Being paid with international transactions

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The confidence and trust between you and your customer can often be decisive for how the payment details are arranged. It goes without saying that you should be extra careful with new business relationships. It is important that all payment terms are clear in the purchase order/agreement.

Read more about foreign payments, on Business Sweden’s website (in Swedish)

Secure payment methods in business relationships

In order to minimise your risks when exporting, you may request advance payment, a letter of credit, documentary collection, or a bank guarantee. You can also supplement this with an export credit guarantee from the Swedish Export Credit Agency (EKN) or from a private credit insurance company. Or can sell the invoice utilising export factoring.

Simple payment

With established business relationships, ordinary simple payment is common. The purchaser can make a bank transfer or buy commercial checks at their bank and send them by post to the seller.

Advance payment

The absolute safest method for you as an exporter, is to require payment in advance. In such case you will be paid prior to sending the item to the purchaser.

Payment via Letter of Credit

A letter of credit is a very secure but also an expensive form of payment. The purchaser arranges for payment via its bank. The bank guarantees payment to the seller when it presents certain documents to the bank. A letter of credit can be an advantage when you do business with a new customer and want to avoid the issues with prepayment.

Documentary collection

Documentary collection means that the seller sends documents such as shipping documents, invoices and packing lists via the bank. The bank issues them to the purchaser only when the goods are paid. Documentary collection works almost like COD. For the seller, it may become expensive if the purchaser does not pick up the documents, because then the seller may have to pay the costs to transport the goods back.

Bank guarantee

A payment guarantee from a bank means that the purchaser’s bank commits to pay a certain amount to the seller if the purchaser fails to fulfil its part of the agreement. Talk to your bank to find out how the payment guarantee works with the particular country you are selling to.

Export factoring

In order to secure the payment for an export order, you can sell the invoice to a finance company, in what is known as export factoring. This basically works in the same manner as factoring within Sweden, in that a finance company takes over the risk of not being paid.

Export Credit Insurance

The Swedish Export Credit Agency (EKN) ( offers various guarantees to protect your company from the risk of not being paid. EKN insures losses caused by commercial and political events. There are also private insurance companies in Sweden and abroad that offer export credit insurance.

Payment solutions for e-commerce

There are many payment solutions with e-commerce transactions, including:

  • credit or debit card
  • SMS
  • wap
  • premium rate calls
  • digital wallet
  • direct payment (internet banking)
  • cash on delivery
  • invoice with credit terms.

What method should you choose? This depends upon how much money is involved, and what target audience you have.

You will need to choose not only the payment solution, but also the payment solution provider. There are an extremely wide range of providers out there to compare between. With any solution, add up all the costs for receiving payments (start-up cost, monthly cost and transaction cost) when making comparisons.

Collection of debts

If you don’t get paid for products and services that you have sold abroad, you can attempt to collect your money via debt collection. However, it may be difficult to fully understand the rules that apply in the other country. Therefore, it can be to your advantage to contact a Swedish debt collection agency that has contacts and resources where the purchaser is located.

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Responsible: Swedish Agency for Economic and Regional Growth

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