Payment Methods
| Turkish term | English term | How it works | Exporter's risk | Importer's risk |
|---|---|---|---|---|
| Peşin ödeme | Cash in Advance (CIA / prepayment) | The buyer transfers the full amount (or part of it, e.g. a 30% advance) before the goods are shipped. | Lowest | Highest |
| Akreditif | Letter of Credit (L/C) | The buyer's bank undertakes to pay when complying documents are presented. | Low (very low if confirmed) | Low–medium (payment is made against compliant documents, not the quality of the goods) |
| Vesaik mukabili | Documents against Payment (D/P), Cash against Documents (CAD) | The shipping documents are sent through the banks; the buyer receives the documents once it pays. Subject to the ICC URC 522 rules. | Medium (if the buyer does not take up the documents, the goods remain at the port of destination) | Low–medium |
| Kabul kredili | Documents against Acceptance (D/A) | The buyer receives the documents by accepting a bill of exchange (time draft); payment is made at maturity. | High (the goods have been released; payment depends on the buyer's will) | Low |
| Mal mukabili / açık hesap | Open Account | The goods and documents are sent directly to the buyer; payment is made by bank transfer at the agreed term (e.g. 30/60/90 days). | Highest | Lowest |
Risk ranking
- For the exporter, from most secure to most risky: Cash in advance → Confirmed L/C → Unconfirmed L/C → Documents against payment (D/P) → Documents against acceptance (D/A) → Open account
- For the importer, from most secure to most risky: Open account → Documents against acceptance → Documents against payment → Letter of credit → Cash in advance
Practical notes
- For new customers, an advance payment + balance against documents (D/P) or a letter of credit is a common compromise.
- In open account/D/A sales, export credit insurance (in Türkiye, Türk Eximbank receivables insurance or private insurers) and factoring are used to reduce risk.
- In Türkiye, foreign exchange obligations such as the repatriation of export proceeds and the export proceeds acceptance certificate (İBKB) must be followed regardless of the payment method; consult your bank for the current rules.
Letter of Credit (L/C) Types
Parties
| Turkish term | English term | Role |
|---|---|---|
| Amir (akreditifi açtıran) | Applicant | Usually the importer; has its bank open the letter of credit. |
| Lehdar | Beneficiary | Usually the exporter; receives payment by presenting complying documents. |
| Amir banka (akreditif bankası) | Issuing Bank | The bank that opens the letter of credit and gives the payment undertaking (the buyer's bank). |
| İhbar bankası | Advising Bank | Advises the letter of credit to the beneficiary and checks its apparent authenticity; has no payment obligation. |
| Teyit bankası | Confirming Bank | Adds its own payment undertaking to that of the issuing bank (usually a bank in the exporter's country). |
| Görevli / ödeyici banka | Nominated Bank | The bank authorized to examine the documents and to pay, accept or negotiate. |
| Rambursman bankası | Reimbursing Bank | The bank that reimburses the paying bank on behalf of the issuing bank. |
Types of letter of credit
| Turkish term | English term | Description |
|---|---|---|
| Dönülemez | Irrevocable | Under UCP 600, all letters of credit are irrevocable unless stated otherwise; they cannot be amended or cancelled without the consent of the parties. |
| Teyitli | Confirmed | A second bank (mostly in the exporter's country) adds its payment undertaking; country and bank risk are reduced. A confirmation fee is incurred. |
| Teyitsiz | Unconfirmed | The payment undertaking rests solely with the issuing bank. |
| Görüldüğünde ödemeli | Sight / At Sight | Payment is made after complying documents are presented and examined (examination period of no more than 5 banking days). |
| Vadeli ödemeli | Deferred Payment | Payment is made at the specified maturity (e.g. 90 days after the bill of lading date); there is no draft. |
| Kabul kredili | Acceptance | A time draft drawn by the beneficiary is accepted by the bank and paid at maturity; the accepted draft can be discounted. |
| Negosiyasyonlu (iştiralı) | Negotiation | The nominated bank pays the beneficiary before maturity by purchasing the documents (advance/discount). Under "freely negotiable" letters of credit, any bank may negotiate. |
| Devredilebilir | Transferable | The beneficiary (usually an intermediary trader) can transfer the letter of credit in whole or in part to a second beneficiary (the actual supplier). Only possible if the letter of credit expressly states "transferable". |
| Karşılıklı (arka arkaya) | Back-to-Back | The intermediary uses the letter of credit opened in its favor as security to have a second letter of credit opened in favor of its supplier. These are two separate letters of credit. |
| Rotatif (yenilenen) | Revolving | For regular shipments; as it is drawn, the amount/period is renewed automatically or conditionally (cumulative / non-cumulative). |
| Kırmızı şartlı | Red Clause | A letter of credit that allows the beneficiary to draw an advance before shipment (for raw materials/production). |
| Yeşil şartlı | Green Clause | Similar to a red clause L/C; however, the advance is granted against a document showing that the goods are stored in a bonded warehouse. |
| Stand-by akreditif | Standby L/C (SBLC) | Serves as a guarantee; if the debtor fails to perform its obligation, the beneficiary makes a demand. May be subject to ISP98 or UCP 600. |
| Rambursmanlı | Reimbursement L/C | A structure in which the paying bank claims reimbursement from a reimbursing bank; subject to the ICC URR 725 rules. |
Rules
- UCP 600 (Uniform Customs and Practice for Documentary Credits, ICC Publication No. 600, 2007): The core rule set for documentary credits. Banks deal only with documents, not with goods; the documents must comply "on their face" with the terms of the letter of credit.
