Payment Terms in Export – TT, DP, DA, and Best Practices for Smooth International Payments
Payment terms in export are the agreed conditions between you (the exporter) and your international client about how and when you’ll get paid. These terms cover specifics like currency, payment schedule, method, and required documentation. For Indian freelancers and agencies especially, unclear payment terms can lead to major problems, such as:
- Payment delays (waiting endlessly for funds)
- Currency confusion (losing money on unexpected exchange rates)
- GST/FEMA documentation issues (compliance headaches with FIRA/FIRC)
- Client disputes (misunderstandings turning into conflicts over payment)
In this guide, we’ll explain the common types of export payment terms (including TT payment terms in export, DP payment terms in export, and DA payment terms in export), give real examples, and suggest better solutions. The goal is to help you set clear expectations that protect your business and ensure you get paid smoothly.
What Are Payment Terms in Export?
Imagine you’re about to start a project for a client in Germany. Before any work begins, you both need to agree on some basic payment questions:
- Will the client pay you upfront, after delivery, or in instalments?
- Will they pay in US dollars, euros, or another currency?
- What happens if they’re late with payment?
- Who covers any bank fees for the transfer?
- Do you need to provide any documents for compliance (like a GST invoice or FIRA)?
The answers to these questions form your payment terms. In an export context, payment terms refer to the conditions between you and your international client on how and when payment will be made. These terms typically cover six key areas:
- Payment Method: Will you receive a bank transfer, PayPal/Wise payment, or a letter of credit?
- Payment Timeline: When is payment due? (e.g. 30% upfront, balance on delivery, or net 30 days after invoice)
- Currency Choice: Which currency will you be paid in? (This affects your earnings since exchange rates fluctuate.)
- Advance Payment Percentage: Will the client pay a portion in advance to protect your cash flow (commonly 20-50%)?
- Late Payment Penalties: Will you charge interest or fees if the client delays payment past the due date?
- Required Documentation: What compliance documents or processes are needed (GST invoices, FEMA documentation like FIRA/FIRC, shipping documents, etc.)?
Getting these terms right from the start prevents headaches later on. Clear payment terms mean you won’t find yourself chasing invoices, losing money to poor exchange rates, or scrambling to meet compliance requirements that could have been planned for. In short, well-defined terms protect your international business and ensure a smooth payment process for everyone involved.
Common Types of Payment Terms in Export
When working with international clients (say a new client from the United States or Europe), there are several payment term options to consider. Each option balances risk and trust differently for you (the exporter) and the client (the buyer). Below are the most common types of export payment terms, and what you need to know about each:
Advance Payment (Upfront Payment)
Advance payment means the client pays the full amount (or a significant portion of it) before you deliver your product or service. This is the safest option for you, since you receive money upfront to cover your costs. However, many clients will hesitate because they’re taking on the risk by paying before seeing results. Advance payments are common for new client relationships, custom-made products, or when you’re dealing with buyers from countries with high payment default risks. Even if not 100% upfront, you might request a 30-50% advance to secure commitment and cash flow at the start.
Letter of Credit (L/C)
A Letter of Credit (LC) acts like a financial safety guarantee provided by the buyer’s bank. In this arrangement, the client’s bank promises to pay you as long as you meet specific conditions (usually presenting certain documents that prove you shipped the goods or delivered the service). While an LC offers strong protection against non-payment, it comes with complex paperwork and bank fees. This method is typically used for large export transactions (e.g. big manufacturing orders worth tens or hundreds of thousands of dollars) rather than small freelance projects. LCs are popular in merchandise trade because the added cost and effort is justified by the high value and risk involved.
Documents Against Payment (D/P) – DP Payment Terms in Export
Documents Against Payment (D/P) is a payment term where the buyer can only collect the shipping or project documents after they pay. In practice, you send the documents (like shipping papers, bill of lading, or a service completion certificate) to the buyer’s bank, and the bank releases those documents to the buyer only when the buyer has made the payment. This arrangement balances risk on both sides: you retain control of the goods/documentation until you’re paid, and the buyer knows they will get the goods once they pay. D/P (sometimes called Cash Against Documents) is a common export payment term for mid-sized orders with clients you have some trust with. It requires careful coordination, usually through banks or international payment platforms, to hold and exchange the documents for payment.
