Proceedings from most secure to least secure:

(Seller = U.S. Exporter; Buyer = Foreign Purchaser)

1. Cash or Cash in Advance

Seller receives cash in full from Buyer prior to shipment. Acceptable

cash is U.S. dollars or marketable foreign exchange. For obvious
reasons, foreign currency that cannot be readily converted into
dollars (foreign exchange) would not be considered "cash" in this
context.

2. Confirmed Irrevocable Letters of Credit (CILC)?

Procedures are same as (3) with the exception that a U.S. bank
"confirms" the LC, or, in other words, substitutes its own
performance for that of the local foreign bank which issues the LC.
Payments under a CILC are remitted immediately by the U.S. bank
issuing its confirmations upon receipt of documents and LC. It
should be noted that the Buyer pays all charges for opening the LC
at its local foreign bank and the Seller pays all charges for
confirming the LC. The U.S. Bank that confirms the LC assumes all
credit, political and exchange risks of the foreign bank and its
country.

2. Unconfirmed Irrevocable Letters of Credit (UILC)?

Local foreign bank opens its letter of credit (irrevocable promise to

pay once terms are met) to Seller on behalf of Buyer. Seller presents
documents and LC to U.S. bank for collection. U.S. bank forwards to
issuing foreign bank and payments are remitted in accordance with
LC (sight to 180 days). Caution is taken to: 1.) make sure LC is
irrevocable, and 2.) the LC does not call for special terms or
conditions which cannot be met. The U.S. bank can provide
assistance in this regard.

3. Cash Against Documents (CAD)?

Buyer deposits cash with its local (foreign) bank. Seller presents
documents to its U.S. bank for "collection". U.S. bank sends
documents to foreign bank that remits payment back through U.S.
bank and forwards documents to buyer.
4. Sight Draft/Documents Against Payment (SD/DP)?

Same procedure as CAD (item 4) with the exception that a Draft

accompanies the documents. The Buyer has made arrangements
with its bank to repay the amounts due under the Draft. Until such
arrangements are made the bank holds the Draft and the
documents. SD/DP means the bank pays at "sight", i.e., upon
presentation with the documents.

5. Sight Draft/Document Against Acceptance (SD/DA)

Also known as "Time Drafts" because a prescribed period of time

elapses before payment; e.g., 30, 60, 90, 180 days SD/DA. The
procedure is the same as SD/DP (item 5) except, in lieu of payment
at sight, the bank returns the Draft stamped "Accepted" to the U.S.
bank which presented it for collection on behalf of the Seller. When
the prescribed time period elapses, the U.S. bank presents the Draft
for payment and the local foreign bank honors its acceptance and
remits payment.

6. Open Account (O/A)

This is the least secure means of foreign sales. In lieu of a bank

being presented the documents, all of the documents are forwarded
directly to the Buyer and payment is remitted according to the
terms of the invoice. Net 30 to 180 days are the range of O/A terms.
The flow of documents is all important because the bearer of
documents is the only party who can clear the imported
merchandise through customs. In O/A sales, the Buyer not only has
immediate access to the merchandise, since it possesses the
documents, but can control repayment at its discretion. For this
reason, only the most creditworthy and longstanding customers
should be afforded O/A terms.

7. Promissory Notes

Generally used for medium term (one to five year) sales of capital
equipment or quasi-capital goods. A Promissory Note is a signed
valid and enforceable obligation to pay a certain amount
("principal") plus interest by the "Maker" (or Buyer) to the "Payee"
(or Seller). Payments are made in one, or a series of installments
until the entire principal is repaid. Promissory Notes may also be
guaranteed by a third party ("Guarantor") who is affiliated with the
Maker. A Guarantor can be an individual (e.g. owner), parent
company or financial institution. Rarely are promissory notes used
for short term sales of non-capital goods.