Most transactions - whether within the UK, or internationally, are carried out via 'Open Account'. The exporter ships the goods with an invoice and awaits the payment from the importer. In this scenario, there is no guarantee of payment on time or even at all. The importer has a clear advantage.
Documentary collection or 'collections'
These come in two varieties - 'term' and 'sight'. Briefly, the importer's and exporter's banks act as agents in the transaction. They handle and coordinate payment and exchange of documents - like a solicitor handling a UK house purchase. 'Term' means the parties have agreed that the importer will pay at a later date. 'Sight' means the importer is to pay immediately on receiving the goods. While a collection offers a little more protection for the exporter, the importer's ability to choose when he/she pays is more limited.
Letters of credit
Additional protection when doing business overseas. The importer's bank guarantees payment by the importer. This product requires the importer to organise a credit facility
(subject to status). An L/C offers exporters security and may also give the importer terms to negotiate a better overall deal price. Letters of credit can also be confirmed at an additional cost, which means that in the event that a payment cannot be made due to general economic or political instability in the importer's country, the payment is still guaranteed, but by the exporter's bank.