Documents Against Acceptance (D/A) – DA Payment Terms in Export
Documents Against Acceptance (D/A) works similarly to D/P, but with an extra level of trust (and risk for you). Under D/A terms, the buyer’s bank releases the documents to the buyer after the buyer accepts a bill of exchange or draft, essentially agreeing to pay at a later date (such as 30, 60, or 90 days after document receipt). In other words, the buyer doesn’t pay immediately to get the documents; instead, they sign an agreement to pay by a specified future date (this is effectively trade credit you are extending to the buyer). D/A is riskier for you because the buyer gets possession of the goods before actual payment. It should only be used when you have a strong, established relationship with the client and confidence in their reliability. It gives the buyer more flexibility in cash flow, but you carry the risk until they actually pay on the agreed date.
Open Account
An Open Account payment term means you deliver the goods or complete the service first, then send an invoice to the client to pay later (for example, within 15 or 30 days of receiving the invoice, known as Net 15 or Net 30 terms). This is one of the most buyer-friendly payment terms and is very common in international trade once trust is established. Many freelancers, agencies, and even product exporters use open account terms with long-term clients because it simplifies the transaction (no escrow or complex process — just deliver and trust the client to pay on time). However, all the payment risk lies on you in this scenario. If the client delays payment, disputes the work, or never pays at all, you’re left with no immediate recourse except chasing the payment or legal action. Open account terms are best reserved for trusted clients with a solid track record of paying on time.
Milestone-Based Payments
Milestone-based payment terms break a project into defined phases, with a portion of the payment due upon completion of each phase or deliverable. This structure is perfect for long projects such as software development sprints, lengthy consulting engagements, or content projects that span weeks or months. For example, you might agree on 25% upfront, 50% at the halfway milestone, and 25% upon final completion. Milestone payments keep your cash flow going throughout the project and reduce risk — if the client disappears halfway, at least you’ve been paid for the work completed up to that point. They also give the client assurance that they only pay as they see progress. Many exporters of services structure deals this way to ensure neither party is overexposed.
Retainer + Variable Payment
A Retainer + Variable model combines a fixed recurring payment with additional charges for extra work beyond the base scope. For instance, a marketing agency might charge a client ₹100,000 per month as a retainer for a set of baseline services, plus an hourly or per-deliverable fee for any work outside of that scope.
This payment term works well for ongoing service relationships — such as maintenance contracts, ongoing marketing, or consulting — where you need to guarantee a minimum income each month (the retainer) but also get paid for extra tasks or projects (the variable part).
The retainer ensures you have predictable income and the client has your availability, while the variable part keeps things fair if the workload increases. Just be sure to clearly define what is covered by the retainer and how additional work will be billed.
Telegraphic Transfer (TT) Payments
Telegraphic Transfer (TT) refers to the method of payment rather than the timing. It’s essentially an electronic bank transfer (often via the SWIFT network) — the standard way money moves internationally between bank accounts. In many discussions about export payments, you’ll hear terms like “TT payment terms in export”, which simply mean the payment will be made via a bank transfer.
Almost all of the above payment terms (advance, open account, D/P, etc.) ultimately get settled by a TT transfer between the buyer’s bank and your bank. The key thing to remember is that TT is about how the money is sent (electronically through banks), not when it is sent.
As an exporter, you will likely be paid via TT for most deals unless you’re using an online platform or a letter of credit. Make sure you provide clear bank details (account number, SWIFT code, etc.) to your client to facilitate a smooth TT payment.
Best Payment Terms for Exporters (Goods & Services)
Not all payment terms are equal for every situation. The best choice depends on what you’re exporting (physical goods or services) and your relationship with the buyer. Below we break down recommendations for two groups – goods exporters and service exporters/freelancers – along with best practices for each.
For Goods Exporters
(Think of manufacturers, Indian MSMEs selling abroad, D2C product exporters, Amazon Global sellers, etc.)
Recommended Payment Terms:
- Advance Payment (100% or at least 30-50% upfront): This significantly reduces risk, especially with new or unknown buyers. Getting a full or partial advance covers your production costs and protects you from potential defaults. While 100% upfront is ideal for security, many buyers will only agree to a smaller deposit like 30% or 50%, with the remaining balance due before shipment. Even a partial advance is better than nothing, as it shows the buyer’s commitment and gives you working capital.
