Glossary

A payment made by the importer to the exporter in advance of the shipment or delivery of the exported goods.

A negotiable instrument that serves as a written order by the exporter to the importer, requiring the importer to pay a specific amount on a specified date.

Cash in Advance (CIA) is a payment method in shrimp trade. The exporter requires the importer to pay for the goods in full before shipment. This method ensures that the exporter receives payment before shipping the shrimp, reducing the risk of non-payment. However, it can be less favorable for importers as they must pay upfront.

A payment method where the exporter retains ownership of the goods until they are sold by the importer, who then pays the exporter based on the sales proceeds.

Documentary Collection is a payment method in shrimp trade. The exporter’s bank collects payment from the importer’s bank on behalf of the exporter, based on the presentation of specified documents. This ensures the exporter receives payment once the importer’s bank receives and verifies the documents. It’s a secure method often used in international trade to minimize risks for both parties.

Documents Against Acceptance (D/A) is a payment method in shrimp trade. In this process, the seller ships the shrimp and sends the shipping documents to the buyer’s bank. The buyer is then notified by their bank to accept a bill of exchange, which is a promise to pay the seller at a later date. Once the buyer accepts this bill, the bank releases the shipping documents, allowing the buyer to claim the shrimp. This method helps ensure that the seller gets paid while the buyer gets the goods. It’s commonly used in international trade to reduce risks for both parties.

Documents Against Payment (D/P) is a payment method in shrimp trade. In this process, the seller ships the shrimp and sends the shipping documents to the buyer’s bank. The buyer must pay the full amount before the bank releases the shipping documents. This ensures the seller receives payment before the buyer gets the shrimp. It’s a common practice in international trade to protect the seller’s interests and guarantee payment.

A payment arrangement where a third-party holds the funds on behalf of the importer and releases them to the exporter upon fulfillment of specified conditions or delivery of the goods.

A Letter of Credit (LC) is a financial instrument in shrimp trade. Issued by a bank on behalf of the importer, it guarantees payment to the exporter once specified conditions, such as the presentation of required documents, are fulfilled. This method provides security to both parties: the exporter is assured of payment upon compliance with the terms, while the importer ensures that payment is made only when conditions are met.

Open Account is a payment method in shrimp trade. The exporter extends credit to the importer, allowing the importer to make payment at a later agreed-upon date after the goods have been delivered. This method is favorable for importers as it provides time to sell the shrimp before making payment, but it carries a higher risk for exporters.