. Our focus is always on maximum security for you as a customer, the manufacturer and us as a trader.

What is a payment term?

In business, a term of payment is a term of payment that differs from general sales contract law, by which the supplier grants his customer a certain period of time for payment of the purchase price when concluding a sales contract.

Payment periods of 30 to 90 days are often agreed upon.

While this method of Payment involves Risks, significant higher costs for financing, it is often given a wrong picture about the solvency of the debtor.

Those payment terms are often covered by credit insurance companies which only give a total sum of risk coverage.

Quite often there is one supplier occupying almost the full amount, even if he is not needing it. In general, this is having a very negative influence to the overall risk rating of the debtor.

What is a Letter of Credit (L/C)

In foreign trade finance, a letter of credit (abbreviated L/C, also known as bankers letter of credit) is an agency agreement with the obligation of a credit institution to make payment to a certain payee within a certain period of time according to the instructions of the principal upon presentation of certain documents.

The Letter of Credit involves great risks. If even one passage in the L/C is not correctly formulated, the executing bank can have the letter of credit burst. In the past, fraud has also been a frequent occurrence with the L/C.

There are also additional costs for the Letter of Credit. For example, the bank will charge a fee and interest will be due.

What is a down payment?

A down payment (formerly a deposit, premium or liability money) is when the purchaser makes a partial payment in the case of a purchase contract or when the purchaser makes a partial payment in the case of another contract, whereby the delivery or service has not yet been made.

A down payment offers the greatest security for customers, traders and manufacturers. The risk is calculable for all parties involved and is distributed in the most fair way.

By comparing all payment methods, this classic way of payment is still the most transparent and economic way of paying.