- Letter of Credit (LC): Use this for large orders or first-time international clients where trust is still building. An LC adds a bank’s guarantee of payment once you fulfill the conditions (like shipping the goods and providing the required documents). It’s especially suitable for high-value exports (e.g. orders above $50,000) where the cost of the LC is justified. The buyer’s bank basically substitutes their credit for the buyer’s, promising you’ll get paid as long as you follow the agreed process. This greatly reduces the risk of non-payment, though you’ll need to handle the paperwork carefully and possibly wait a short time for the bank’s processes.
- Document Against Payment (D/P): This term gives you control over the goods until payment is made. It’s a solid choice for medium-sized orders or situations where the buyer is somewhat known but you still want assurance. Under D/P, you ship the goods but send the documents to the bank, and the buyer only gets those documents (and thus the goods) when they pay. It balances risk — you don’t release goods without payment, and the buyer knows you’ve shipped and the money is ready to go as soon as they pay.
- Documents Against Acceptance (D/A): Use this cautiously, and only with very trustworthy buyers. D/A extends credit to the buyer: they get the documents (and thus the goods) now, and they promise to pay by a certain date (e.g. 60 days after shipment). This can help secure deals with buyers who insist on credit terms, but it exposes you to the risk of non-payment for that credit period. Reserve D/A for long-term partners who have proven reliable, and even then, consider insuring the receivable or using export credit insurance if available.
Best Practices:
- Define the payment currency upfront. For every export deal, clearly state the currency (USD, EUR, INR, etc.) in the invoice or contract. This avoids confusion later if exchange rates move. Both parties should know exactly what currency will be paid so you can price accordingly.
- Set a clear payment timeline. Don’t leave timing vague – specify dates or timeframes. For example: “Balance payment due within 5 days of receiving shipping documents” or “Net 15 days from invoice date.” This sets expectations and gives you a basis for follow-up if payment is late.
- Clarify who covers bank charges. International transfers often go through intermediary banks that charge fees. Decide in advance whether the buyer pays all bank fees, you split them, or you’ve built those fees into your price. If you don’t specify this, you might receive $50-$100 less than expected due to surprise deductions in transit.
- Get terms in writing (Proforma Invoice or contract). Always document the agreed payment terms in a Proforma Invoice or contract before you start production. Both parties should sign off. This way, if any dispute arises, you have a written reference. A signed Proforma Invoice detailing the product, quantity, price, and payment terms is a common approach in exports to make sure everyone is on the same page.
For Service Exporters and Freelancers
(Think of software developers, marketing agencies, designers, SaaS providers, consultants – anyone providing services to international clients.)
Recommended Payment Terms:
- Milestone-Based Payments: For large or long-running projects, this is ideal. Break the project into phases or deliverables with payments tied to each. For example, 30% upfront, 40% upon first draft or Phase 1 completion, and 30% on final delivery. This ensures you have cash flow throughout the project and protects you if the client disappears mid-project. It also keeps the client engaged, as they see work before paying further.
- Monthly Retainer + Hourly (or + Scope-Based) Fees: If you have an ongoing engagement, consider a retainer model. Say you charge a fixed monthly fee (retainer) for a defined set of services or a block of hours, and anything above that is billed extra (hourly or per project). For instance, a web development agency might charge $2,000 per month to be “on-call” for a client’s needs, plus $50/hour for any work beyond 40 hours a month. This gives you stable income and the client guaranteed support, while covering any variable workload fairly.
- 50% Advance / 50% on Completion: For smaller projects (that maybe last a few weeks or less), a simple split like this works well. Many freelancers use 50% upfront and 50% after delivery as a straightforward, low-risk term. The initial 50% ensures the client has skin in the game and that you’re at least partially compensated if the project is terminated, and the final 50% holds the client to review and accept the work. Just make sure to clearly define what “completion” means (e.g. delivery of final files, approval by client, etc.) to avoid any ambiguity on when that payment is due.
- Net 7 / Net 15 Payment Terms: These mean the payment is due within 7 days or 15 days from the invoice date, respectively. Such short credit terms can be offered to trusted, repeat clients who consistently pay on time. It gives them a bit of breathing room (which they appreciate), while not delaying your cash flow too much. If you use Net 7/15, always include a late fee clause (for example, “1.5% interest per month on overdue amounts”) in your terms. This not only encourages timely payment but also compensates you if they drag their feet. Be cautious: avoid offering any credit terms to brand new clients – stick to advances or milestones until they’ve proven their reliability.
