Home Mr Old Man ADVANCE PAYMENT AND ADVANCE PAYMENT GUARANTEE

ADVANCE PAYMENT AND ADVANCE PAYMENT GUARANTEE

2 min read
0
0
3,279
A windy day!

 QUESTION

 Dear Mr. Old Man,

 A sale contract for USD150,000 states the payment terms as follows: 

 30% by T/T in advance

70% by D/P

 The buyer is afraid that it is risky for him to pay in advance as the seller may not effect shipment while he has received the advance payment.

 What should the buyer do to avoid the risk?

 Looking forward to your answer.

 Thank you

—-

 ANSWER

Hi,

Advance payment means that the seller receives the payment for goods before they have been shipped. When accepting this payment term, the buyer would trust that the seller will deliver the goods in time and as specified. If the buyer must accept to pay in advance but fears that the seller fails to fulfill his obligation on delivery of the goods, he may insist on an advance payment guarantee to cover the risks of non-delivery of the goods and failure to repay the prepayment made.

Last but not least, the buyer needs to know his customer (KYC) to determine if he agrees to pay in advance with or without an advance payment guarantee.

Best regards,

Mr. Old Man

Load More Related Articles
Load More By Mr Old Man
Load More In Mr Old Man

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

INVOICE NOT CERTIFYING WHAT HAS NOT BEEN SHIPPED

QUESTION Dear Sir, LC allows both AIR and SEA shipment. Amount: USD 100,000 Shipment by AI…