International commercial and banking practice has developed a number of ways to resolve mutual monetary claims and obligations in the field of international economic relations. Moreover, the implementation of these methods provides for determining the moment of transfer and payment of goods: immediately or with a deferred payment. Such a point determines the conditions of international settlements and payments.
The following basic conditions for settlements and payments are distinguished in the international settlement system:
for cash; on credit; combined.
Cash payment terms are understood to mean immediate payment goods and shipping documents. Immediate payment means payments and payments that fall within the scope of international and national legislation. It should be borne in mind that all settlements on a cash basis are carried out in a non-cash manner by reflecting the movement of funds on the accounts of entities.
The terms of settlements and payments “on credit” means the payment of goods and shipping documents before or after their delivery. In the first case (before delivery), the importer acts as the lender, in the second case, the exporter, who provides the importer with unpaid goods.
In practice, in most cases, a mixed form of settlement and payment conditions is used. If the first 30% of the contract value is paid mainly on the terms of settlements and payments “for cash”, then the rest of the value –
“on credit.