Question

For which payment method is the importer-buyer required in principle to make payment when presented with both the draft and the shipping documents even though the buyer may not have taken possession of the goods yet?

Answer 1

The payment method that requires the importer-buyer to make payment when presented with both the draft and shipping documents is cash in advance.

Step-by-step explanation:

The payment method that requires the importer-buyer to make payment when presented with both the draft and the shipping documents, even if the buyer has not taken possession of the goods yet, is cash in advance.

Cash in advance refers to a payment term in international trade where the importer-buyer must make full payment to the exporter-seller before the goods are shipped or delivered. This payment method provides the exporter-seller with a guarantee of payment and minimizes the risk of non-payment for the goods.

For example, if a company in the United States wants to import goods from a company in China using the cash in advance payment method, the importer-buyer would need to transfer the full payment to the exporter-seller's bank account before the goods are shipped. Once the exporter-seller receives the payment, they can arrange for the shipment of the goods to the importer-buyer.