New foreign trade customers do not agree with the payment method, how to negotiate?

A Bangyou member asked: “The company only accepts TT payments, but the client insists on using LC. Neither side is willing to compromise. What should we do?”
 
This is a problem many Bangyou members have faced or are currently encountering. Often, some members may reject the client’s payment request, citing company policies or industry practices as the reason. However, this approach may not always be the best. So, what is the correct negotiation strategy for payment methods?


 
1. Tiered Pricing Method
 
This method is a very effective way of quoting prices, allowing clients to choose the payment method based on their needs. Naturally, the more favorable the payment method for the client, the higher the price will be. The client will choose the method that best suits their overall costs. Here is an example of tiered pricing:
 
- If the payment is 100% TT in advance, the price is USD 1000 per metric ton.
- If it is a sight letter of credit (LC at sight), the price is USD 1020 per metric ton.
- If it is a 30-day letter of credit (LC 30 days), the price is USD 1060 per metric ton.
 
2. Role Model Effect Method
 
In every market, there are always well-known or authoritative buyers. In the early stages, we can strive to win over these clients, even if it means offering them lower prices, as it is important to secure them. This helps to create a role model effect. When other clients haggle or hesitate about the payment method, we can cite these well-known clients as examples.
 
Collaborating with such well-known companies or authoritative buyers also significantly increases the client's trust and gives a competitive edge when advancing orders.
 
3. Delivery Date Differentiation Method
 
Sometimes, clients are very tight on delivery timelines and insist on paying by letter of credit. For example, a client once requested an extremely tight delivery time but insisted on using LC for payment. I told him: “It takes 3-4 days after receiving the LC, and production will not start until then. After production is completed, the shipment may miss the scheduled vessel departure. However, the goods currently being produced are already paid for. If you agree to use TT, I can ask the boss to prioritize your order and begin production first. What do you think?”
 
If the client urgently needs the goods, they usually agree to this suggestion.
 
4. Poor-Rich Method
 
This is a method I use often, and it tends to be quite successful. You can say something like: “Our company just built a new factory or invested in a new production line, and funds are currently tight. To quickly recoup the funds, we are offering some special discounts. Any client who accepts 100% TT in advance will receive an additional 5% discount on top of the original discount, to help with cash flow and solve our funding difficulties.”
 
5. Enticing Method
 
A client may reject your proposal often due to a lack of trust, especially during a first-time collaboration, when neither side is familiar with the other. In this case, you can say: “I believe you are requesting this payment method not due to funding issues, but due to concerns about us. To be honest, I have some worries about our first cooperation as well, so we’re not asking for full TT in advance or even a deposit. We only ask for a sight letter of credit (LC at sight), which is guaranteed by the bank and fair to both parties. What do you think?”
 
This approach helps the client understand you and dispels their concerns. If the client is a real buyer, they will usually agree to this payment plan.
 
6. Direct Approach Method
 
If all the above methods fail, and the client still doesn’t accept your proposal, looking for further reasons may no longer be meaningful. At this point, you can directly express your true thoughts: “Because there are more orders during this period, the company’s policy does not accept orders other than TT and L/C. I would love to work with you, but I’m not the boss, so it’s not up to me!”
 
These payment solutions should be used flexibly depending on the actual situation of the salesperson. There is no fixed order of methods. Some clients may reach an agreement after hearing just one reason, while others may need all the reasons to be presented before responding. If you encounter clients who never seem to reach an agreement, it may be wise to walk away. Even if compromising seems likely, it might still end up being a “pitfall.”