Best Practices:
- Invoice in the client’s preferred currency. As a service provider in India (or anywhere), if your client is in the US, bill them in USD; if in Europe, maybe EUR. Quoting and invoicing in their currency removes one extra barrier to payment (they don’t have to worry about conversion) and avoids confusion. You can always convert it to INR when you receive it, or even hold it in a forex account if you want.
- Use platforms or methods that provide FIRA for compliance. If you’re an Indian freelancer or agency, ensure the payment method gives you a Foreign Inward Remittance Advice (FIRA) or equivalent documentation. This is important for GST refunds/exemptions and satisfying RBI/FEMA rules for incoming foreign payments. Many specialized platforms and new-age payment providers automatically generate this for you, making tax time much easier.
- Agree on the payment mode upfront. Clarify how the client will pay: bank transfer, Wise, PayPal, credit card via an invoice tool, etc. Different modes have different fees and compliance steps, so you should include the agreed method in your contract or invoice. For example: “Payment Mode: International bank transfer to the account below” or “Payment via Wise link (we’ll provide a payment link/instructions).” This prevents last-minute confusion like the client sending to your PayPal when you expected a wire transfer.
- Specify timelines and expectations clearly. Just like with goods, set exact due dates or conditions for each invoice or milestone. Instead of saying “Payment upon completion of project,” say “Payment due within 5 days of final deliverables being handed over.” Also, communicate what happens if that timeline isn’t met – for example, work pauses until payment is received, or a late fee will apply. Having this in writing means the client is well aware of the importance of paying on time.
Additional Considerations for Both Goods and Services
No matter what you’re exporting, here are some extra tips that apply across the board:
- Currency Risk Management: For longer projects or contracts, currency fluctuations can bite into your earnings. If there’s a significant time gap between pricing the project and getting paid (say 2-3 months), consider including a clause that addresses currency changes. You might fix the exchange rate at the time of the agreement or stipulate that if exchange rates move by more than a certain percentage, the price will be adjusted. This protects both parties from extreme currency volatility.
- Documentation Requirements: Make sure you know what documents are needed for the payment method you choose. For instance, a bank wire above a certain amount might require a Purpose Code and will definitely require a FIRA from your bank for you to keep on record. If you use an online platform, they might handle a lot of compliance for you but charge higher fees. Being aware of documentation (like invoices, packing lists, FIRC/FIRA, GST invoices, etc.) will ensure you stay compliant with tax laws and export regulations.
- Emergency (Delayed Payment) Clauses: Hope for the best, but plan for the worst. Include a clause in your contract for what happens if the client really delays payment or defaults. This could be something like: “If payment is delayed more than 15 days beyond the due date, the exporter has the right to stop all work/delay any further deliveries until payment is received in full. Any payment delayed beyond 30 days will incur a late fee of X%, and failure to pay beyond 60 days from invoice date gives the exporter the right to terminate the contract.” It sounds strict, but having these terms agreed in writing can save you in a tough situation.
- Client Onboarding & Communication: Always discuss payment terms as part of onboarding a new client. It might feel awkward to talk money early, but it’s far worse to have a misunderstanding later. Go through each aspect of the payment terms with your client (perhaps in an email or proposal) before work starts. This way both of you can ask questions, negotiate changes, and come to a comfortable agreement. Good clients will appreciate the professionalism, and risky clients might reveal themselves by pushing back unreasonably (which is a red flag, as we’ll discuss later).
Bottom line: Match your payment terms to your risk tolerance, trust level with the client, and cash flow needs. For a brand new client or a high-risk country, you might insist on a hefty advance or even full upfront payment. For a long-term client who’s always reliable, you might offer Net 15 or milestone terms that give them flexibility. The key is to protect yourself while still offering terms that make the client comfortable doing business with you.
How to Write Export Payment Terms (Email + Invoice Examples)
Crafting clear payment terms in writing — whether in an email, a contract, or an invoice — is crucial. It ensures the client knows exactly what to do, how to pay you, and when. Below, we cover the essential elements your written payment terms should include, provide sample email templates for different scenarios, and show invoice examples that incorporate strong payment terms.
Essential Elements to Include
No matter the format, any statement of your payment terms should include these five elements:
- Payment Currency: Specify the currency you expect to be paid in. For example, “All payments to be made in USD.” This avoids situations where a client sends you the wrong currency (and you lose on conversion). It’s especially important in export, because a client might assume they can pay in their local currency unless told otherwise.
