There are three basic payment methods in foreign trade: prepayment, immediate payment and deferred payment (post-payment). It is obvious that from the point of view of payment, only deferred payment presents a risk to the exporter as it means that the customer (or their bank) pays only after the delivery of goods. The export contract defines when and by what instalments the customer shall pay. The deferral period may be 30, 60, 90, 120, or even 360 days.
How can exporters address the risks posed by deferred payment? They can apply for one of the bank guarantees (letter of credit or bank guarantee), can take export credit insurance from EXIM or other insurance company or can transfer their claim to EXIM or another bank. In the latter case, the bank pays the amount owed by the buyer. Naturally, every solution has associated costs (bank charges, insurance costs); the most optimal solution in the specific transaction shall be selected.