Discusses the most common methods of payment, such as open account, letter of credit, cash in advance, documentary collections, factoring, etc. Includes credit-rating and collection agencies in this country. Includes primary credit or charge cards used in this country.
Last Published: 8/14/2019

Payment methods and terms vary depending upon the U.S. company’s business model and relationship with its Russian trading partner.  For new-to-market companies, requesting advance payment for goods and services from a Russian customer may be a prudent safeguard until both parties establish a positive record of payment.  Once a U.S. firm has established a strong relationship with a Russian trading partner, it may consider extending short and eventually longer-term credit to bolster sales volume.  This step should be undertaken with caution and only after careful evaluation and establishment of successful payments.  30/70 is a commonly used payment structure for international transactions in Russia, meaning 30 percent due at the time of order/invoice and 70 percent due upon shipment.

For large transactions, advanced payment from a Russian buyer may be impractical, and financing may be provided by a bank, export credit agency or venture fund.  Please note that due to the Russian annexation of Crimea and ongoing Ukrainian conflict, the Export-Import Bank of the United States (EXIM) has suspended its operations in Russia.  Exporters’ risk can be minimized with a bank or insurance guarantee from a Russian bank that would be acceptable to a U.S. bank.  Several Russian banks and/or their corporate leadership are currently sanctioned by the United States Government, and exporters must verify that they abide by U.S. sanctions when conducting financial transactions.  Sectoral sanctions applied against Russian banks limit the duration of debt/equity financing that can be provided and may affect standard export transactions.  In leasing deals, exporters should insist on an upfront payment of three to fourth months upon delivery to mitigate risk.

Leasing has become increasingly attractive for both sides because of its economic effectiveness, flexibility and accessibility in comparison to bank financing.  Most large Russian banks have leasing programs that they offer their clients, and there is a growing list of foreign leasing companies operating in Russia that offer Russian clients leasing terms for imported equipment.  Aviation, energy, mining, construction, transportation, pharmaceutical production, forestry and fishing industry equipment, which may be too expensive for many Russian customers to purchase outright, are often leased.

As with sales, companies providing leased equipment must also be careful to comply with U.S. sanctions that (as already mentioned) limit the duration of debt and equity financing for certain Russian end-users, particularly with respect to Russian entities on the U.S. Sectoral Sanctions Identification List (SSI List) in the financial, energy, and defense sectors.  For more information on Russia sanctions, please consult the Russia resource website of the U.S. Department of the Treasury.
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.