Korea

Country starter pack
Business practicalities in Korea
81
Choosing the right payment options
When competing to win contracts including those based
on exporting, the payment terms that you offer an
overseas buyer can really make a difference.
The payment terms that you can choose from are:
• Pre-payment, where you receive some or all of the
payment amount upfront
• Documentary collection, which involves you shipping
your goods or services but retaining control of them
until you receive payment or a legal undertaking of
future payment from your overseas buyer
• Open account (or open credit), which gives your
buyer certain credit terms by delivering your goods
or services with an invoice requesting payment on a
specific date after delivery.
Managing exchange risk
Options to manage your exchange rate risk should be
discussed with your bank. The international trade section
of your bank’s website will provide information about their
exchange rate products.
Repatriation of funds
If a foreign investor complies with all reporting and
approval requirements, the Foreign Investment
Promotion Law guarantees the investor’s right to
repatriate income earned from the ownership of
shares or equity interest, proceeds on disposal of such
assets, principal and interest earned on long term
loan agreements, and payments received pursuant to
technology licensing agreements. Repatriation methods
include the sale of shares, receipt of dividends and other
distributions, or a capital reduction.
Prepayment and documentary collection are both
methods that can help you manage the initial risk of
non-payment. However, until you have an established
relationship with your buyers or have a proven track
record in exporting or supplying, these payment methods
may generally not be available to you.
Speak to your bank or an international business consultant
for more comprehensive advice about choosing the right
payment option for you.