Delivery (Sales) Methods, Payment Methods and Documents in Foreign Trade 1

Delivery (Sales) Methods, Payment Methods and Documents in Foreign Trade

Foreign trade is not only the exchange of goods and services between buyers and sellers, but also serves as a bridge between different cultures, laws and economic practices. Therefore, the success of these business interactions requires choosing the right delivery methods, effective payment methods and preparing all necessary documents completely and accurately.

Delivery (Sales) Methods determine the responsibilities between the seller and the buyer regarding the delivery of the goods. This includes important issues such as risk management, loading, transportation, insurance and unloading. The right choice is critical to ensure that the transaction is fair and profitable for both parties.

Payment Methods are the backbone of foreign trade. This includes options such as letter of credit, prepayment or payment against documentation. Choosing the right payment method ensures the financial security of buyers and sellers and strengthens business relationships.

Foreign Trade Documents are official documents that ensure the legality and order of the transaction. Customs procedures, contracts and other documents required for import and export transactions are required at every stage of the transaction and must be carefully managed.

Finally, Exchange and Capital Regime are financial elements that directly affect foreign trade transactions, from exchange rates to capital flow. This regime allows trade to grow in a healthy and sustainable way.

1. Delivery (Sales) Methods 🛍️:

  • EXW (Ex-Factory): The seller delivers the goods to the buyer at his own workplace. Goods loading, shipping, insurance and all other expenses belong to the buyer.
  • FOB (Delivery at Free Port of Call): The seller is obliged to deliver the goods to the inland waterway or designated port. This method of delivery is generally used in export transactions.
  • CIF (Including Cost, Insurance and Freight): Seller bears cost, shipping and insurance expenses. undertakes. However, the risks and expenses of unloading the goods belong to the buyer.
  • 2. Payment Methods 💳:

      • Advance Payment: The buyer makes payment before the goods/services are received. This is the safest method for sellers.

      • Letter Credit (Letter of Credit): In the Letter of Credit, assurance is given that the buyer will make the payment in payments made through a bank. This method is frequently used in foreign trade because it provides a certain level of security for both buyers and sellers.

      • Payment in Exchange for Documents: Delivery documents of the goods are given after the buyer’s payment is made. This is a method frequently used in foreign trade contracts.

    3. Foreign Trade Documents 📄:

      • Invoice: Contains the quantity, price and other important information of the goods sold. It is required for both import and export transactions

      • Bill of Lading: It is a document proving that the goods are transported during loading and transportation. It is of critical importance in export transactions and foreign trade contracts.

      • Customs Declaration: Verifies the compliance of goods with customs legislation during the import or export of goods from one country to another. It is mandatory in every foreign trade transaction

    4. Foreign Exchange and Capital Regime 💹:

      • Foreign Exchange: It refers to the foreign exchange buying and selling transactions used in foreign trade transactions. It directly affects payment methods and exchange rates in import and export transactions.

      • Capital Regime: Contains the rules and regulations regarding a country’s capital and financial transactions. It determines how investments, capital movements and payments will be managed in foreign trade transactions.

    These concepts are vital to ensuring that transactions between buyers and sellers are conducted smoothly due to the complex nature of foreign trade. As an expert foreign trade professional, managing all these elements correctly and issuing appropriate documents is essential for a successful trade transaction.

    Delivery (Sales) Forms in Foreign Trade

      1. EXW (Delivery at Work): This is the delivery method in which the seller has the least liability. The seller delivers the goods to the buyer at his own facility. Goods loading, shipping, insurance, and all other expenses belong to the buyer. This means more liability for the buyer.

      1. FCA (Free Carrier): The seller delivers the goods to the buyer’s carrier at the specified location. From this point on, shipping and insurance costs are covered by the buyer. This term can be used for both road transport and inland waterway transport.

      1. CPT (Delivery Prepaid): The seller covers the transportation costs and delivers the goods to the place determined by the buyer, but the insurance of the goods belongs to the buyer. Risk passes to the buyer when the goods are delivered to the carrier.

      1. CIP (Delivery with Carriage and Insurance Paid): The seller covers the transportation cost and insurance costs of the goods. The risk of damage or loss of the goods passes to the buyer upon delivery of the goods to the first carrier.

      1. DAP (Delivery at Specified Place): The seller delivers the goods at the place specified by the buyer, without customs clearance for import. Customs clearance, taxes, and other customs expenses are borne by the buyer.

      1. DPU (Delivery Unloaded at the Specified Place): This delivery method is similar to DAP, but the unloading costs of the goods are also covered by the seller. After the unloading process is completed, the risk passes to the buyer

      1. DDP (Delivery with Customs Duties Paid): The seller delivers the goods at the place determined by the buyer, with all customs procedures completed and taxes paid. This is the type of delivery for which the seller has the most liability.

    These delivery methods are frequently used in foreign trade and must be clearly stated in foreign trade contracts drawn up in accordance with international trade laws. Buyers and sellers must fully understand the obligations and costs associated with each delivery term and take these terms into account when planning foreign trade transactions. In addition, foreign exchange and capital regime are closely related to these delivery methods, especially in terms of payment methods and cost of goods calculations.

    This is our article titled Foreign Trade Regime, Customs Law and Foreign Exchange Legislation. =”link” data-id=”https://adaptedijital.com/dis-ticaret/dis-ticaret-rejimi-gumruk-kanunu-kambiyo-mevzuati/”>link You can reach it.

    Rules Covering All Transport Types

    Delivery methods used in foreign trade are regulated by Incoterms (International Trade Terms), which are standardized terms in international trade. Incoterms determine the key obligations, costs and risks of agreements between buyers and sellers. These terms clarify responsibilities for delivery of goods, transportation, insurance and related costs, as well as customs clearance. Here are the rules covering all transport types:

      1. EXW (Delivery at Work): The seller delivers the goods to the buyer at his own facilities. The buyer is responsible for export and import operations and all transportation costs.

      1. FCA (Carrier Free Delivery): The seller delivers the goods to the carrier determined by the buyer. It can be used regardless of the mode of transport (land, sea, air).

      1. CPT (Delivery Prepaid): The seller pays the transportation costs to the destination, but the risk passes to the buyer when the goods are delivered to the carrier.

      1. CIP (Carriage and Insurance Paid Delivery): The seller pays for transportation and minimum insurance costs to the destination. However, the risk passes to the buyer when the goods are delivered to the carrier.

      1. DAP (Delivery at Specified Place): The seller delivers the goods at the destination specified by the buyer, without customs clearance for import.

      1. DPU (Delivery Unloaded at the Specified Place): The seller delivers the goods unloaded at the specified destination. This term is similar to DAP, but unloading costs are covered by the seller.

      1. DDP (Delivery with Customs Duties Paid): The seller delivers the goods at the destination with customs clearance for import and duties paid.

    These rules apply to all modes of transport and can be used in any type of transport. Regardless of the mode of transportation, these terms ensure a clear understanding between buyer and seller and help avoid potential disputes. However, each Incoterm has specific obligations and terms, so when concluding a trade agreement both parties must understand and accept these terms.

    EXW On-Site Delivery

    EXW (Ex Works or its Turkish equivalent, Delivery at Work) is a delivery method determined according to the Incoterms rules published by the International Chamber of Commerce (ICC). This delivery term refers to a form of delivery in which the seller’s obligations are minimal, while the buyer is responsible for almost all stages of the logistics process.

    In EXW delivery, the seller is only obliged to deliver the goods to the buyer at his own facilities (factory, warehouse, etc.). Loading, collection, shipment, customs clearance, freight, insurance and all other expenses and procedures are the responsibility of the buyer. The seller is not obliged to deliver the goods to the buyer’s carrier; The buyer must load it on the carrier.

    EXW delivery includes the following obligations:

       


        1. Seller:
            • To ensure the production and preparation of goods.

            • Informing the buyer that he can receive the goods within a certain period of time from the date of delivery.

            • To make the goods ready for the buyer’s order at the place and time specified in the contract.



        1. Recipient:
            • To cover all transportation costs.

            • To complete domestic and international customs procedures.

            • Obtaining export and import licenses or other official permits.

            • Receiving and loading the goods from the seller’s facilities.

            • To undertake all risks starting from the seller’s facility.

      EXW is especially preferred in cases where the buyer has a good knowledge of logistics and customs procedures or reliable partners in the seller’s country. However, since this type of delivery maximizes the buyer’s liabilities while minimizing the seller’s liabilities, the buyer should be careful about the risks he may encounter during the transportation process. Buyers and sellers must fully understand and accept these conditions, especially when concluding foreign trade contracts.

      No Charge to FCA Carrier

      FCA (Free Carrier) is a delivery method that is part of the Incoterms rules published by the International Chamber of Commerce (ICC). FCA is a delivery term where the agreement between the seller and the buyer ends at the point when the seller delivers the goods to the buyer’s designated carrier. This term can be used for all modes of transport and is especially preferred in container or combined transport.

      The outline of FCA delivery is as follows:

         

          1. For
          2. Seller:
              • Preparation and packaging of the goods in accordance with the contract conditions.

              • Delivery of the goods to the carrier designated by the buyer at the specified place and time.

              • Provision of documents regarding the delivery of goods.

              • Completion of necessary export procedures and formalities.


