1) Letter of Credit (L/C)
A letter of credit is issued by the buyer's bank, which guarantees to the seller that the payment for the goods will be made in accordance with the conditions stipulated in the contract after the delivery is completed. This is a commitment.
Characteristics: Payment is made through a letter of credit, which is safe and reliable, ensuring the interests of both buyers and sellers are protected. As long as the seller delivers the goods according to the contract, they can receive the payment without worrying about the buyer's breach of contract; The buyer only needs to pay the purchase price after receiving qualified goods, which can ensure the safety of the payment.
Process: The customer and supplier first communicate on sales and place an order, then the customer provides the order information to the import and export company and pays the deposit for opening the letter of credit. After receiving the deposit, the import and export company will open a letter of credit to the outside world. The supplier arranges for the factory to ship the goods and provides transportation documents such as invoices and packing lists. The import and export company is responsible for transporting and receiving goods. After the customer pays the import taxes, payment, and agency fees to the import and export company, the import and export company handles the customs clearance procedures and then releases the goods.

2) Telegraphic Transfer (T/T)
Telegraphic transfer is when the payer deposits a certain amount of money into the remitting bank, and the remitting bank informs the destination branch or agent bank (i.e. the remitting bank) via telegram or telephone, asking the remitting bank to pay a certain amount to the payee.
Characteristics: Telegraphic transfer is fast, but compared to letter of credit, the risk of wire transfer is higher because the seller cannot obtain payment protection like letter of credit.
Process: The customer and supplier first have sales communication, place an order, and then the customer provides order information to the import and export company. Before making foreign exchange payments, the full amount of RMB payment must be made. After receiving the money, the import and export company will make foreign exchange payments, and the supplier will arrange for shipment and provide relevant documents.

3) Documents against Payment (D/P)
Payment against documents means that the buyer's submission of documents relies on the importer's payment, which means that the seller hands over the documents to the bank after delivery, and the bank then hands over the documents to the seller after the buyer's payment.
Characteristic: Payment against documents carries certain risks for the seller, as the buyer may not make payment after receiving the documents. However, for the buyer, they can check the documents of the goods before payment to ensure that the goods meet the requirements of the contract.

4) Documents against Acceptance (D/A)
Document against acceptance means that the exporter's submission relies on the importer's acceptance on the bill of exchange. In other words, the exporter issues a deferred bill of exchange after shipping the goods, along with the shipping documents, and prompts the importer through the bank. After the importer accepts the bill of exchange, the collecting bank immediately hands over the shipping documents to the importer, and the importer pays when the bill of exchange expires.
Characteristic: There is a greater risk of accepting and presenting documents, as the seller can receive the documents after the buyer accepts the bill of exchange, but the buyer may not make payment on the due date of the bill of exchange.

5) Collection
Collection is when the exporter entrusts the responsibility of payment to their own bank, allowing the bank to collect payment on behalf of the exporter from the importer.
Characteristics: The characteristic of collection payment is that it is simple and convenient, suitable for situations where the trade scale is relatively small. However, compared to letter of credit payment, collection payment carries greater risks, and the seller cannot receive the same payment protection as letter of credit payment.

6) Advance Payment
Advance payment refers to the buyer paying a portion or all of the payment to the seller before receiving the goods.
Characteristic: Prepayment is beneficial for the seller as it ensures stable cash flow. But for the buyer, there is a certain risk because after paying the price, they may not receive qualified goods, or the goods may not meet the requirements of the contract.

7) Cash on Delivery (COD)
Cash on delivery means that the buyer pays the seller for the goods after receiving them.
Characteristic: Cash on delivery is beneficial for the buyer as payment can be made after inspecting the goods. But for the seller, there is a certain level of risk as the buyer may refuse to pay or make insufficient payments after receiving the goods.