In international trade, there are differing reasons why you may experience a buyer defaulting on payment. A buyer may have a legitimate complaint regarding an incorrect shipment. There maybe a problem with the banks facilitating payment. Or a buyer may simply have decided not to pay for their goods. Regardless of the reason(s), there are some things you, as a supplier, can do to reduce this risk:

• It is a general rule that before international trade is conducted, both parties should always engage in both some formal and informal "checks" of the other party.
  
  
• It is always wise to have insurance against payment defaults, but be aware that you must exhaust all reasonable means of collecting payment before an insurance claim will be honored.
  
  
• It also considered wise to select or suggest payment options which reduce your exposure to financial loss, especially if you are dealing with a buyer for the first time. From the wide range of payment options available, the most popular among suppliers is Telegraphic Transfer (T/T) payment in advance, which means the payment is sent to you before you order shipment of products.
  
  
• Another option is to select a payment process which works both in favor of the buyer and seller. Letters of credit distribute risk evenly.

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