Everything that goes wrong later was agreed on the order.

Most disputes I get asked about are described as payment problems.

Almost none of them start at the payment.

They start here, weeks earlier, in a document that two people signed quickly because the price had already been agreed on a call.

What one page settles

An order fixes things that nobody reopens later. Only one of them is the price.

When money moves. Payment terms decide whether you are financing the buyer or the buyer is financing you. Sixty days after invoice is not a detail of wording. It is two months of your working capital, on every shipment, permanently.

Who carries the risk, and to what metre. The Incoterm names the exact point where the cargo stops being yours. There are eleven published rules and they move real money between the two sides.

What the bank will pay against. If payment runs through a letter of credit, the order determines which documents get listed in it. Every document named there is a document that can later be refused.

Which currency carries the conversion. Whoever invoices in a foreign currency owns the exchange risk and the conversion cost. That choice is made once, on the order, and then repeated on every shipment for years.

Payment terms are a loan with no interest line

Terms of net sixty mean you ship, you invoice, and you wait two months. During that time the goods are gone and the money has not arrived, so the gap is financed by you.

The production run has to be paid for even earlier, and that is where the strain shows. The Asian Development Bank sized unmet demand for trade finance at $2.5tn in its 2025 survey, up from $1.5tn in 2015. It also found 41% of applications from small and medium companies were rejected, against 40% from corporates.

The number that stayed with us is smaller and quieter: 17% of small firms surveyed in Kenya and Tanzania had a need for trade finance and did not apply at all. They had learned what the answer would be.

Payment terms are where that pressure is created, one order at a time.

Advance, open account, or a bank in the middle

Most trade runs on one of three arrangements. They sit along a line, and the line measures who is trusting whom.

Advance payment puts the risk entirely on the buyer. They pay before anything ships and trust that it will. Common with new suppliers, rare once a relationship has weight.

Open account puts the risk entirely on the seller. You ship, then you invoice, then you hope. Most established trade runs this way because it is cheap and fast, and it works until it does not.

Documentary credit puts a bank between the two, and the bank pays against documents rather than against goods. It costs more, it moves slower, and it converts a commercial risk into a paperwork risk. Whether that is a good trade depends on how good your paperwork is, which is the subject of Stage 6.

There is no correct answer. There is only a choice that somebody makes on the order, often without saying out loud that they are making it.

What I could not settle

I wanted to publish typical payment terms by sector, so an exporter could tell whether sixty days was normal or was being pushed onto them.

Every survey I found either covers domestic invoices, or aggregates across countries in a way that makes the median meaningless, or comes from a company selling invoice finance.

None of those is a source I will print a number from.

So I cannot tell you what normal is.

I can tell you that whatever you signed last time is what will be proposed next time, and that the order is the only moment in the whole sequence when changing it costs nothing.

What I got wrong

I used to read orders for the price and skim the rest.

Then I spent a year watching payment arguments and noticed that the price was almost never what people were fighting about. They were fighting about a date, a named place, or a document that somebody had promised without checking who would sign it, and every one of those had been settled on a page nobody reread.

Reading an order like the person who has to get paid

Ask these before anybody signs. They take ten minutes and they save arguments that take months.

When does the clock start? Invoice date, shipment date and receipt of goods are three different dates, and they can be weeks apart. Net sixty from receipt is not net sixty from invoice.

Which Incoterm, and which named place? The rule without the place is incomplete. The place is the metre where the risk changes owner, and it belongs in writing next to the rule.

Which documents are named? Every document listed is a document that can be refused later. If a certificate is named that you have never issued before, find out now who signs it.

Whose currency? If it is not yours, you are carrying the conversion, and the conversion is usually the largest deduction in the whole chain. Stage 8 prices it.