- Payment Timeline: Be explicit about when the payment is due. Instead of saying “Payment on delivery” or “Payment ASAP,” use clear terms like “50% advance before work begins, and 50% within 7 days of final delivery,” or “Net 15 days from the invoice date.” If there’s an exact calendar date, include that too. A specific timeline sets a firm expectation.
- Payment Mode: Indicate how the payment should be made. This could be “via wire transfer to the bank account below,” “via PayPal to [your PayPal email],” or “through Wise using the link provided.” Stating the mode in writing prevents the client from, say, sending a check or using a payment method that you don’t support or that could cause you compliance issues.
- Responsibility for Fees: Clarify who bears any transfer fees or bank charges. For example, “Client is responsible for all intermediary bank fees,” or “Payment must be ours (sender covers all fees) so that the full invoice amount is received.” This detail is often overlooked, and you might find $30-$50 deducted from your payment due to bank fees if it’s not spelled out. You can also build fees into your pricing, but one way or another, make it clear.
- Tax Compliance Notes: If you will provide certain documents after payment, mention it. For instance, “We will provide a Foreign Inward Remittance Advice (FIRA) upon payment for your records,” or “Please note, this service export is GST zero-rated; we will include the necessary GST details on the invoice.” Including this assures the client you know what you’re doing, and it also reminds them of any info they might need to provide. It’s especially relevant for Indian exporters dealing with GST and FEMA requirements.
By covering all these points, you leave little room for confusion. Next, let’s see how you might communicate these terms to a client via email in a few common situations.
Email Templates for Different Scenarios
Sometimes you need to email a client about payment terms — for example, sending an initial proposal or invoice. Here are a few templates you can adapt, which incorporate the principles we discussed:
For New Clients (Emphasis on Security & Clarity):
Hi [Client Name],
Thank you for choosing to work with me on [Project]. I’m excited to get started!
Before we begin, I’ve attached a Proforma Invoice outlining the project scope and payment terms. To summarize: 50% payment is required upfront to kick off the project, and the remaining 50% will be due within 7 days of final delivery of the project files.
All payments should be made via international bank transfer in USD. (I’ve included my bank details in the invoice.) Please ensure that you cover any bank transfer fees on your end so that the full amount reaches us.
Once I receive the upfront payment, I’ll also provide a Foreign Inward Remittance Advice (FIRA) for your reference, which is the document showing the funds arrived in India (useful for your records and compliance).
Let me know if you have any questions regarding these terms. If everything looks good, we can move forward once the advance payment is received.
Regards, [Your Name] [Your Business]
For Established Clients (More Flexible Terms):
Hi [Client Name],
I hope you’re doing well! Please find attached the invoice for [Project/Service delivered].
As we discussed, the payment terms are Net 15 days from the invoice date. You can send the payment via your preferred method – I’ve had good experiences with both bank transfers and Wise, and my account details are on the invoice.
As usual, I’ll handle any minor incoming fees on my side, and once the payment comes through, I will email you the FIRA document for your records (to confirm the foreign payment was received).
Thanks for your continued partnership. Let me know if everything looks in order, and feel free to reach out if you have any questions.
Regards, [Your Name]
For Milestone-Based Projects:
Hi [Client Name],
I’m excited to get started on [Project Name]. To ensure we’re on the same page, here’s the agreed payment schedule for the project milestones:
- 30% upfront – to begin the project (due before [Start Date])
- 40% at the halfway point – when [Milestone deliverable] is completed (due within 5 days of that deliverable)
- 30% on final completion – upon delivering all final assets (due within 5 days of final delivery)
All payments will be in USD via international wire transfer. I’ve attached an initial invoice for the 30% upfront amount, which also includes my bank details. Please note that any intermediary bank fees should be borne by the sender to ensure we receive the full amount.
Let me know if you have any questions or if anything needs tweaking. Once the first payment is received, I’ll get started right away on the project. Looking forward to a successful collaboration!
Regards, [Your Name]
These templates strike a balance: they’re polite and professional, yet very clear about what’s expected. Feel free to adjust the tone to match your style, but never leave out the key details (amounts, timelines, currency, mode, fees).
Invoice Template Examples
Your invoices should also reflect clear payment terms. Below are two examples – one for a service export and one for a goods export – showing how you can format payment information on an invoice.
Service Invoice with Clear Terms:
Goods Export Invoice:
For goods, the proforma invoice clearly spells out the split between advance and balance, and when each is due. It also specifies that production only starts after the proforma is signed and the advance is paid — a critical point for exporters to protect themselves.