        For

          1. Recipient:
              • Selecting the carrier and paying transportation costs.

              • Undertaking all risks after transportation and receipt of the goods.

              • Completing import procedures and formalities.

              • Paying all costs (e.g. customs duties, taxes, other charges) at destination.


        In the

        FCA delivery method, the transfer of risk occurs as soon as the goods are delivered to the carrier determined by the buyer. This may mean loading the goods onto the transport vehicle, or it may mean delivering them to the buyer where they are ready to be loaded. The important thing here is that the risks and expenses pass to the buyer at the time of delivery to the carrier.

        This type of delivery gives the seller obligations regarding export transactions, while it gives the buyer obligations regarding import transactions, costs at the destination and risks that may occur during the transportation of the goods. Therefore, buyers and sellers must fully understand and accept these conditions when making foreign trade contracts. It is important for both parties to clarify the details of the agreement, especially on issues such as transportation, insurance, customs procedures and payment methods.

        CPT Transport Paid

        CPT (Carriage Paid To) is a delivery method specified in the Incoterms rules published by the International Chamber of Commerce (ICC). CPT states that the seller must pay the costs of transporting the goods to the named destination, but the risk of loss or damage to the goods after delivery passes to the buyer at the time of delivery to the carrier.

        The main features and obligations of the CPT delivery method are as follows:

            1. Seller:
                • Preparation and packaging of the goods in accordance with the contract conditions.

                • Paying all costs necessary to transport the goods to the named destination.

                • Completing the necessary export procedures and formalities.

                • Contracting with the carrier to transport the goods to the designated point.

           

            1. Recipient:
                • Assume all risks from the moment the goods are delivered to the carrier.

                • Receipt of goods at destination.

                • Completing import procedures and formalities.

                • Paying all costs (e.g. customs duties, taxes, other charges) at destination.

          In CPT delivery method, the seller must complete the customs procedures required for export, but import procedures are the responsibility of the buyer. The transfer of risk occurs when the seller delivers the goods to the designated carrier. This means that the risk of loss or damage to the goods after they are delivered to the carrier is borne by the buyer.

          CPT is frequently used, especially in cases requiring combined transportation between different transportation modes. For example, if goods are first transported by truck to a port, then by ship to another country, and finally by truck again to an inland destination, a form of delivery such as CPT may be useful.

          When choosing this method of delivery, buyers and sellers should carefully review all the terms and details in their foreign trade agreements. In particular, it is important to understand exactly when and where risks, costs and responsibilities are transferred. This will help prevent the parties from encountering unexpected costs or problems.

          CIP Transportation and Insurance Paid

          CIP (Carriage and Insurance Paid To) is a delivery method defined in the Incoterms rules published by the International Chamber of Commerce (ICC). CIP requires the seller to pay the transportation costs of the goods and a minimum coverage insurance policy that protects the buyer against risks that may occur during shipment to the destination. However, the risk of loss or damage to the goods passes to the buyer as soon as the goods are delivered to the carrier.

          The main features and obligations of CIP are:

             

                • Contracting with the carrier to transport the goods to the designated point.
                • Seller:
                    • Preparation and packaging of the goods in accordance with the contract conditions.

                    • Paying all costs necessary to transport the goods to the named destination.

                    • Providing a minimum coverage insurance policy that protects the buyer against risks that may occur during the transportation of the goods.

                    • Completing the necessary export procedures and formalities.
                    •  

              1. Recipient:
                  • Assume all risks from the moment the goods are delivered to the carrier.

                  • Receipt of goods at destination.

                  • Completing import procedures and formalities.

                  • Paying all costs (e.g. customs duties, taxes, other charges) at destination.

                  • Providing additional insurance protection, if desired.

            CIP delivery method imposes certain obligations on the buyer and seller. The seller pays the transportation and insurance costs of the goods, but the risk passes to the buyer as soon as the goods are delivered to the carrier. This means that the buyer can benefit from insurance for any damage or loss that the goods may suffer in transit, but will bear the risks that occur after the goods are delivered to the carrier.

            This delivery method emphasizes that the buyer and the seller must carefully examine all the conditions and details when making foreign trade contracts. It is particularly important to check whether insurance cover is adequate, as the insurance provided under CIP is often minimal coverage. If the buyer wants greater protection, he or she can provide additional insurance or agree to more comprehensive insurance coverage with the seller.

            Delivered in DAT Terminal

            DAT (Delivered At Terminal) delivery method, with the Incoterms update in 2020, DPU (Delivered At Place Unloaded) Changed to /strong>. However, in this answer I will explain the use of the old term DAT as some companies may still use this term or the information may be needed to reference past contracts.

            DAT delivery method requires the seller to deliver the goods unloaded at a terminal designated by the buyer (for example, a port, airport, or train station). Delivery at terminal means that the goods are unloaded from transport vehicles at a specific terminal at the destination and are ready for the buyer to receive.

            DAT’s main features and obligations are:

               

                1. For
                2. Seller:
                    • Preparation and packaging of the goods in accordance with the contract conditions.

                    • Paying all costs necessary to transport the goods to the terminal at the designated destination.

                    • Completing the necessary export procedures and formalities.

                    • Unloading the goods at the destination terminal.

                    • Undertaking all risks until the unloading of the goods.


              For

                1. Recipient:
                    • Assuming all risks from the moment the goods are unloaded at the terminal.

                    • Receiving and receiving the goods from the terminal.

                    • Completing import procedures and formalities.

                    • Paying all costs (e.g. customs duties, taxes, other charges) at destination.

              Under DAT, the seller’s obligation includes unloading the goods at the designated terminal and completing customs clearance at the destination. However, the risks that may occur after the goods are unloaded at the terminal belong to the buyer.

              This delivery method is frequently preferred, especially in foreign trade transactions, where goods are transported using more than one type of transportation vehicle. In particular, buyers and sellers must agree on the determination of the terminal at which the goods will be unloaded and the exact point at which the risk will be transferred. This will help prevent the parties from encountering unexpected costs or problems.

              It should be noted that, with the 2020 Incoterms update, the term DAT has been changed to DPU and now means “Delivery of Goods Unloaded at the Specified Place”. This change reflects the fact that the delivery point is not limited to just the terminal but can be any designated location.

              DAP Delivery at the Specified Location

              DAP (Delivered At Place) is a delivery method determined by Incoterms and requires the seller to deliver the goods at the place determined by the buyer, without being unloaded from the transportation vehicle. This means that the buyer can pick up the goods directly at his premises or at another designated point. However, the unloading cost and risk passes to the buyer at this point.

              The main features and obligations of DAP are:

                 

                  1. For
                  2. Seller:
                      • Preparation and packaging of the goods in accordance with the contract conditions.

                      • Paying all costs necessary to transport the goods to the buyer’s designated destination.

                      • Completing the necessary export procedures and formalities.

                      • Undertaking all risks until the goods are delivered unloaded from the transport vehicle at the designated place.


                For

                  1. Recipient:
                      • Assuming all risks from the moment the goods are delivered unloaded from the transport vehicle at the designated place.

                      • Unloading and receiving of goods.

                      • Completing import procedures and formalities.

                      • Paying all costs (e.g. customs duties, taxes, other charges) at destination.

                This type of delivery is widely used in foreign trade because it provides the seller with the flexibility to transport the goods to a point determined by the buyer, usually close to the buyer’s facility. However, the buyer is responsible for unloading the goods at destination and for all customs clearance and other formalities at destination.

                DAP provides a certain flexibility between the buyer and seller because the buyer can determine the delivery location. However, this flexibility also brings additional responsibilities to the buyer; because the unloading of the goods, import procedures, and other formalities at the destination are the responsibility of the buyer. Moreover, this method of delivery can potentially entail unexpected expenses for buyers and sellers, especially if the delivery location has inadequate infrastructure or there are certain customs regulations. Therefore, it is important that the parties understand their precise obligations and point of delivery under the DAP delivery terms.

                Delivered with DDP Duties Paid

                DDP (Delivered Duty Paid) is a delivery method defined as part of Incoterms. This term requires the seller to deliver the goods at the buyer’s designated location, with all charges paid (including customs duties, taxes and other charges) and import customs clearance completed. The seller is also responsible for the risks that may occur during the transportation of the goods and in the period until delivery.

                DDP’s main features and obligations are:

                   

                    1. For
                    2. Seller:
                        • Preparation and packaging of the goods in accordance with the contract conditions.

                        • Paying all costs necessary to transport the goods to the buyer’s designated destination.

                        • Completing the necessary export and import procedures and formalities.

                        • Paying customs duties, taxes and other charges at destination.

                        • Undertaking all risks until the goods are delivered unloaded from the transport vehicle at the designated place.


                  For

                    1. Recipient:
                        • Assuming all risks from the moment the goods are delivered unloaded from the transport vehicle at the designated place.

                        • Unloading and receiving of goods.

                  This type of delivery is the delivery method that brings the most liability to the seller and the least liability to the buyer, because the seller has to manage all processes from export to import of the goods. This may be preferable in foreign trade transactions, especially where the seller has a good understanding of the buyer’s local regulations and transactions, or where the seller wants to provide “doorstep” service to the buyer.

                  DDP provides the buyer with minimal liability at the location of pickup, but this can create potentially high costs and complex logistical responsibilities for the seller. The seller must be knowledgeable about the destination country’s customs regulations, tax legislation and other import obligations. Otherwise, unexpected customs charges, penalties or delays may occur.

