It is important to know the forms of payment and delivery, as well as to find a market that can compete in exports, to know customers, to have deep product knowledge.

I have already mentioned to you the importance of the contracts and mentioned that you should write all the details of the exports you have made in the contracts. At the beginning of the problems emerging in practice are the forms of delivery and payment and the uncertainties there. Knowing the forms of delivery and payment, which will be of great help in resolving possible disputes, is linked to international rules in order to prevent possible loss of time, money losses and reduce complexity of the rule system in the future.

The most common forms of payment in foreign trade in the world are letters of credit, money and property. When we look at the structure of the Turkish exporter, it is seen that the payment of goods is more prevalent and therefore the head of our exporters can not be saved from this. The form of delivery is another claim. The general practice is known as FOB, CF and CIF, but we can talk about the existence of a wider delivery style.



Briefly, the product to be exported is the statement in which form and conditions the customer will be delivered. Although it is determined by common usage letter codes, there are also clear expressions. The delivery forms expressed with these codes, which are known as the international name “INCOTERMS”, have come from time to time since 1936, varying occasionally. Delivery preferences are of course named in different forms according to land, sea, air and rail transport, but some can also be used in general terms. It is important to find the most accurate delivery method according to the property of the goods during the export bargaining process, since it means that each type of delivery means insurance, meaning that it carries different cost loads both by the buyer and the seller.


EXW (Ex – Works)

Although it is used in the sense of delivery to the commercial enterprise, it should be understood that “commercial place” is the place (factory, workshop, business) where the product subject to export is produced. Ex – Works statement is a general expression and it is expressed as Ex – Factory if the product is to be delivered in the factory. Briefly, the transportation and insurance costs from the place where the goods are delivered and all the risks belong to the buyer.


FCA (Free Carrier)

We shall call the transporter as delivery, in the form of delivery, to the point of delivery to the delivery point agreed upon by the person or institution that will import the exporter’s goods, as well as to the point of completion of the customs exit procedures (port, railway station, truck depot, airport etc.) At this stage the obligations of the exporter cease and after this stage the obligations of the transporter and the importer begin.


FAS (Free Alongside Ship)

The ship is a form of delivery on the board. The goods subject to export are the transactions and responsibilities of the exporter company until it is put on the board of the agreed gatemet which they agree with the importer. I need to clarify the shipboard statement. The ship is not an expression in the sense that it is the drift of the board. It means a dock, barge, or similar platform prepared to be loaded on board the vessel. In this case, any problems, damages, losses and costs incurred during loading on board shall be borne by the importer.


FOB (Free On Board)

Open expression means the installation of the god’s deck. It is the most common type of installation. It means that the exporter is responsible for the expenses from the operation of the exported goods to the port, the cost of the harbor, the cost of loading the ship deck, the costs of the exit customs and the risks. Since the goods are loaded smoothly into the ship deck, there is no longer any risk with the shipping company, the insurance costs, the importer company.


CF (Cost and Freight)

Also known as C + F. It is used in the meaning of freight and freight. The export means that the exporter has paid all the costs and freight charges from the country of origin to the country of destination from which the goods are loaded. The most important feature is that the risks from the country to the country where the goods are loaded are made by the importer, not the exporter, in the sense of insurance. The cost of downloading at the port at the port of destination belongs to the importer.


CIF (Cost, Insurance, Freight)

It is a way of loading in terms of cost, insurance and freight. The exporter undertakes all expenses (including freight, insurance) from the country where the product subject to exportation is loaded to the customs area of ​​the country in which the goods will be delivered, and all kinds of damage and loss risk belong to the exporting company.

CPT (Carriage Paid To)

CIP (Carriage and Insurance Paid To)

DAF (Delivered at Frontier)

DES (Delivered Ex – Ship)

DEQ (Delivered Ex –Quay)

DDU (Deliverd Duty Unpaid)

DDU (Delivered Duty Paid)


Source; Foreign Trade Undersecretariat for Export Contracts.


Although there are eight different types of payment in general terms in foreign trade, the ones that are used intensively are the forms of letters of credit, documents, and property payments. The form of payment varies according to the situation of the markets, customers, countries, and it is beneficial when the most appropriate is selected according to these situations.

The property of goods is an important factor in the choice of payment method. The market is bullish, the demand is excessive, the exporter is strong, and at that time may be insistent on paying in cash.

The economic situation of the country in which the goods are exported is weak, the banks are weak, the customers have no power, then the letter of credit will be attractive.

Customer trust. In order to speed up the export, the documentary payment may come into play.

The customer is confident, the customer’s country is economically strong, and there is no problem in exporting goods.

In short, let’s look at the forms of payment that I can understand in this way in a little more detail.


Cash In Advance

Payment in the form of this payment is made before delivery of the goods. The payment may also cover a certain rate, such as covering the entire cost of goods. The confidence that the exporter in this type of payment gives to the importer is essential. Although it is not a common form of payment today, it may be tempting to buy because the early payment will take a serious discount on the cost of goods or there is a monopoly situation.

Letter Of Credit

Expressed as L / C in short, this form of payment is the most commonly used form of payment.

Letter of Credit sent by the bank and the importer to the bank of the exporter details the amount, description, terms of payment, form of payment, dates and other details of the agreement.

There may be more banks with two banks or correspondent banks in between. The banks will also open credits in a way that accredites them. Importer “Amir” in letter of credit; the exporter is represented by the word “beneficiary”. The letter of credit can be in broad terms in definitions, recipes and variations.



The importer may cancel at any time in the accreditation bank which the exporter has opened in favor of. This cancellation will be null and void if the exporter’s products have been loaded on condition and in the manner prescribed by the letter of credit. In this case, it is necessary to make a bank payment in the form of a document.



