See how we helped Michael

"Fantastic! The legal document I used was so comprehensive and easy to complete. It is very reassuring to know my business now has this level of protection"

Michael S, London



With international contracts, if you're the seller, you may want payment before you send any goods, but the buyer might not want to pay you until they've received them. Or the buyer might want a credit period. How can this be reconciled?

There are a number of different ways to pay in an international sale. Your bargaining power will determine whether you can get the buyer to agree the method that suits you best. You can negotiate with your buyer over which of the following ways to pay:

Cash with order

This means that the buyer pays for goods when they order them. This might not be possible with large contracts, but it's often possible for smaller ones. It gives you the greatest degree of control over the entire transaction, as the buyer depends on you to send the goods as agreed. You could agree that the buyer pays with a personal cheque, banker's draft, or electronic transfer.

Open account

This means that you have a prior arrangement with the buyer for them to pay invoices that you send at agreed times. You'll normally send the goods to the buyer before they pay you. You must make sure you're happy with the buyer's reputation and that you trust them before sending the goods on an open account basis.

Bill of exchange

A bill of exchange is an unconditional written order that requires the 'drawee' (usually a bank) to pay the payee (you) a certain sum of money. There are 2 types:

  • A sight bill means the sum is payable as soon as you present the bill to the drawee bank

A term bill is like a post-dated cheque and is payable on a fixed date in the future.

Options with a term bill of exchange

With a term bill of exchange, you can:

  • Wait for the due date to collect the full payment, or
  • Sell the bill (once it's been accepted) at a discount to get cash early.

So, for example, if the buyer wants a credit period, e.g. 60 days, you could agree that the buyer pays with a term bill of exchange payable in 60 days from the date it's drawn. The 60th day would be the due date. The buyer wouldn't need to pay until this date.

However, if you wanted to get cash in the meantime, you could sell the bill at a discount before the due date. You'll first need to have the drawee bank 'accept' the bill of exchange by signing it. The bill would then become saleable. Anyone buying it from you would pay less than the face value of the bill (i.e. they would buy it at a discount) because they'd need to wait until the due date to collect the full amount of the bill from the drawee.

Letters of credit

You could use the bill of exchange (see above) in conjunction with a letter of credit.

Letters of credit is a method that offers a compromise for both of you.

For more information, see Letters of credit.

Copyright © 2022 Epoq Group Ltd. All trademarks acknowledged, all rights reserved

This website is operated by Epoq Legal Ltd, registered in England and Wales, company number 3707955, whose registered office is at 2 Imperial Place, Maxwell Road, Borehamwood, Hertfordshire, WD6 1JN. Epoq Legal Ltd is authorised and regulated by the Solicitors Regulation Authority (SRA number 645296).

Our use of cookies

We use necessary cookies to make our site work. We would also like to set some optional cookies. We won't set these optional cookies unless you enable them. Please choose whether this site may use optional cookies by selecting 'On' or 'Off' for each category below. Using this tool will set a cookie on your device to remember your preferences.

For more detailed information about the cookies we use, see our Cookie notice.

Necessary cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Performance cookies

We'd like to set cookies to help us to improve our website by collecting and reporting information on how you use it. For more information on these cookies, please see our Cookie notice. The cookies collect information in an anonymous form. Data is only used in aggregate.

Functionality cookies

We'd like to set cookies to provide you with a better customer experience. For more information on these cookies, please see our Cookie notice.