                  Therefore, this form of delivery between buyers and sellers is particularly suitable for cases where the seller fully understands and can manage the legal requirements and transactions at the destination. Otherwise, less complex alternatives (e.g. DAP) may be less risky.

                  In our article titled Foreign Trade Transactions and Foreign Market you can reach it from this link

                  Rules Specific to Sea and Inland Water Transportation

                  Sea and inland waterway transportation has an important place in foreign trade, especially in the transportation of large volumes of goods and raw materials. This mode of transportation includes certain modes of delivery and sale; these are FAS (Free Ship), FOB (Free On Board), CFR (Delivery Including Costs and Freight) and CIF (Delivery Including Costs, Insurance and Freight) expressed in terms. These terms clearly state how transportation, insurance, cost of goods and related expenses will be shared between buyers and sellers, thus reducing the risk of disputes between the parties during customs and foreign exchange transactions.

                  FAS and FOB state that the seller has the obligation to transport the goods to a certain point, but the costs and risk of loading the ship pass to the buyer. CFR and CIF state that the seller must bear the costs of transporting the goods to the port of destination, but with CIF the seller is also responsible for insuring the goods during transportation. These terms regulate how costs and responsibilities will be allocated in areas such as loading and unloading of goods, transportation, insurance and customs clearance, especially during import and export transactions, so that trade between parties can be carried out smoothly. enables it to happen. These rules are an integral part of foreign trade agreements drawn up in accordance with international trade laws and have an important role in the capital regime.

                  FAS Free Ship Directing

                  FAS (Free Alongside Ship) is a form of delivery used in international trade and describes how the responsibilities between the buyer and the seller will be shared at the time the goods are delivered, next to the ship, at a certain port. explains. This term is generally used in foreign trade transactions where bulk cargo or different types of cargo are transported by sea.

                  Under FAS, the seller’s obligations include:

                    1. Preparation, packaging and bringing the goods to the specified port in accordance with the export process

                  .

                    1. Bringing the goods to the ship designated by the buyer; but does not bear any responsibility for loading or unloading the ship.

                    1. Preparation of all necessary foreign trade contracts and documents and completion of customs procedures.

                  Buyer’s obligations include:

                    1. Making all necessary shipping and insurance arrangements for the goods to be loaded onto the ship and transported to the destination.

                    1. Manage customs clearance at destination and pay all import-related costs and taxes

                    1. Assuming all risks from the moment the goods are brought alongside the ship.

                  This type of delivery ends the seller’s liability at the stage before the goods are loaded onto the ship and passes the risk to the buyer. FAS may be preferred especially in cases where the buyer wants to control the loading process and operations on the ship. However, this requires a clear separation of responsibilities during loading for the seller and unloading for the buyer, thus avoiding possible disputes. In this process, care should be taken in terms of payment methods and a letter of credit, which is generally a secure payment method, can be used.

                  FOB Free on Board

                  FOB (Free On Board) is a form of delivery used in international foreign trade and explains how the obligations between the buyer and the seller will be divided when the goods are loaded onto the ship. This term is generally used in sea or inland waterway transportation and requires the seller to deliver the goods on board the ship at the designated port of loading.

                  Under FOB, the seller’s obligations include:

                    1. Preparation, packaging and bringing the goods to the specified loading port in accordance with the export process.

                    1. Loading the goods onto the ship and delivering them to the ship at the specified port.

                    1. Preparation of all necessary foreign trade contracts and documents and completion of customs procedures.

                  Buyer’s obligations include:

                    1. Making all necessary transportation and insurance arrangements for the carriage of goods.

                    1. Manage customs clearance at destination and pay all import-related costs and taxes.

                    1. Undertaking all risks from the moment the goods are loaded onto the ship.

                  This type of delivery ends the seller’s liability and transfers the risk to the buyer as soon as the goods are loaded onto the ship. FOB may be preferred, especially when buyers want to control the transportation process and handling at the destination. When using FOB, care should be taken in terms of payment methods and letter of credit, which is generally a secure payment method, can be used. This increases trust between buyer and seller and secures the payment process.

                  CFR Charges and Freight

                  CFR (Cost and Freight or Including Costs and Freight in Turkish) is a delivery method used in international foreign trade. This term means that the seller is responsible for loading the goods onto the ship at the port of loading and the buyer bears the costs of transporting the goods to the named port of destination. However, once the goods are loaded onto the ship, the risk passes from the seller to the buyer. At this point, the seller has no obligation to insure; This is the buyer’s responsibility.

                  Under the CFR, the seller’s obligations include:

                    1. Preparation, packaging and bringing the goods to the specified loading port in accordance with the export process.

                    1. Loading the goods on the ship and covering the transportation costs to the port of destination.

                    1. Preparation of all necessary foreign trade contracts and documents and completion of customs procedures.

                  Buyer’s obligations include:

                    1. Receiving goods at destination and managing customs clearance.

                    1. Paying all import-related costs and taxes.

                    1. Undertaking all risks from the moment the goods are loaded onto the ship.

                  CFR delivery method requires buyers to insure against risks that may occur during the transportation of the goods. For this reason, buyers should have insurance against the risks that may arise when the goods are loaded onto the ship. In addition, payment methods are also important in terms of payment processes between the buyer and seller; In this process, it is common to use reliable payment methods such as letters of credit for the security of transactions. This method of delivery is especially suitable for buyers who want to keep control of transportation costs with the seller. However, buyers need to be careful about the transfer point of risk and insurance obligations.

                  CIF Expenses, Insurance and Freight

                  CIF (Cost, Insurance, and Freight or Including Costs, Insurance and Freight in Turkish) is a delivery method used in international foreign trade. This term means that the seller is obliged to pay the costs and freight of transporting the goods to the named port of destination, and is also required to insure the goods against loss or damage during sea transportation. The risk passes from the seller to the buyer as soon as the goods are loaded onto the ship; However, the seller must provide an insurance policy valid until the port of destination.

                  Under CIF, the seller’s obligations include:

                    1. Preparation, packaging and bringing the goods to the specified loading port in accordance with the export process.

                    1. Loading the goods on the ship and covering the transportation costs and freight to the port of destination.

                    1. Providing minimum marine insurance for the goods.

                    1. Preparation of all necessary foreign trade contracts and documents and completion of customs procedures.

                  Buyer’s obligations include:

                    1. Receiving goods at destination and managing customs clearance.

                    1. Paying all import-related costs and taxes.

                    1. The seller assumes all risks from the moment the goods are loaded on the ship, but the risks covered by insurance are provided by the seller.

                  This type of delivery ensures that buyers are protected from risks that may arise during transportation, because insurance is arranged by the seller. However, buyers can often also arrange their own insurance policy to provide additional protection. CIF is also important for payment processes between buyer and seller; To ensure security, reliable payment methods such as letter of credit are often preferred. This form of delivery is particularly suitable for situations where buyers prefer to have less control over shipping and insurance arrangements. However, it is important for buyers to be careful about the insurance coverage and details of the policy and to obtain additional insurance when necessary.

                  dis trade

                  Payment Methods in Foreign Trade

                  Foreign trade includes the exchange of goods and services between different countries in the international arena, and this process consists of various stages. Among these stages, payment methods that ensure that transactions are carried out legally, safely and efficiently have an important place. Financial transactions between buyers and sellers form the basis of such trading, and these transactions can be complex depending on a variety of factors.

                  Payment in foreign trade Their form is shaped by the mutual trust of the parties to the transaction, international and local customs laws, import and export regulations, exchange control mechanisms and the regime on capital transfers. These payment methods are designed to protect the parties to trade, minimize financial risks and ensure the smooth functioning of international trade.

                  As a foreign trade expert, it is important to emphasize that the chosen payment method should be appropriate to the type of transaction, the financial strength of the parties and the general situation of the market. Foreign trade contracts created between the buyer and the seller are the basic documents that determine the rights and responsibilities of the parties. These contracts include many factors affecting trade such as loading, unloading, transportation, insurance, cost of goods, and also regulate payment conditions in detail.

                  That’s why understanding and correctly applying payment methods in foreign trade is vital for the success of international trade. Each payment method carries certain advantages and potential risks; Therefore, the parties are required to choose the most appropriate payment method by carefully evaluating all aspects of the trade.

                  Foreign trade is a complex process involving the exchange of goods and services internationally. One of the most critical stages of this process is determining payment methods. Payment methods in foreign trade vary depending on the trust relationship between buyers and sellers, existing foreign trade agreements, customs laws and foreign exchange regime.

                    1. Advance Payment: The buyer pays the price of the goods to the seller before the goods are shipped. This method is the safest for sellers, but carries risks for buyers.

                    1. Payment Against Goods: In this method, the cost of the goods is paid by presenting documents confirming that the goods have been delivered to the buyer. This provides assurance to the buyer during the export process.

                    1. Payment Against Promissory Note: The seller receives a check or promissory note from the buyer in return for a certain payment period. This carries a certain risk for the seller because payment is made after the goods are delivered.

                    1. Payment by Letter of Credit: This is one of the most frequently used and safest forms of payment in foreign trade. In this method, which is carried out through a bank, the seller must meet certain conditions in order to receive payment. In a letter of credit, assurance is provided for both the buyer and the seller.

