– Exporter receives payment from the importer, this paper and sells it to his bank for local currency, which it needs for production and other purposes;

– The exporter's bank sends abroad its correspondent bank payment document;

– From the sale of this document, amount of foreign currency is credited by the bank of the importer to exporter's bank's correspondent account.

This mechanism allows for international settlements through correspondent banks by offsetting counterclaims and obligations without the use of cash.

Banks tend to support the necessary foreign exchange positions in different currencies according to the structure and timing of payments, as well as carrying out monetary and financial conditions and payment of foreign trade transactions include the following elements:

– Exchange rates, the choice of which along with its level, the interest rate and currency exchange rate depends on the degree of efficiency of the transaction;

– The currency of payment, which must be repaid the obligation of the importer (or borrower); mismatch of currency rates and currency of payment – the simplest method of exchange risk insurance;

– Payment terms – an important element of foreign trade transactions. Among them are distinguished: cash payments, payments to a loan, a loan with an option (the right to choose) cash payment.

By cash international settlements are settlements in the period from the date of readiness of the exported goods to the transfer of documents of the importer.

Provision of credit has a definite influence on the conditions of international payments. If his calculations are carried out after the international transfer of goods in the ownership of the importer, exporter that lends it’s usually in the form of issuing a bill. If the importer pays for goods in advance, he credits the exporter.

Loan with an option for cash payment, if the importer, exercise the right of deferral of payment for goods purchased, he is deprived of discounts offered by cash payment.

To link the opposing interests of counterparties in the international economic organizations and their payment relationship apply various forms of payment.

The choice of methods of payment depends on:

– Type of product;

– Availability of credit agreement;

– The solvency and reputation of counterparties for foreign economic transactions.

The contract specifies the conditions and methods of payment.

– The collection form of payment – the client's order to the bank on receipt of payment from the importer of goods and services and placement of these funds to the exporter's bank. Banks perform collection operations, using the instructions received from the exporter in accordance with the Uniform Rules for Collections.

– Letter of credit – an agreement on the obligation of the bank at the request of the customer to pay for the documents, accept, or (negotiate) a bill in favor of a third person (beneficiary) to whom a letter of credit.

The procedure for this form of payment is regulated by the Uniform Customs and Practice for Documentary Credits. The letter of credit (especially irrevocable and confirmed) to a greater extent than the collection ensures timely payment.

However, this is the most complex and expensive form of payment, the importer in this case has to reserve the amount of credit or use credit bank.

– Bank Transfer – order one bank to another to pay the payee (beneficiary) a certain amount. It involves:

– Originator – the debtor;

– A bank, took the assignment;