Importers, exporters and banks can not be canceled without the intervention of. It is safe because the bank is committed to pay when the conditions are met. Such letters of credit usually have a certain maturity and amount limit.



It is a type of letter of credit issued under the mutual affirmations of the importers and exporters’ banks and / or the correspondent banks, if any. Here, all the banks have performed the confirmation act. Such letters of credit are found in irrevocable letter of credit. Again, all the banks in the business can not be canceled without a break.



When the bank notifies you that the letter of credit has been opened, the transaction begins. It will report the bank, but it has no responsibility for payment. Although it is a kind of letter of credit that the importer is looking for, there is not much acceptance by exporters.

Revolving Credit

If the product subject to exportation is continuous and the customer is safe, instead of open letter of credit for each shipment, letter of credit is used instead of package letter of credit for each part sent by opening letter of credit. In such letters of credit, the amount and the amount are usually high. Since there are a lot of quantities and certain loads are made, the number of times the letters of credit can be repeated from time to time, the limit of total payments is put.


Red – Clause Credit

A typical pre-paid credit. The amount is sometimes an entirety, sometimes an accreditation made up as prepayment or advance payment to the correspondent bank without a certain amount being shipped. The reason for the Red Clause warning is that it is already written in red.


Green – Clause Credit

Red – Clause Akreditife is separated from the Red – Clause letter of credit by way of being together with a third party or company. Goods are delivered to the bank in the name of a warehouse bank owned by the third party and can be adviced from the bank against the warehouse delivery receipt. Here, the person who is described as a third person is in the sense of sevdi – sure. Red-Clause and Green-Clause letters of credit can be interpreted as a financial support.


Back – to – Back

These letters of credit have a vehicle. It is usually used in transit operations. Transit ticarete vehicle bank is both an importer and an exporter. The intermediary company opens a letter of credit in favor of the company in the country to which it will import by showing the guarantee of the accreditation opened in favor of the country to be sold. In this case one has been shown the other. Here both the importer and the exporter are the same person, while the banks of both sides are the same.


Transferable Credit

The beneficiary is in possession of a third person accredited. The letter of credit and the first letter of credit must be identical in terms of form, terms and conditions. Such letters of credit may be transferred in whole or in part. One or more beneficiaries may be transferred. However, the transferor can not transfer another second.


Guarantee accreditation

A letter of credit guaranteeing payment in case of non-payment of debts arising between the exporter and the importer. In this letter of credit, exporter impose some kind of pressure on the importer’s responsibility and guarantee to take it. If the importer fails to fulfill his obligations, the payment obligation will be fulfilled by the bank.


Documentary Collections

The short name used in the markets is CAD, which is also called “Cash Against Documents”. It is a form of payment made in the case that the delivery documents of the goods subject to export are submitted to the bank. The correspondent bank gives the documents to the importer after collecting the cost of goods from the importer.

There are mutual risks as well as being a common type of payment. The order has already been given, the goods have been produced and the order can be canceled at this stage. Since the documents are given to the bank after the goods are loaded, the importer may not pay or buy the goods. In this case the goods arrive at the importer’s country and can wait for a long time at the customs. Mutual trust is essential in such payments.


Open Account

The name used in the market is “Cash Againist Goods”. In short it is expressed as CAG. It is a kind of open account payment which expresses that the exported goods will be withdrawn from the customs and paid in a certain date in the future.

The entire risk is a form of payment that is based on confidence that you are on the exporter. Unfortunately, this payment which is widely used in Turkish exports has created many victims. There is no date for payment. Since shipment documents are sent directly to the customer rather than to the bank, the goods can be easily withdrawn from the customs without making any payment.

Acceptance Credit

It is a type of payment made with a policy that states that the export price will be paid on a certain date. The goods shipped together with the consignment papers may be withdrawn after they have been accepted by the importer and bank (mutually signed).

This type of payment can be either a trade acceptance or a bankers acceptance. This choice is a matter to be decided between the importer and the exporter. The guaranteed one is the bank acceptance (Avali). Such payment letters of credit may also be used for both physical and municipal payments.


Counter – Trade

Typical swap or swap transaction that we know by market name. No cash payment. The goods are paid with goods.



There is no monetary movement. It’s a form of payment meant to be replaced by one of the items that are considered to be equally worthy. The swap transaction is divided into two types, “private swap” and “linked transaction”.


Private Barter

Exchanges between the same real and legal entities in whole or in part without any financial liability in export and import transactions by one person.


Counter Purchase

The goods and services subject to foreign trade are payments made in the form of goods or services according to agreements between the parties and the companies. In the case of goods or services used in this form of payment, there is no similarity in terms of product, price, price. The price differences are closed by foreign currency transfer, not goods.



Along with being a kind of clearing, there are central banks of importer and exporter countries and clearing accounts opened in those banks. The issue is not money, but goods, services and technology. Payments are made in the national currency and a swap transaction between accounts is completed.


ounter – Purchase

A form of payment in which a certain percentage of the exporter’s stated value to the contract is bought directly from the importer or bought to a third party.



Export is the process of purchasing the value of the subject matter as part or all of the goods.


The main mutual trust. The sale of the exported goods is a partial or partial payment of the cost of the goods after the sale of the goods within a certain period of time in the future. The risk is on the exporter. There is a similar thing to paying property.

Source; Foreign Trade Legislation Volume 1 – Export Legislation – Foreign Exchange Legislation, Volume 3 – Payment of Export and Import Bills – Transit Trade, Arif Şahin, İGEME.