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: 11/8/2019
There are four common methods of international payment: cash in advance; letters of credit (L/C); documentary collections such as documents against payment (D/P) and documents against acceptance (D/A); and open account (O/A). Cash in advance terms are generally used in new relationships when transactions are small and the buyer has no choice but to pre-pay. Bank-to-bank letters of credit (L/C) are the most common form of international payment for established relationships because they provide a high degree of protection for both the seller and the buyer. D/P and D/A terms are also commonly used in ongoing relationships and provide a measure of protection for both the seller and the buyer. Open account (O/A) is used only when the seller has significant trust in the buyer’s ability and willingness to pay once the goods have been shipped. O/A terms lend maximum security to the buyer and pose greatest risk to the seller.

AIT’s Commercial Section recommends that U.S. exporters minimize financial risk by requiring their Taiwan trading partners to finance their imports through L/Cs. The vast majority of Taiwan’s importers use L/Cs with a validity of up to 180 days. On the whole, U.S. companies find Taiwan’s trade finance system to be efficient and report no widespread pattern of deferred payment.

Banks authorized to handle foreign exchange may issue L/Cs. As of March 2019, this includes all 37 local banks (and their branch offices), six U.S. banks and their branches, and 23 third-country banks. All banks in Taiwan that are authorized to handle foreign exchange have correspondent relationships with one or more U.S. banks.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide available at www.Export.gov/TradeFinanceGuide.

 

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.