Lesson 3: Secure payment methods for first deals

For a first transaction, the payment method itself is one of your strongest protections. Secure methods shift risk away from either side acting alone. They also give a new relationship a clear, shared structure.

Common options (ask your bank and trade advisor which fits your deal):

• Letter of credit: the buyer's bank commits to pay when you present specified shipping documents. A confirmed letter of credit adds a commitment from a bank you choose.

• Documentary collection: banks handle the exchange of shipping documents for payment, with less protection than a letter of credit.

• Escrow: a neutral third party holds the payment until agreed conditions are met.

• Staged payments: a deposit before production, and the balance at agreed milestones.

• Trade credit insurance: may cover nonpayment risk on open account sales.

Each option has costs and paperwork. Discuss them openly with your partner, including who pays bank charges, and agree in writing.

Example: proposing staged payments.

Dear Alhaji Musa,

Thank you for your order. For first orders with all new partners, we use staged payments:

1\. 30% deposit when we confirm the order.

2\. 70% balance when the goods are ready to ship, with photos and inspection documents shared beforehand.

We are happy to discuss other options, such as a letter of credit, if your bank prefers. After our first order together, we will gladly review these terms.

With best regards,

Rachel Adams

The percentages in this example are illustrative only. Agree the actual structure with your partner and your bank.

Notice that the message gives the partner choices and a path to future terms. It protects both sides without sounding defensive.