                    1. Payment Method: In general terms, it refers to all payment methods used in foreign trade. It includes the agreement between the seller and the buyer on processes such as loading and unloading of goods, transportation, insurance, as well as how the payment will be made.

                  Each payment method has its own advantages and risks. Therefore, buyers and sellers must choose the most appropriate payment method, taking into account capital flows, customs procedures, foreign exchange legislation and international trade laws. This choice keeps trade moving smoothly and steadily while helping to protect both parties.

                  Cash Payment

                  Cash Payment method is one of the simplest payment methods used in foreign trade. This method requires the buyer to pay the seller before receiving the goods or services. It is generally preferred when the buyer and seller trust each other and the trade carries low risk.

                  Although cash payment carries some risks for buyers, it is quite safe for sellers. Because the seller receives payment before delivering the goods or services. This provides a significant advantage, especially when the seller is a new or small-scale business and capital flow is limited.

                  However, for buyers, advance payment brings with it some risks. Situations such as the seller’s failure to deliver the goods or services on time or in accordance with the terms of the contract after payment may create problems for the buyer. Therefore, when using the cash payment method, it is important that the parties know each other and the market conditions well, and also make reliable and verified foreign trade contracts.

                  As a result, cash payment is suitable for situations where trust and mutual understanding are high in foreign trade transactions. Preparing a detailed contract that will protect the rights of the parties and minimize potential risks is critical for the successful implementation of this form of payment.

                  Payment Against Goods (Cash on Deliver–Cash Against Goods)

                  Payment Against Goods (Cash on Delivery – COD or Cash Against Goods) is a payment method widely used in foreign trade. In this method, the buyer pays when he receives the goods or when it is confirmed that the goods have arrived at a certain point. This system creates trust, especially when there is no strong commercial relationship between the buyer and seller, or when the parties do not know each other well.

                  This form of payment provides the buyer with the opportunity to inspect the goods and verify whether the delivery complies with the conditions, while giving the seller the opportunity to carry out a transaction where payment is guaranteed. Additionally, this method provides assurance against risks that may arise during the transportation of the goods.

                  However, the payment method against goods also has its own risks. Situations such as any dispute arising during the delivery of the goods or the buyer giving up payment may pose financial risks for the seller. Likewise, delay or non-payment of payment after the goods reach the buyer, or disruptions in the buyer’s payment of the price of the goods, may cause problems for the parties.

                  For this reason, when using the payment against goods method, foreign trade contracts should be very clear and issues such as delivery of the goods, quality and payment conditions should be specified in detail. Additionally, such transactions are often mediated by third-party logistics companies, banks or financial institutions, which increases the security of the process.

                  Payment Against Documents (Cash Against Documents)

                  Payment Against Documents (Cash Against Documents – CAD) is a frequently preferred form of payment in foreign trade transactions. This method involves the seller delivering documents to the buyer only when payment is made. These documents are generally documents showing the ownership of the goods, shipping and delivery information.

                  In this payment method, the seller sends the relevant documents to the buyer’s bank after sending the goods. The bank delivers the documents to the buyer as soon as the buyer makes the payment. Thus, the buyer acquires title to the goods and can clear the goods from customs only when he receives the documents. While this system provides assurance of receipt of the price for the goods for the seller, it also serves as proof that the goods have been delivered for the buyer.

                  However, this method involves some risks for both parties. For the seller, if the buyer refuses to accept the documents, issues regarding title to the goods and potentially long-term storage costs may arise. For the buyer, not being able to see the physical condition of the goods before receiving the documents is a significant risk.

                  For these reasons, it is critical that the parties clearly understand and state their rights and obligations within the framework of foreign trade agreements when making payment against documents. Moreover, the role of banks and other financial institutions in this process is vital for the security of transactions and maintaining order.

                  Payment after Disposal of the Goods – Shipment on Consignment

                  Shipment on Consignment is another form of payment used in foreign trade. This method is a type of sales in which the seller sends the goods to the buyer, but does not receive payment until the goods are sold or a certain period of time has passed. In this process, the cost of the goods is paid if the goods are sold or used by the buyer. Consignment sales are generally preferred by sellers who want to introduce products in new markets or evaluate overstock products.

                  The advantages of this method are:

                    1. Low risk for buyers: Buyers pay when they sell or use the item, which means less pressure on cash flow.

                    1. Market access: Sellers can use this method to enter specific markets or introduce new products.

                  However, consignment sales also involve risks:

                    1. Payment delays: The seller receives payment based on the sale of the goods by the buyer. This can cause delayed payments and imbalances in the seller’s cash flow.

                    1. Control of goods: The seller cedes control of the goods to the buyer, which means he/she has less control over how the goods are stored, marketed or priced.

                  Therefore, consignment sales contracts should clearly state issues such as payment terms, protection of goods, sales reporting and return of unsold goods. This can be achieved through foreign trade agreements that protect the rights and expectations of both parties.

                  Acceptance Credit Payment

                  Acceptance Credit Payment is another form of payment used in foreign trade transactions. This method is used in agreements where the buyer will make payment after receiving the goods. Usually, a maturity period is set and the buyer agrees to pay the seller within this period. Acceptance credit payment is widely used, especially between parties who have long-term commercial relationships and trust each other.

                  Advantages of this payment type:

                    1. Cash Flow: Regulates cash flow by providing payment flexibility for buyers. It offers a certain payment guarantee for sellers.

                    1. Building Trust: Promotes long-term business relationships by creating trust between the parties.

                  However, acceptance credit payments also have disadvantages:

                    1. Risk of Payment Delay: If the buyer does not pay, the seller may not receive payment or may have to take legal action, resulting in additional costs.

                    1. Interest Rates: Futures are often subject to interest rates, which can increase costs.

                  Therefore, in such transactions, it is important to prepare detailed foreign trade contracts that protect the rights of buyers and sellers. It is also useful to perform a credit check to assess the buyer’s ability to pay and his reputation.

                  Open Account


                  Open Account
                  is a form of payment used in foreign trade that provides the buyer with the flexibility to make payments after the delivery of the goods. This method is especially popular among parties who are in a permanent business relationship and trust each other. The seller delivers the good or service and expects to receive payment from the buyer within a certain period of time (usually 30, 60 or 90 days).

                  Advantages of open term payment include:

                    1. Competitive Advantage: Thanks to the ease of payment it provides to buyers, it can be a more attractive sales option for sellers and increase customer loyalty.

                    1. Cash Flow Management: Provides buyers with the opportunity to better manage payment periods and optimize cash flow.

                  However, this method also has disadvantages:

                    1. Payment Risk: The seller bears a certain financial risk until he receives payment from the buyer. If the buyer does not pay, financial losses may occur for the seller.

                    1. Tie-up of Funds: Until payment is received, the seller’s capital remains tied-up, which can lead to liquidity problems.

                  In such payments, it is important for sellers to minimize their risks with tools such as credit insurance. Additionally, preparing comprehensive foreign trade agreements specifying the rights and responsibilities of both parties can help prevent possible disputes. Correct management of payment processes is the key to success in foreign trade transactions.

                  Letter of Credit

                  Letter of Credit is a very reliable payment method aimed at solving the trust problem between buyers and sellers in international trade. In this system, the buyer’s bank issues a letter (letter of credit) guaranteeing payment to the seller when certain conditions are met. These terms generally include proof of shipment and delivery with verified documentation.

                  The advantages of payments by letter of credit are as follows:

                    1. Security: Provides payment guarantee for sellers; For buyers, it provides the opportunity to be sure that payment will be made only when the specified conditions are met.

                    1. Documented Process: Verifying each step with documentation increases transaction transparency and prevents disputes

                    1. Flexibility: Letter of credit terms can be customized according to the needs of buyers and sellers.

                  But it also has disadvantages:

                    1. Cost: Since letters of credit are generally provided by banks, transaction fees and charges may apply.

                    1. Complication: In some cases, complexity of documents and terms can slow down transactions

                  Payments by letter of credit are preferred, especially in high-value transactions or when there is a limited trust relationship between the buyer and the seller. In addition to minimizing risk in foreign trade transactions, the letter of credit is also an effective tool in verifying compliance with certain customs and exchange laws. This method is frequently used to ensure payment security, especially in certain import and export transactions.

                  Definitions in Letter of Credit

                  Letter of credit transactions are complex financial arrangements frequently used in foreign trade. Understanding the terms and definitions used in this process is critical for the parties to manage the transactions correctly. Here are some basic definitions encountered in letter of credit transactions:

                    1. 🌟 Letter of Credit: It is a written guarantee in which a bank undertakes to pay the seller, in line with the buyer’s instructions, when certain conditions are met.

                    1. 🌟 Confirmed Letter of Credit: It is a letter of credit in which two banks are involved and both of them undertake to make payment. This increases the seller’s confidence that they will receive payment.

                    1. 🌟 Revolving Letter of Credit: It is a letter of credit that allows multiple uses within a certain period of time, within predetermined limits.

                    1. 🌟 Transferable Letter of Credit: It is a letter of credit in which the seller has the right to transfer all or part of it to a third party in accordance with the terms of the original letter of credit.

                    1. 🌟 Red Clause Letter of Credit: It is a special type of letter of credit that allows the seller to receive an advance payment before presenting certain documents.

