The importer pays the exporter after the exporter ships the goods.
The importer needs the shipping documents to clear goods on arrival. The bank holds the documents until the importer pays for the goods.
This is called a "sight" payment, sometimes known as "Documents against Payment" or "D/P".
- For importers – considered a medium level of risk as there's some assurance that the exporter has shipped the goods before you have to pay.
- For exporters – considered as a medium level of risk as the goods you've shipped usually get released to the importer after they pay.
Air freight companies usually release goods to the importer immediately, even though they may not have paid.
More information can be found on our export, import and domestic collections documentary sight or term bills page.