I (Meaning and importance of Exports) Unit Structure

2) Advance Payment 
 
 
Under advance payment, the buyer is supposed to make the 
payment in advance. If this term of payment is offered, there is 
absolute safety of getting payment. This method may work when 
the buyer is completely dominated by the exporter and the buyer is 
interested in getting the goods. It is customary on the part of the 
exporter to demand a certain percentage of the value of goods in 
advance especially when the goods manufactured are against 
certain specifications of the buyer. 
3. Payment against Shipment on Consignment 
 
 
The exporter supplies the goods to the overseas consignee 
or agent, without actually giving up the title. Payment is made only 
when the goods are ultimately sold by the overseas consignee to 
other parties. 
This method is costly, because of commission to be paid to 
the consignee, apart from other charges and at the same time it is 
very risk. The consignee may return the goods back if remained 
unsold and even the consignee may not clear off the dues in time. 
The price to be realized also uncertain as it depends on market 
conditions in the buyer‟s country. 

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However, this method offers an advantage to the buyer as 
the buyer can examine the goods before purchasing and the seller 
may get a higher price if the buyer is satisfied about the quality. 
In India prior approval is required to be taken from the 
exchange control department of RBI for shipment on consignment 
basis. 
4. Documentary Bills 
 
 
When relevant documents of the title of the goods are also 
sent along with the foreign bill of exchange it is called documentary 
bill. Which are of two types i.e. (a) Documents Against Payments 
(D/P) and (b) Documents Against Acceptance (D/A).