                    1. 🌟 Green Clause Letter of Credit: Similar to the red letter of credit, but provides additional funds for the seller to store the goods.

                    1. 🌟 Standby Letter of Credit: It is a type of assurance in which the seller can request payment from the bank in case the buyer does not pay.

                    1. 🌟 Confirmation: It is the transaction in which the confirming bank accepts its obligation to make payment when the conditions of the letter of credit are met.

                    1. 🌟 Compliance: It is the process of evaluating whether the submitted documents comply with the terms of the letter of credit.

                  These terms are of critical importance in understanding the legal obligations for buyers and sellers in foreign trade, especially regarding customs, import/export laws and foreign exchange regime, due to the nature of letter of credit transactions. Letter of credit is considered a safe form of payment in international trade because the credit reliability of banks guarantees payment, depending on the terms of the contracts.

                  How Letter of Credit Transaction is Done

                  Letter of credit transactions are a very effective method to eliminate the lack of trust between buyers and sellers in international trade and to secure payment processes. These transactions, especially in foreign trade, are carefully structured around specific steps and participants. Here is the typical way the letter of credit transaction is carried out:

                    1. 📝 Contract Signing: A sales contract is signed between the buyer and the seller. This contract states that payment will be made by letter of credit.

                    1. 🏦 Opening a Letter of Credit: The buyer requests a letter of credit to be opened by applying to his own bank. At this stage, the buyer provides the necessary assurances (collateral, down payment, etc.) to the bank.

                    1. 📨 Transmission of the Letter of Credit: The buyer’s bank (the bank that opened the letter of credit) sends a letter of credit to the seller’s bank. This letter of credit is a commitment stating that the seller can receive payment in return for providing certain documents.

                    1. 📑 Preparation of Documents: The seller ships the goods and prepares the necessary documents in accordance with the conditions specified in the contract and the letter of credit. These documents usually include shipping, insurance, invoices and other customs documents.

                    1. 🔄 Submission of Documents: The seller submits the necessary documents to his bank within the period specified in the letter of credit. The bank checks the compliance of the documents with the terms of the letter of credit.

                    1. 💳 Payment: If the documents are confirmed to be appropriate, the seller’s bank pays the seller according to the terms of the letter of credit. This payment can be made from the seller’s bank’s own resources (if the letter of credit is confirmed) or from the buyer’s bank (if not confirmed).

                    1. 🚚 Delivery of Documents to the Buyer: The buyer’s bank forwards the documents to the buyer. The buyer collects the goods from customs using these documents.

                    1. 💰 Buyer’s Payment: The buyer makes payment to his own bank according to the terms of the letter of credit after receiving the goods.

                  This process is critical to ensure security and transparency in foreign trade. For both buyers and sellers, knowing that their transactions are secure provides great peace of mind amid the complex nature of international trade.

                  Letter of Credit Types

                  Letters of credit are divided into various types according to the situations in which they are used and their structure. Each is designed to meet specific business needs. Here is a summary of letter of credit types:

                    1. 🔄 Revolving Letters of Credit (Revolver Letter of Credit): This is a type of letter of credit that can be withdrawn more than once up to a certain maximum amount within a certain period of time. For example, if the seller will ship a certain amount of goods every month, this type of letter of credit is suitable.

                    1. 🔓 Transferable Letter of Credit: This type of letter of credit allows the initial beneficiary (usually an intermediary) to transfer its rights, in whole or in part, to a third party (usually the manufacturer or primary seller).

                    1. 🌐 Confirmed Letter of Credit: In this type, another bank (usually a bank in the seller’s country) confirms the open bank’s commitment (the buyer’s bank), thus further reducing the seller’s risk.

                    1. 📅 Timed Letter of Credit: It is a type of letter of credit in which payments will be made after a certain period of time after the documents are accepted by the bank.

                    1. 🚫 Irrevocable Letter of Credit: This type of letter of credit means that the bank from which the letter of credit is opened and/or the confirming bank has an irrevocable commitment to make payment, provided that the beneficiary fulfills the conditions.

                    1. 🆚 Back-to-Back Letter of Credit: It is a special structure in which a new secondary letter of credit is opened under the security of the primary letter of credit. Often used by brokers.

                    1. 🛑 Red Clause:This is a special letter of credit that allows the seller to receive advance or partial payment before submitting certain documents.

                    1. 💼 Green Clause: Similar to the Red Letter of Credit, but in this type, advance payment is made when a certain storage condition is met.

                    1. 🏭 Stand-By Letter of Credit: It is actually a type of guarantee and is used only if the obligations in the main contract are not fulfilled.

                  These types of letters of credit are designed to address various risks and needs encountered in foreign trade transactions. Each type helps buyers and sellers find the most appropriate financing solution based on specific business requirements and conditions.

                  Terms in Letter of Credit

                  In letter of credit transactions, periods and dates are vital for the safe and smooth execution of the transaction. Here are the critical points about letter of credit periods:

                    1. 🗓️ Validity Period of the Letter of Credit: This period refers to the last date specified in the letter of credit and on which the letter of credit can be used. The seller must submit the documents before this date.

                    1. 💰 Buyer’s Payment: The buyer makes payment to his own bank according to the terms of the letter of credit after receiving the goods.

                  This process is critical to ensure security and transparency in foreign trade. For both buyers and sellers, knowing that their transactions are secure provides great peace of mind amid the complex nature of international trade.

                  Letter of Credit Types

                  Letters of credit are divided into various types according to the situations in which they are used and their structure. Each is designed to meet specific business needs. Here is a summary of letter of credit types:

                    1. 🔄 Revolving Letters of Credit (Revolver Letter of Credit): This is a type of letter of credit that can be withdrawn more than once up to a certain maximum amount within a certain period of time. For example, if the seller will ship a certain amount of goods every month, this type of letter of credit is suitable.

                    1. 🔓 Transferable Letter of Credit: This type of letter of credit allows the initial beneficiary (usually an intermediary) to transfer its rights, in whole or in part, to a third party (usually the manufacturer or primary seller).

                    1. 🌐 Confirmed Letter of Credit: In this type, another bank (usually a bank in the seller’s country) confirms the open bank’s commitment (the buyer’s bank), thus further reducing the seller’s risk.

                    1. 📅 Timed Letter of Credit: It is a type of letter of credit in which payments will be made after a certain period of time after the documents are accepted by the bank.

                    1. 🚫 Irrevocable Letter of Credit: This type of letter of credit means that the bank from which the letter of credit is opened and/or the confirming bank has an irrevocable commitment to make payment, provided that the beneficiary fulfills the conditions.

                    1. 🆚 Back-to-Back Letter of Credit: It is a special structure in which a new secondary letter of credit is opened under the security of the primary letter of credit. Often used by brokers.

                    1. 🛑 Red Clause:This is a special letter of credit that allows the seller to receive advance or partial payment before submitting certain documents.

                    1. 💼 Green Clause: Similar to the Red Letter of Credit, but in this type, advance payment is made when a certain storage condition is met.

                    1. 🏭 Stand-By Letter of Credit: It is actually a type of guarantee and is used only if the obligations in the main contract are not fulfilled.

                  These types of letters of credit are designed to address various risks and needs encountered in foreign trade transactions. Each type helps buyers and sellers find the most appropriate financing solution based on specific business requirements and conditions.

                  Terms in Letter of Credit

                  In letter of credit transactions, periods and dates are vital for the safe and smooth execution of the transaction. Here are the critical points about letter of credit periods:

                    1. 🗓️ Validity Period of the Letter of Credit: This period refers to the last date specified in the letter of credit and on which the letter of credit can be used. The seller must submit the documents before this date.

                    1. 🔄 Indirect Period (Submission Period): It is the time allocated for the documents to be submitted to the bank from the delivery date of the goods. It is usually determined as 21 days, but this period may vary depending on the agreement of the parties.

                    1. Delivery Period of the Goods: The last date for the shipment of the goods is specified in the letter of credit. This date indicates the deadline for the seller to load and ship the goods within the specified time.

                    1. 📝 Amendment Period: When a change is required in the letter of credit, a certain period of time is given for all parties to accept it. Changes come into force only with the approval of the parties.

                    1. 🕒 Payment Period: The time allotted for the documents to be checked by the bank and the payment to be made. In case of sight letters of credit, it is made immediately after the documents are submitted to the bank, and in case of term letters of credit, it is made after a certain maturity.

                    1. 🚚 Shipping Time: If the letter of credit contains special terms regarding shipping time (for example, shipping in a certain season or between certain dates), these conditions must be adhered to.

                    1. 🖊️ Protest Period: If the documents are rejected by the bank, the seller has the right to object and this objection must be made within a certain period of time.

                  All these periods must be clearly stated in the letter of credit and the parties must strictly comply with these periods. Failure to comply with these deadlines may lead to payment delay, cancellation or other legal consequences. Management of deadlines in letter of credit transactions is the key to success in foreign trade and all parties must comply with these deadlines carefully.

                  Our article titled What is Foreign Trade (International Trade) and Its Policy this link

                  Documents in Foreign Trade

                  Successful transactions in foreign trade depend on the accurate and timely preparation of various documents. These documents used during import and export transactions regulate transactions such as transfer of ownership of goods, shipment of goods, insurance policies and payments. Below you can find a list of the most frequently used documents in foreign trade:

                    1. 📄 Invoice: It is the document presented by the seller to the buyer and containing the quantity, description, unit price and total amount of the goods sold. This is an integral part of every foreign trade transaction.

