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Industry · export and import

In trade, the documents move the money

Cross-border trade runs on terms agreed before shipping, documents that prove what happened, and banks that won't pay or close records until the papers match. Get the terms and the paperwork right and the money follows.

A letter of credit, step by stepSimplified

Importer

1Agrees terms and asks its bank to open a letter of credit

8Pays its bank and takes the documents to clear the goods

Importer's bank

2Issues the letter of credit

6Checks documents; pays under the LC terms

Exporter's bank

3Advises it to the exporter

5Checks documents and sends them on

Exporter

4Ships and presents the documents the LC lists

7Receives payment

Banks deal in documents, not goods: the exporter is paid when the documents match the letter of credit. Real LCs involve more parties and terms; this is the outline.

Payment terms, from safest for the seller to safest for the buyer

International trade payment terms
TermHow it worksRisk sits withSuits
Advance paymentBuyer pays before shipmentBuyerNew buyers, small orders, custom goods
Letter of creditBuyer's bank undertakes to pay against matching documentsBanks, against documentsLarge orders, new relationships
Documentary collectionBanks release documents against payment or acceptanceSharedEstablished buyers, moderate trust
Open accountSeller ships; buyer pays by the due dateSellerTrusted, long-standing buyers

Simplified. Bank charges, documents and terms vary by bank and transaction; discuss with your bank's trade team.

Exporters: getting paid and closing the record

Every export creates an entry in your bank's Export Data Processing and Monitoring System (EDPMS), and that entry needs to be closed by the money arriving, within the period the rules set. Receipts that can't be tied to a shipping bill leave entries open and questions from your bank.

The fix is consistency: the same invoice number on the shipping documents, the invoice and the buyer's payment instructions, and the correct purpose code when your bank asks.

  • One invoice number everywhere. Shipping bill, invoice and payment reference.

  • Buyer told how to pay. Your bank details and the reference to quote.

  • Purpose code. Matching the transaction, when the bank asks.

  • Short payments explained. Bank charges or discounts documented, so the entry can close.

Importers: paying abroad through your bank

Import payments go out through an authorised dealer bank, with your bank's application form and declarations, and are tracked against the import in its Import Data Processing and Management System (IDPMS). The bill of entry and the payment have to be matched to close the record.

Paying an advance to a new supplier is the importer's biggest risk: if goods don't arrive, recovering money from abroad is slow. For large first orders, a letter of credit or staged payments shift that risk.

  • Check the supplier

    Before any advance, especially a first order.

  • Pay through your bank

    With the correct documents and purpose.

  • Match bill of entry to payment

    So the import record closes.

  • Watch for changed bank details

    Supplier bank changes by email are a classic fraud.

Currency risk between order and payment

Trade deals are priced today and paid weeks or months later. If the rupee moves in between, the margin moves with it. Exporters lose when the rupee strengthens; importers lose when it weakens.

Banks offer ways to fix a rate for a future receipt or payment, such as forward contracts. Whether to use them, and how much of your exposure to cover, depends on your margins and how predictable your flows are; discuss it with your bank.

A simple exposure check

List every foreign-currency receipt and payment due in the next three months. For each, ask: if the rate moved against us by a few per cent, would the deal still make money? The ones that wouldn't are where to start.

Small exports through e-commerce

Not all exports are container loads. Selling goods to consumers abroad through your own website is exporting too, and RBI's Master Direction on payment aggregators (15 Sep 2025) covers the cross-border aggregators that collect those payments: up to ₹25 lakh per transaction, with the aggregator required to give your bank the documents it needs to close export entries. See the cross-border D2C page.

  1. Step 1

    Order paid online

    Through a cross-border payment aggregator, within the per-transaction limit.

  2. Step 2

    Goods shipped

    With an invoice and shipping record for that order.

  3. Step 3

    Export entry closed

    Your bank matches the receipt to the export, using the aggregator's documents.

Where Peneu fits

This page doesn't say Peneu is an authorised dealer bank or handles letters of credit, and names no corridor, currency or partner. Trade payments run through banks under India's foreign exchange rules. Whether Peneu can help with any part of yours is confirmed during onboarding.

Trade payment questions

What are the common ways to get paid for exports?

Advance payment before shipping, open account (ship first, get paid later), documentary collection (banks exchange documents for payment or acceptance), and letters of credit (a bank undertakes to pay against matching documents). They run from safest for the exporter to safest for the buyer.

Why does my bank ask about export entries?

Banks track exports and the receipts against them in their Export Data Processing and Monitoring System (EDPMS), and imports and payments in IDPMS. Entries have to be closed as money arrives or is paid, within the periods the rules set, so keep invoices and shipping documents matched to payments.

What is a purpose code?

A code that tells the bank why money is coming in or going out, such as payment for exported goods or for a service. Your bank asks for it on foreign exchange transactions; RBI publishes the lists. Use the code that matches the transaction.

Can small exporters use online payments instead of wire transfers?

For e-commerce sales, cross-border payment aggregators can collect from buyers abroad, up to ₹25 lakh per transaction under RBI's 2025 Master Direction, and must give the exporter's bank the documents it needs to close export entries. Larger trade usually runs through banks.

How can I protect against exchange-rate moves?

Banks offer hedging products such as forward contracts to fix a rate for a future receipt or payment. Whether and how to hedge depends on your exposure; discuss it with your bank.

Does Peneu handle trade payments?

This page doesn't say Peneu is an authorised dealer bank or handles letters of credit, and names no corridor or currency. Whether Peneu can help with any part of your trade payments is confirmed during onboarding.

Official sources

Last reviewed . Examples, amounts and screens marked illustrative are not Peneu figures.