- ISBP (International Standard Banking Practice, current version ISBP 821): Practical guidance on how documents are to be examined under UCP 600.
- eUCP (electronic supplement to the UCP, version 2.0/2.1): Rules on the presentation of electronic records.
- Other related rules: URR 725 (reimbursements), ISP98 (standby), URC 522 (documentary collections), URDG 758 (demand guarantees).
Common discrepancies
- The shipment date exceeding the latest shipment date in the letter of credit.
- The presentation period being exceeded (under UCP 600, unless otherwise stated, no later than 21 calendar days after shipment and in any case within the expiry date of the letter of credit).
- The letter of credit having expired.
- The invoice amount exceeding the amount of the letter of credit; the description of the goods not matching the letter of credit.
- Inconsistencies between documents (weight, number of packages, marks, port names).
- The bill of lading not being "clean" (damage clause), or the "on board" notation being missing/undated.
- The insurance document being issued with insufficient cover or with a date later than the shipment date.
- Missing required signatures, endorsements, certification (legalization) or number of originals/copies.
- Partial shipment or transshipment being carried out where prohibited.
Typically required documents
- Commercial Invoice
- Bill of Lading / Air Waybill (AWB) / CMR
- Packing List
- Certificate of Origin – e.g. for Gulf countries, often certified by the chamber of commerce and, if required, legalized by the consulate
- Insurance policy/certificate (for CIF/CIP sales)
- Certificate of analysis, quality, health or phytosanitary certificate (for food products)
- Inspection Certificate
- Bill of Exchange / Draft – for acceptance and negotiation letters of credit
- Special documents such as a Beneficiary's Certificate, vessel certificate or halal certificate
Let ARTAGAN do this for you
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Sources
- ICC – Incoterms® 2020: https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/
- ICC – Incoterms rules history and overview: https://iccwbo.org/business-solutions/incoterms-rules/
- ICC – UCP 600 / Documentary credits: https://iccwbo.org/business-solutions/trade-finance/
- Hapag-Lloyd – Container Specification (PDF): https://www.hapag-lloyd.com/content/dam/website/downloads/press_and_media/publications/15211_Container_Specification_engl_Gesamt_web.pdf
- Hapag-Lloyd – 40' Standard High Cube: https://www.hapag-lloyd.com/en/services-information/cargo-fleet/container/40-standard-high-cube.html
- Hapag-Lloyd – 40' Standard: https://www.hapag-lloyd.com/en/services-information/cargo-fleet/container/40-standard.html
- Hapag-Lloyd – 40' Flatrack: https://www.hapag-lloyd.com/en/services-information/cargo-fleet/container/40-flatrack-high-cube.html
- Hapag-Lloyd – 40' Open Top: https://www.hapag-lloyd.com/en/services-information/cargo-fleet/container/40-open-top-high-cube.html
- ISO 668 – Series 1 freight containers: https://www.iso.org/standard/76912.html
- IMO – SOLAS Verified Gross Mass: https://www.imo.org/en/OurWork/Safety/Pages/Verification-of-the-gross-mass.aspx
- IATA – Air Cargo / e-AWB / ULD: https://www.iata.org/en/programs/cargo/
- IATA – Dangerous Goods Regulations: https://www.iata.org/en/publications/dgr/
- IPPC – ISPM 15: https://www.ippc.int/en/publications/640/
- EPAL – Euro pallet specifications: https://www.epal-pallets.org/
- EU Directive 96/53/EC (vehicle weights and dimensions): https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:31996L0053
- UNECE – CMR Convention: https://unece.org/transport/road-transport
- IRU – TIR system: https://www.iru.org/what-we-do/facilitating-trade-and-transit/tir
- TOBB – TIR and ATA carnets: https://www.tobb.org.tr/
- Kuehne+Nagel – Incoterms 2020 overview: https://www.kuehne-nagel.com/us/how-to/customs-clearance/incoterms
- Wikipedia – Incoterms (for general cross-checking): https://en.wikipedia.org/wiki/Incoterms