                    1. 🚢 Bill of Lading: Serves as a shipping document and documents the transfer of ownership of the goods from the carrier to the buyer. This document is of critical importance, especially in sea transportation.

                    1. 📑 Certificate of Origin: It is a document that indicates the place where the goods are produced and provides customs advantages in some cases. It may be required during import and export according to international agreements.

                    1. 📦 Packing List: It is used during goods loading and contains a detailed list of the products sent. This is essential for control during unloading and delivery of goods.

                    1. 🛡️ Insurance Policy: Provides protection against damages or losses that may occur during the transportation of goods. In foreign trade transactions, it may be mandatory according to the agreement between buyers and sellers.

                    1. 🌐 Letter of Credit: It is a form of payment that provides financial assurance between the buyer and the seller, especially in foreign trade. Letter of credit is used especially when the seller and buyer do not know each other or there is a lack of trust.

                    1. 🚚 Customs Declaration: It is a document that must be submitted to customs authorities when goods cross a border. It includes the type of goods, their value, country of origin and other important information during import and export.

                  These documents form the basis of foreign trade transactions such as agreements between buyers and sellers, payment methods and delivery method. Each contains critical information regarding a specific aspect of the transaction and is required under foreign trade agreements. Preparing these documents completely and accurately is essential for the smooth completion of the transaction.

                  To reach the official website regarding foreign trade you can click on this link.

                  Shipment Documents

                  Shipping documents are official documents that document the transportation of goods from one place to another in foreign trade and are required in this process. These documents contain details regarding the transportation, delivery and transportation of the goods to the buyer. Below are some important types of shipping documents:

                    1. 🚢 Bill of Lading (B/L): It is the official document required for the delivery of the transported goods to the buyer in sea transportation. It confirms that the goods have been received by the carrier, will be transported to a specified destination, and will be delivered to the specified person or entity.

                    1. ✈️ Air Waybill (AWB): It is a shipping document used in air transportation, stating that the goods sent have been received by the carrier and will be delivered to the specified recipient.

                    1. 🚚 CMR Consignment Note: It is a standard shipping document used in international transportation by road. It is a document that specifies the carrier, sender and recipient and contains the transportation conditions and delivery details of the goods.

                    1. 🛤️ Railway Bill: It is used in transportation by rail and indicates that the goods have been received by the carrier, will be transported to a certain destination and will be delivered to a certain buyer.

                    1. 📨 Courier Receipt: It is used in transportation services provided by courier companies. It is a document that confirms that the package or document has been received, transported and delivered.

                  These documents contain important information such as ownership of the goods, shipping details, recipient and sender information. They are also necessary to ensure the safe and orderly transportation of goods. Filling out these documents accurately and completely is of critical importance in fulfilling the legal obligations of foreign trade transactions.

                  Shipment Documents Representing Ownership of Goods

                  Shipping documents representing the ownership of the goods are documents that show the ownership of the goods in foreign trade and provide the buyer with control over the goods. These documents enable buyers to make legal claims when receiving the goods. Here are some critical documents that fall into this category:

                    1. 📜 Bill of Lading (B/L): This is the most important document used in maritime transportation and representing the ownership of the goods. The bill of lading states that the goods will be delivered to a specific buyer and that the ownership of the goods passes from the buyer to the seller during transportation. The buyer can claim ownership of the goods by presenting this document.

                    1. 📄 Dock Receipt: This document confirms that the goods have been accepted by the port operator and are kept for delivery to the buyer or the person acting on his behalf. This is a document confirming the transfer of ownership.

                    1. 🛂 Customs Entry Document: It is an official document presented to the customs by the importer and allowing the goods to enter the country. This document generally does not represent ownership of the goods, but indicates that the goods have been legally imported and belong to the buyer.

                    1. 📦 Delivery Order (D/O): This document confirms that the ownership of the goods has passed from the carrier to the buyer. The buyer can receive the goods by presenting this document.

                    1. 🚛 Forwarder’s Cargo Receipt (FCR): This is a document issued by a transportation company confirming that goods have been accepted, transported and will be delivered to a specific person or company at a specific destination.

                  These documents prove that the buyer has legal rights over the goods and thus confirm that ownership of the goods has passed to the buyer. In foreign trade, the correct preparation and management of these documents is vital for the smooth conduct of transactions between the parties.

                  Shipment Documents That Do Not Represent Ownership of the Goods

                  Shipping documents that do not represent ownership of the goods provide important information regarding the transportation, delivery and receipt of the goods, but do not directly represent the legal ownership of the goods. These documents help carry out the necessary operations during the transportation and delivery of the goods. Here are some key documents included in this category:

                    1. 📄 Freight Bill: This document provides information about the cost and details of transportation services. The freight receipt proves that transportation charges have been paid, but does not represent ownership of the goods.

                    1. 🛃 Customs Declaration: This is a document that must be presented for customs procedures of imported or exported goods. The customs declaration contains the content, value and other important information of the goods, but does not represent any information regarding the ownership of the goods.

                    1. 📃 Packing List: This document contains a detailed list of the goods sent, indicating the quantity, weight, dimensions and contents of the package. Although it does not directly represent the ownership of the goods, it provides the buyer with important information about the condition of the goods.

                    1. 📝 Invoice: This is a document presented by the seller to the buyer, showing the quantity, description and total amount of goods or services sold. The invoice is required for payment but does not directly represent ownership of the goods.

                    1. 🛅 Shipping Order: This is the document containing the instructions given to the carrier for the transportation of a load. It contains information such as what the cargo is, where it will be sent, from whom it will be collected and where it will be delivered.

                    1. 🔍 Inspection Certificate: In some cases, it is a document issued by a third party to verify the quality, quantity and/or price of the goods. It creates trust between buyer and seller, but does not represent ownership.

                  These documents are necessary for the smooth and transparent conduct of foreign trade transactions and protect the rights of buyers and sellers. However, these documents only provide information regarding transactions and do not directly represent legal ownership of the goods.

                  Invoices

                  Invoices play a central role in foreign trade transactions because these documents are presented by the seller to the buyer and contain important details such as the quantity, description, unit price, total amount and payment terms of the goods sold or services provided. The types of invoices used in foreign trade are:

                    1. 📜 Commercial Invoice: This is the most commonly used invoice type in foreign trade. It includes the quantity, description, unit price and total amount of goods sold. It also includes details such as seller and buyer information, payment terms and delivery method. This document is used to determine the value of goods during customs procedures.

                    1. 🧾 Proforma Invoice: Usually includes a detailed description of the goods, their total value, and potential other charges before final sale. It is used to give the buyer an estimated cost of the goods and is often required to obtain import permits or advance payment.

                    1. 🚢 Consignment Invoice: This is used in consignment sales and means that the goods have been delivered to the buyer, but payment will be made after the sale of the goods. This invoice contains details of the goods but does not request payment until final sale.

                    1. 💼 Customs Invoice: Some countries may require a special type of invoice to determine customs duties on imported goods. This is similar to a commercial invoice, but usually contains more detailed information as required by the customs authority.

                    1. 🧮 Electronic Invoice: This is the electronic equivalent of a paper invoice and is frequently used in e-commerce transactions. Electronic invoices reduce paper waste while increasing the speed and efficiency of transactions.

                  These invoices play an important role in foreign trade, because they ensure the transparency of the exchange of goods and services, help in calculations of the cost of goods, and assist in customs procedures, especially in imports and exports. Required during export. They are also critical in determining payment methods and calculating potential expenses. Each invoice type is designed to facilitate a specific aspect of commerce.

                  Insurance Documents

                  Insurance Documents play a critical role in foreign trade transactions because these documents prove that the transported goods are under insurance coverage. These documents indicate that buyers or sellers will be compensated if the goods are damaged or lost in transit. Here are some insurance documents commonly used in foreign trade:

                    1. 📄 Insurance Policy: This is the formal agreement between the insurance company and the owner. It specifies the value of the goods, the insurance coverage, the duration of the policy, and in what cases and how much the insurance company will pay. This document is especially important for CIF and CIP delivery methods because in these cases, the seller is obliged to take out insurance during the shipment of the goods.

                    1. 📑 Certificate of Insurance: Serves as a summary of the insurance policy and is usually shorter and less formal. This certificate confirms that the goods are insured, but only contains basic information rather than detailed terms and conditions. Typically used to provide a quick reference to buyers or interested third parties.

                    1. 🚛 Freight Insurance Policy: This special type of policy covers damages that may occur to goods during transportation. This is necessary to ensure the safety of the goods and to protect against risks that may occur during transportation.

                    1. 🔥 Comprehensive Hazard Insurance (All-Risk Insurance): This, as the name suggests, is the broadest type of insurance that covers almost any damage that may occur to goods. However, there may be some exceptions specified in the policy.

                  These documents provide both security and financial protection for buyers and sellers. They are especially important in foreign trade transactions that carry the risk of damage or loss of goods during transportation. Insurance documents ensure that trade takes place in a safer and more accountable way by protecting the cost of goods. Additionally, it helps the import and export transactions proceed smoothly during customs procedures and when presented with various circulation documents.

