I (Meaning and importance of Exports) Unit Structure

7. Forwarding of Notes/Bills to forfaiting agency 
The EXIM bank verified the promissory note or bills and then 
forwards it to the forfeiting agency for discounting purpose. 
8. Collection of Amount 
The EXIM bank then makes arrangement to collect the 
discounted proceeds of promissory notes or bills from the overseas 
forfeiting agency. The EXIM bank then credits the proceeds to the 
exporter through his bankers. 
On the due of the promissory notes/bills the forfeiting agency 
makes arrangement to realize the payment from the overseas 
buyer. 
11.10 METHODS OF PAYMENT/TERMS OF PAYMENT
11.10.1 
INTRODUCTION 
 
 
There are different methods of payments in export trade. 
The mode and manner of payment are decided by the parties to a 
foreign trade transaction. Banks play the most important role in this 

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regard. The seller has to make sure that the sales proceed is 
credited in his account with in 180 days from the date of shipment 
of goods. 
11.10.2 METHODS OF SECURING PAYMENTS IN AN
 
EXPORT TRADE 
 
 
There are several methods of securing payment of export 
proceeds, some of which are as follows 
1) Open Account 
 
 
Open account is also called trade credit. Under this method, 
there is an understanding between the seller and the buyer on the 
terms of credit and rate of interest on the outstanding amount. This 
facility is extended by the seller to his overseas buyer only when he 
is confident of the 
buyers‟ integrity to honour his commitments. 
An advantage of this method is that the seller is relived of 
the botheration of drawing and discounting bills of exchange. But it 
can be adopted only when the parties are well known to each other 
and there are cross dealings between them so that the accounts 
are at least partly squared up.