Cash in advance or open account: which is safer?
Cash in advance is safest for the exporter and riskiest for the buyer, who may pay for goods that never ship. Open account is the reverse. The buyer receives the goods and pays later, often after 30, 60 or 90 days, the US International Trade Administration says, so the exporter carries the risk of not being paid. Most traders meet in between, through the banks.
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What is a documentary collection?
In a documentary collection, the exporter's bank sends the shipping documents to the importer's bank, which hands them over only when the importer pays or signs a promise to pay. The banks neither check the documents nor guarantee payment. Collections therefore suit established relationships with a trusted buyer. ICC's Uniform Rules for Collections, URC 522, govern them.
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What is documents against payment?
Under documents against payment (D/P), the importer's bank releases the shipping documents, including the bill of lading needed to collect the goods, only when the importer pays. Under documents against acceptance (D/A), the importer gets the documents by accepting a draft to pay on a set later date. With D/A, the exporter is giving credit.
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Duties are paid to KRA, never to a phone number
Duties and taxes are a separate payment from your supplier's. The Kenya Revenue Authority (KRA) issues a payment slip with a payment registration number; pay it at a bank, or by mobile money through Government PayBill 222222 only. Never pay duty to an agent's personal number. See the official channels step.
- Sources
- KRA PayBill notice, customs FAQ
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