                  Other Documents

                  Other documents used in foreign trade are necessary to facilitate the legal, regulatory and operational aspects of transactions. Here are some documents that are important in this context:

                    1. 📃 Certificate of Origin: This document is an official statement about the country in which the goods were produced or came from. This document is of critical importance in foreign trade transactions, as elements such as customs regulations, trade agreements and import taxes may vary depending on the origin.

                    1. 📦 Packing List: It includes details such as how the goods are packaged, the number of boxes, the contents of each and the total weight. This simplifies the loading and unloading processes, customs inspections and the buyer’s inventory control.

                    1. 🛃 Customs Declaration: It is a document filled out by the importer or exporter and containing the description, value, origin and other important information of the goods. This is required for customs clearance and ensures compliance with appropriate taxes, tariffs and regulations.

                    1. 🚢 Bill of Lading / Air Waybill: It is an official document issued by the carrier and confirming the transportation of goods. This document specifies how the ownership of the goods will be transferred during transportation and is usually required for the delivery of the goods.

                    1. 📄 Fumigation Certificate: It is a document confirming that the exported goods have gone through fumigation or other quarantine processes against certain harmful organisms. This is especially necessary in foreign trade of agricultural products.

                    1. 📝 Commercial Invoice: Prepared by the seller, the description of the goods sold, quantity, unit price, total price, payment method, delivery method, etc. document containing information. This is a central document for sales methods, payment methods and foreign trade agreements

                  These documents ensure smooth and harmonious foreign trade transactions, confirm agreements between buyers and sellers and international It guarantees compliance with lawsand regulations.

                  Circulation Documents

                  Circulation documents are documents that are required for the free movement of goods from one country to another and are defined by various international agreements or trade blocs. These documents verify the origin of the goods and sometimes their compliance with certain standards. Here are some important examples of these documents:

                    1. 🚛 EUR.1 Movement Certificate: This is used so that goods can benefit from preferential tariffs between countries that have trade agreements with the European Union. This document confirms that the goods comply with certain rules of origin and may therefore be subject to reduced or zero customs duties.

                    1. 🌍 ATR Movement Certificate: It represents free movement between Turkey and the European Union and originates from Turkey’s Customs Union agreement with the EU. This document allows Turkish goods to be exported to the EU duty-free.

                    1. 📜 FORM A – Generalized System of Preferences (GSP) Certificate: This is used so that goods from developing countries can benefit from preferential tariff rates. GTS aims to provide access to wider markets for the goods of these countries at more accessible prices.

                    1. 🔄 TIR Carnet: It is a document used in international transportation and ensures the acceleration of customs formalities and procedures. The TIR Carnet prevents goods from being checked and resealed each time they cross various customs borders.

                    1. 🌐 EUR-MED Movement Certificate: This is used to facilitate preferential trade between countries party to Euro-Mediterranean agreements. Verifies that the goods comply with certain rules of origin.

                  These circulation documents are of great importance in foreign trade transactions because they ensure that trade is carried out quickly, safely and regularly. Additionally, thanks to these documents, customs costs that may occur during export and import transactions can be significantly reduced. Each document has specific requirements regarding the origin, characteristics and destination of the goods, and fulfillment of these conditions ensures efficient international trade.

                  Turkey Application of Payment Methods in Foreign Trade

                  Turkey’s dynamic structure in the foreign trade arena increases the need for various payment methods that direct import and export transactions. These methods establish trust between buyers and sellers and ensure the security of transactions. Here are the payment methods frequently used in Turkey:

                    1. 💰 Advance Payment: It is the method in which the seller requests full payment before shipping the goods. While this minimizes risk for sellers, it can increase costs for buyers. This method is preferred in export transactions if there is no solid commercial history with the buyer.

                    1. 📦 Payment Against Goods: It is a method where payment is made after the delivery of the goods. This gives buyers the opportunity to inspect the goods and ensure their satisfaction.

                    1. 📄 Payment Against Documents: Payment against documents is a system in which the buyer can only receive the documents after making the payment. This is used in foreign trade, especially in new trade relations where security is important.

                    1. 📝 Payment by Letter of Credit: This is a method that is especially common in foreign trade contracts, mediated by banks through letters of credit. Letter of credit minimizes the risks of the buyer and seller because payment is conditional on the presentation of documents determined by the bank.

                    1. 💳 Open Account: In this method, the buyer makes payment within a certain period of time after receiving the goods. This is often used in long-term and reliable trading relationships.

                    1. 🚢 Consignment: This is a form of sale in which payment is not made unless the goods are sold. It is generally used in domestic trade, but can also be seen in some foreign trade transactions.

                  These payment methods vary depending on the type of transaction, the trust level of the parties and market conditions. Documentation plays a critical role at every stage of these transactions, because documents such as shipping documents, insurance and circulation documents determine who has the ownership and risks of the goods. Companies in Turkey must use and manage these various payment methods effectively in order to compete in the global market.

                  Import Procedures

                  Import operations is a complex process that involves entering goods or services into a country from another country. Import transactions in Turkey require various regulations, laws and documents, and this process involves a series of steps for buyers and sellers. Here are the basic stages of these processes:

                    1. 📑 Import Permit and Agreements: First, importers must obtain the necessary permits and make agreements with sellers in accordance with Turkey’s foreign trade legislation and international trade norms. At this stage, it is checked whether the products are allowed to enter the country.

                    1. 🚢 Goods Loading and Transportation: According to the terms of the agreement, the seller ships the products. This process varies depending on the chosen delivery method (FOB, CIF, EXW etc.) and includes relevant shipping and insurance regulations

                    1. 📄 Customs Procedures: When the goods reach Turkey, importers must initiate customs procedures. This includes the submission of various documents (invoices, shipping documents, insurance documents, etc.) and payment ofcustoms duties and other expenses

                    1. 💳 Payment Transactions: Payment terms may vary depending on the agreement. Various payment methods can be used, such as cash payment, payment against documents, payment against goods or payment by letter of credit.

                    1. 📦 Unloading and Receiving of Goods: After customs procedures are completed, the goods are unloaded and delivered to the buyer. This process must be carefully managed to ensure that goods are received correctly and on time.

                    1. 🧾 Document Control and Tracking: At every stage of the import process, it is critical to check the accuracy and completeness of relevant documents (circulation documents, shipping documents, etc.).

                  🔍 Inspections and Compliance: Import transactions in Turkey are subject to inspections by various government institutions. Importers must ensure that all their transactions comply with Turkey’s foreign trade, customs and foreign exchange laws.

                  These steps are essential for the successful execution of import transactions and each must be managed correctly in terms of the legal and financial aspects of the transaction.

                  Payment by Letter of Credit

                  Payment by letter of credit is a frequently used form of payment in international trade, especially in foreign trade, to minimize the risk between the buyer and the seller. It is a widely preferred method in both import and export transactions in Turkey. Here are the important points about payments by letter of credit:

                    1. 📝 Opening a Letter of Credit: The buyer opens a “letter of credit” through a bank, which guarantees that payment will be made if the seller meets certain conditions. This process involves the buyer using their bank’s creditworthiness so the seller feels more secure about paying.

                    1. 🌐 International Rules: Letter of credit transactions are generally regulated according to the “Biriform Standard Letter of Credit Rules” published by the International Chamber of Commerce (ICC). These rules are standards that are frequently referenced in foreign trade contracts to ensure a common understanding between the parties to the transaction.

                    1. 📨 Presentation of Documents: After the seller fulfills the conditions specified in the letter of credit, he submits the necessary documents such as transport document, invoice, insurance policy to the buyer’s bank. Submission of documents occurs after the products have been shipped and usually needs to be done within a certain period of time.

                    1. 💡 Document Review: The buyer’s bank reviews the submitted documents for compliance with the terms of the letter of credit. In case of any discrepancy, the seller is given the opportunity to make corrections.

                    1. 💰 Payment: If it is confirmed that the documents comply with the terms of the letter of credit, the bank makes payment to the seller according to the specified payment method (cash payment, payment against documents, etc.).

                    1. 🔄 Delivery of Documents to the Buyer: After payment, the buyer’s bank delivers the documents to the buyer so that the buyer can clear the imported goods from customs.

                    1. 🔍 Controls and Compliance: In Turkey, payments by letter of credit are strictly regulated and supervised. Exporters and importers must ensure that all their transactions comply with Turkey’s foreign trade, foreign exchange, and customs laws.

                  🛑 Risks and Protection: Letter of credit payments reduce the lack of trust between parties, but the transaction process can be complex and errors in documents can delay transactions. Therefore, the parties should carefully review the terms of the letter of credit and compliance with applicable laws.

                  The letter of credit payment method is preferred in foreign trade transactions, especially when there is not enough trust between the buyer and seller or when there is no certain trade history between the parties. This method provides a certain assurance to the parties, but it is important to remember that the terms of the letter of credit and applicable legal regulations must be carefully managed.

                  Payment Against Documents

                  Payment against documents is a form of payment used in foreign trade that strengthens the trust between the buyer and the seller. This method, which we frequently encounter in transactions in Turkey, includes certain steps and controls. Here are the important stages of this process:

                    1. Shipment of the Goods: The seller ships the goods in accordance with the terms of the contract and prepares the necessary documents regarding the shipment of the goods. These documents usually include the transport document, invoice, insurance certificate and other necessary movement documents.