Feel free to use these templates as a starting point. Tailor the details to fit your exact scenario (different percentages, different fees, etc.), but always keep the structure of clearly defined terms.
Advanced Clauses for Complex Projects
For larger or more complex deals, you might need to include additional clauses in your contracts or terms to cover various scenarios. Here are a few advanced clauses you can consider adding, along with examples of how to phrase them:
- Scope Change Clause: “Any changes to the project scope will require written approval (via email or signed change order) and may affect the project timeline and payment terms. Additional work beyond the agreed scope will be billed separately at a rate of $X/hour (or at a price to be negotiated for each new feature).” (This protects you from scope creep and ensures you get paid for extra work not originally agreed.)
- Currency Fluctuation Protection: “For projects extending beyond 60 days, if the exchange rate between [Client’s Currency] and [Your Currency] fluctuates by more than ±5% from the rate at the time of this agreement, the parties agree to renegotiate the pricing in good faith to compensate for the change. Alternatively, the exchange rate can be locked in on the date of the agreement for all payments due.” (This clause is useful when dealing with highly volatile currency situations or long-term contracts. It ensures neither side is hurt too badly by extreme currency movements.)
- Work Stoppage & Termination Rights: “If any payment is delayed more than 10 days past its due date, [Your Company] reserves the right to pause all work until the payment is received. If payment is delayed more than 30 days, [Your Company] may, at its discretion, terminate the project and retain all payments received for work completed. The client will be liable for any work completed up to that point.” (This clause gives you a clear exit if a client isn’t paying, and puts pressure on them to pay on time or communicate if there’s an issue.)
Including such clauses depends on the level of formality and risk in your engagement. For a simple one-off freelance gig, you might not include all these. But for a big contract with an overseas company, having these terms in a Master Service Agreement or contract can save you from a lot of pain later.
Platform vs. Bank Transfer Considerations
How your client pays can be just as important as when they pay. Bank transfers and online payment platforms each have pros and cons for export payments:
- Using Online Platforms (PayPal, Wise, Stripe etc.): If you opt for a platform, mention that explicitly in your invoice or contract. For example: “Payment via Wise (preferred) or PayPal is accepted. Note: any platform fees or currency conversion fees will be added to the invoice total or must be covered by the client.” This ensures the client isn’t surprised if, say, PayPal deducts a fee – you’ve already told them those fees are on them (or you’ve added it to what they owe). Some platforms charge around 3-5%, so make sure you account for that. Also, confirm if the platform provides the documentation you need (Stripe, for instance, might not give a FIRA, whereas a service like Wise or a specialized service like Skydo will).
- Using Bank Transfers (SWIFT/TT payments): If you’re getting paid by traditional bank transfer, make sure to include all necessary bank details in your invoices (as shown in the example above). This typically includes: Account Name, Account Number (or IBAN in some countries), SWIFT/BIC code, Bank Name, and Bank Address (sometimes required). It’s also a good practice to ask the client to email you the transfer confirmation or reference number once they’ve made the payment. International transfers can take a few days; having a confirmation helps you track the payment and provides a reference if you need your bank to trace a delayed payment.
The key is to minimise confusion and reduce any friction in getting paid. The easier and clearer you make it for your client to pay you (and the fewer surprises in fees or process), the more likely you’ll be paid on time and in full.
Red Flags to Avoid When Negotiating Payment Terms
Negotiating payment terms can be a bit uncomfortable, but it’s a crucial part of protecting your business. As you discuss and agree on terms with a client, watch out for these red flags that could indicate future trouble:
- Client insists on 100% payment after delivery (especially if new): If an unknown client says “We only pay after the work is done” and refuses any upfront or mid-project payment, be very cautious. This is the riskiest scenario for you – you’d be doing all the work with no guarantee of payment. New clients should be willing to do at least a small upfront deposit if they are serious. If they won’t, it could be a sign of a scam or a client who doesn’t value your risk.
- Vague or non-committal answers about payment timing: Listen for language like “We’ll sort it out later” or “We usually pay pretty quickly after we get the work”. If a client isn’t willing to lock in a specific timeline or is using very casual terms for payment, that’s a red flag. Everything may be friendly now, but memories and interpretations can differ later. Always push for clear, written terms like dates or defined periods (Net 15, Net 30, etc.).
