2011 Bahrain Country Commercial Guide - US - Export.gov

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Chapter 7: Trade and Project Financing
How Do I Get Paid (Methods of Payment)
How Does the Banking System Operate
Foreign-Exchange Controls
U.S. Banks and Local Correspondent Banks
Project Financing
Web Resources
How Do I Get Paid (Methods of Payment) Return to top
Letter of Credit (L/C) is the preferred method of payment for exports. The L/C should
conform to international guidelines established by the International Chamber of
Commerce (ICC), as published in the Uniform Customs and Practice for Documentary
Credits (UCP). Letters of Credit offer certain advantages to the seller who depends on
the creditworthiness of the opening (issuing) bank rather than that of the buyer. For the
buyer, an L/C ensures that all of the seller's documents are correct before payment is
made.
Other possible methods of international commercial payments include cash, open credit,
and documentary credit sales.
According to a post-conducted telephone/fax/emails survey of local companies that
regularly import a wide range of products from the U.S., the most commonly used
method of payment is open accounts, followed by commercial letters of credit.
The breakdown of payment methods is estimated to be as follows:
4.5 percent cash in advance
32 percent commercial letter of credit
55.5 percent open account
5 percent documentary collections
0 percent consignment sales
10 percent bankers acceptances
0 percent barter transactions
0 percent trade factoring
10 percent other methods
How Does the Banking System Operate Return to top
Bahrain is a principal financial services hub in the Middle East. Legal, regulatory, and
accounting systems in the financial sector (onshore and offshore) are transparent and
consistent with international norms. International financial institutions operate in Bahrain,
both internationally and domestically, without impediments.
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