                    1. Bank Intermediation: The seller delivers the documents to his bank and the bank sends the documents to the buyer’s bank. This stage forms the basis of the “payment against documents” process because the documents are delivered to the buyer through the bank before the ownership of the goods passes directly to the buyer.

                    1. Notification for Payment: The buyer’s bank notifies the buyer that the documents have arrived and instructs him to make the payment. It is clearly stated that without payment, the documents will not be delivered to the buyer and therefore the goods cannot be cleared from customs.

                    1. Delivery of Documents: The buyer receives the documents after making the requested payment. These documents enable the buyer to receive the goods because these documents are needed during customs procedures.

                    1. Customs Procedures: The buyer passes the goods through customs using the shipping documents and completes the import procedures.

                    1. Legal Compliance: During all these transactions, the buyer and seller must act in accordance with Turkey’s foreign trade, customs laws and international norms. . Otherwise, you may face criminal sanctions.

                    1. Cycle of Payments: Payments against documents are generally used in ongoing commercial relations between buyer and seller. This creates a continuous cycle and increases business trust between the parties.

                  👁️‍🗨️ Risks: Payment against documents involves more risks for the seller than for the buyer because the buyer may refuse to pay before clearing the goods from customs. In this case, the seller may incur additional costs to get the goods back.

                  🔍 Diligent Review:Both buyer and seller must closely review the accuracy of the documents and process and comply with all legal requirements. Ensuring that both parties understand the terms of the agreement and applicable laws ensures that the transaction goes smoothly.

                  Payment against documents is especially suitable for buyers and sellers who have regular business relationships. However, it is important for the parties to carefully review the terms of the agreement and the relevant legal requirements to avoid possible disputes and legal challenges.

                  Export Applications

                  Export Practices is one of the basic components of foreign trade in Turkey and makes significant contributions to the growth of the economy. Exporting involves selling products to foreign markets and this process is quite extensive with various documents, regulations to comply with and procedures to follow. Here are some important steps of this process:

                    1. Preparation of Documents: Before starting export operations, exporters must prepare all the necessary documents. This includes documents such as circulation documents of products, invoices, certificates of origin and, where necessary, insurance documents.

                    1. Sales Forms and Contracts: A foreign trade contract is made between the exporter and the buyer, which includes the delivery method of the goods, payment conditions, delivery dates and other important details. This agreement protects the rights and obligations of both parties.

                    1. Payment Methods: Payment methods used in export transactions include cash payment, payment against goods, payment against documents and payment by letter of credit. Each payment method involves different levels of risk and transaction costs.

                    1. Goods Loading and Transportation: According to the delivery method specified in the contract, the products are appropriately packaged, loaded and sent to the buyer. During transportation, various expenses (shipping, insurance, customs duties, etc.) are borne by the exporter or buyer.

                    1. Customs Procedures: The exporter fills out the export declaration in accordance with Turkish customs legislation and submits it to the customs with all necessary documents. Customs officials examine documents and goods and authorize export.

                    1. Legal Compliance and Inspections: During export transactions, exporters must fully comply with Turkey’s foreign trade legislation, international agreements and import regulations of the receiving country. Non-compliance may lead to serious sanctions.

                    1. Continuous Relationships and Marketing: Exporters can increase their export volumes by establishing continuous relationships with foreign buyers and marketing their products effectively. This is of great importance for brand awareness and international market share.

                  🚨 Risk Management: Exporters can use secure payment methods such as letters of credit to minimize payment risks in their agreements with buyers. They should also consider other risks associated with exports, such as political, exchange rate and transportation risks.

                  Export operations require careful planning, detailed information and meticulous legal compliance. Exporters in Turkey must constantly review their strategies and develop innovative solutions in order to compete in global markets and create a sustainable foreign trade structure.

                  Payment by Letter of Credit

                  Payment by Letter of Credit It is a secure payment method that is frequently preferred in foreign trade transactions in Turkey. This method eliminates potential issues of distrust between buyer and seller, building trust, especially in high-value transactions or long-term trading relationships. Here are the main aspects of this form of payment:

                    1. 📝 Letter of Credit Opening: When the export process begins, the buyer instructs his bank to open a letter of credit. This instruction guarantees that payment will be made if the seller meets certain conditions. This process increases the seller’s confidence that he will receive payment.

                    1. 🏦 Role of Banks: Payment by letter of credit requires the establishment of a relationship between the buyer’s bank and the seller’s bank, as well as the transaction between the buyer and the seller. The letter of credit opened by the buyer is confirmed by the seller’s bank, which guarantees that payment will be made if the specified conditions are met.

                    1. 📃 Presentation of Documents: After fulfilling the conditions specified in the letter of credit, the seller submits the shipment and other commercial documents to his bank. These documents are forwarded to the buyer’s bank after verifying that they comply with the conditions specified in the letter of credit.

                    1. 💳 Payment Transactions: The buyer’s bank makes payment to the seller’s bank after receiving the documents and confirming their compliance with the terms of the letter of credit. The seller’s bank then forwards this payment to the seller.

                    1. 🛡️ Risk Reduction: Letter of credit payment minimizes risks such as the buyer not making payment or the seller not sending goods in accordance with the contractual terms. For this reason, it is a preferred method especially in large-scale foreign trade transactions.

                    1. 🌐 International Rules: Banks in Turkey generally follow international standards such as the “Unified Letter of Credit Rules” (UCP) published by the International Chamber of Commerce (ICC) when managing payments by letter of credit.

                  Although payment by letter of credit is a tool that provides trust between the buyer and seller, it may require additional expenses such as transaction costs and banking fees. In addition, it is of great importance that the documents are prepared completely and in accordance with the terms, otherwise the payment may be delayed or canceled. Therefore, the use of letters of credit in foreign trade transactions requires careful document management and careful monitoring of all aspects of the process.

                  Payment Against Documents

                  Payment Against Documents is another payment method frequently used in foreign trade in Turkey. This method is a system that regulates the process between the delivery of goods and payment and is based on the delivery of documents in return for payment. Here are the critical stages of this payment method:

                    1. 🚢 Goods Shipment: The seller ships the goods in accordance with the terms of the contract and prepares all necessary commercial documents. These documents usually include transport document, invoice, insurance policy and other necessary foreign trade documents.

                    1. 🏦 Sending Documents Through Banks: The seller delivers the documents he has prepared to his own bank. The seller’s bank sends the documents to the buyer’s bank. This process usually occurs through cooperation between the buyer’s and the seller’s banks.

                    1. 💰 Payment and Delivery of Documents: The buyer’s bank receives the documents and informs the buyer. The buyer makes the payment to the bank to receive the documents. After payment, documents are delivered to the buyer to ensure ownership and receipt of the goods.

                    1. 📑 Transmission of Documents to the Seller: The payment collected from the buyer is transferred to the seller’s bank by the buyer’s bank. The seller’s bank then pays the seller.

                    1. 🛡️ Risk Management: Payment against documents is preferred especially when a certain level of trust is established between the buyer and the seller. This method may involve the risk of the buyer not paying for the seller, and the risk of the goods not conforming to the terms of the contract for the buyer.

                    1. 🔄 Exchange Rates and Payment Times: When using payment against documents in Turkey, factors such as fluctuations in exchange rates and timing of payment are important for both the buyer and the seller. Therefore, payment processes and management of exchange rate risks are elements that must be taken into account in this form of payment.

                  Payment against documents can provide advantages for both parties, but accurate and complete preparation of documents is critical. In addition, the trust relationship between the buyer and seller and market conditions need to be carefully evaluated. The applicability of this payment method may vary depending on the needs of the parties, industry norms and the characteristics of the transaction.

                  Payment Against Goods

                  Payment Against Goods method is one of the practical and reliable payment methods used in foreign trade transactions in Turkey. This system requires the buyer to pay before receiving the goods. Here are the prominent steps of this process:

                    1. 📦 Order and Payment Confirmation: The buyer places the order and agrees to pay. At this stage, in order to build trust, it is important that the agreements between the buyer and the seller are clear and transparent, especially in new trade relations.

                    1. 💵 Advance Payment: The buyer pays the seller before the goods are shipped. This is usually done via a bank transfer and the seller is expected to confirm receipt of payment.

                    1. 🚚 Shipment of Goods: After payment, the seller sends the goods to the buyer. In this process, it is critical that the goods are shipped on time and in accordance with the contract conditions.

                    1. 📄 Sending Documents: The seller arranges the transport document, invoice, insurance certificate and other necessary foreign trade documents, if any, to be forwarded to the buyer.

                    1. 🛃 Customs Procedures: The buyer completes the necessary customs procedures during the entry of the goods into the country. This process is shaped according to the customs laws of the country of import and may incur various costs.

                    1. 🤝 Receipt of the Goods: The goods are delivered to the buyer after the customs procedures are completed. The buyer checks the condition of the goods and its compliance with the contract conditions.

                    1. 🔄 Return and Objection Processes: In case of any problem, return or objection processes can be processed according to the predetermined conditions between the buyer and the seller.

                  Payment against goods is preferred especially when there is no strong commercial history or trust relationship between the buyer and the seller. While this method provides a payment guarantee to the seller, it may involve certain risks for the buyer, because payment is made before the goods are delivered to the buyer. Therefore, in this process, buyers must trust the seller regarding the quality and delivery of the goods.

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