- No written agreement or contract: The absence of any written agreement is a huge red flag. Even if you’re dealing with a friendly client, you need something in writing (email exchanges can sometimes suffice) that outlines what both parties agree to. If a client says “Oh, we don’t need a contract, let’s just start” – be careful. Professional clients expect to sign agreements or at least approve a written quote. A client who avoids it may later dispute what was agreed, intentionally or not.
- Ignores bank fees or currency issues: Pay attention if, during negotiation, the client says something like “You handle the fees” without clarity, or seems unaware that an international payment might incur charges or delays. If neither of you accounts for bank processing time, you might find a payment “late” simply because it’s stuck in the banking system. Bring up the topic: “International wires can take a few days, and fees may be deducted – how would you like to handle those?” If the client brushes this off or says “I don’t know, just figure it out”, consider that a small red flag – you might end up bearing those costs unless you specify otherwise.
- Pressure to start ASAP without finalising terms: You’ve sent the contract or invoice, but the client says “We need you to start immediately. We’ll pay soon, don’t worry!”. This is a big warning sign. Professional clients understand that work starts after agreements and initial payments (if required) are in place. If someone is in a rush and downplays the need to settle terms first, they might be trying to lock you in and delay payment, or they could be disorganised in a way that will cause problems later. Always get at least the critical terms agreed (and any upfront payment received) before you begin significant work.
Trust your gut. If a client is giving you any of these signals and refuses to budge when you address them, you might be better off walking away or insisting on very secure terms (like 100% payment upfront or via an escrow platform). It’s better to lose a questionable deal than to not get paid for hard work.
How Skydo Makes Export Payments Smoother
Setting good payment terms is only half the battle. The other half is having the right tools to ensure those terms are met with minimal friction. This is where a platform like Skydo can be a game-changer for exporters and freelancers dealing with international clients. Here’s how Skydo can help you get paid faster and more securely:
- Global Local Accounts: Skydo provides you with local bank account details in multiple countries. That means your US client can pay into a US bank account, your UK client into a UK account, and so on – no international wire hassles for them. The result? Payments clear faster (often within 1 business day, not 10+ days) and your Net 7 or Net 15 terms truly mean you’ll have the money in that number of days, not stuck en route in the SWIFT system. Clients are also happier to pay locally, so it removes excuses and delays.
- No Hidden Forex Markups: Unlike traditional banks that often sneak in a 2-4% markup on exchange rates for foreign payments, Skydo uses transparent, real exchange rates with a low flat fee. This means if you invoiced $5,000, you’ll know exactly what amount in rupees you’ll get, and you won’t be surprised by a shortfall due to a poor rate. Essentially, more of your hard-earned money stays in your pocket instead of being lost in currency conversion.
- Instant FIRA for Compliance: Every time you receive a payment through Skydo, you automatically get a Foreign Inward Remittance Advice (FIRA) document instantly. No more chasing the bank manager for a FIRC or waiting weeks for paperwork. This makes your life much easier during GST filing or any compliance checks – you have the proof of foreign payment at your fingertips for every transaction.
- Faster Settlements = Better Cash Flow: Skydo is built to move money quickly. You don’t have to worry about the typical 3-5 business day wait (or longer) for international payments to hit your account. By shortening the payment settlement time, your cash flow improves. You can pay your expenses, reinvest in your business sooner, and you spend less time checking if a payment has arrived. Moreover, when clients see that paying you is as easy as a domestic bank transfer and you receive it quickly, they’re more likely to stick to the agreed schedule (since there’s no friction or confusion in the process). In other words, Skydo helps your clients treat you like a local vendor, simplifying the whole experience.
In summary, while you work on negotiating and clarifying great payment terms, consider leveraging a solution like Skydo to execute those terms. It addresses many pain points – speed, fees, compliance – that traditional banking often fails at for international business.
Explore Skydo! With the right payment terms and the right payment platform, you can focus on your work without constantly worrying about getting paid or dealing with financial bureaucracy. Smooth payments mean better business for both you and your clients.
What are the most common payment terms in export?
The most common export payment terms include Advance Payment, Letter of Credit (LC), Documents Against Payment (D/P), Documents Against Acceptance (D/A), Open Account, and Milestone-Based Payments. Each term offers a different balance of risk and flexibility depending on the exporter-client relationship.
What is TT payment in export?
What does DP payment term mean in export?
What does DA payment term mean in export?
How can Indian exporters reduce payment risks?
