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The payment issue in Algeria
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We recently received an order from an Algerian client, but they insisted on usingI need to make a payment, and the buyer requires payment 90 days after the goods are shipped. I've heard that Algeria has strict foreign exchange controls, and there's a high risk of payment issues. Could you please advise on how to ensure safe payment collection in this case?
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
Algeria is a country with strict foreign exchange controls，and all cross-border payments must be approved by its central bank (Bank of Algeria). The risks of the 90-day forward letter of credit you encountered include: First，letters of credit issued by Algerian banks typically require confirmation by third-country banks such as France or Germany，otherwise domestic banks may refuse to discount them. Second，the approval period for foreign exchange quotas under forward letters of credit can take 60-90 days，meaning you may face a "money-for-goods gap" during the post-delivery payment window. It is recommended to require clients to open immediate letters of credit，or at least have them confirmed by a top-50 global bank. Additionally，include a clause in the contract stating that "if payment cannot be made due to Algerian foreign exchange controls，the buyer must complete payment through a third-country account within 7 working days." All documents must strictly comply with letter of credit requirements，particularly the Arabic translations of certificates of origin and commercial invoices. Any non-compliance could result in bank refusal to pay.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
From a logistics operation perspective, Algeria's payment methods directly determine your cargo ownership control strategy. If you must accept a 90-day deferred letter of credit, it is essential to use an ocean bill of lading (Ocean B/L) rather than a seaway bill (Seaway Bill), and fill in the consignee column with "To Order of Issuing Bank" to ensure that the bank controls the cargo ownership. You must receive the original letter of credit before shipping and verify its authenticity through your bank. The customs clearance time at Algerian ports is typically 15-20 days, but under deferred letters of credit, customers may intentionally delay pickup, leading to high demurrage fees. It is recommended to clarify the demurrage fee liability clause in the contract and purchase "buyer's default insurance". Regarding documents, Algerian customs requires that the invoice, packing list, and certificate of origin must be completely consistent, and all documents must be authenticated in advance at the Algerian Embassy in China, which requires at least 10 working days of preparation time.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
Algerian clients insist on deferred payment, with 90% of cases attributable to working capital constraints or local policy restrictions. Directly refusing their demands might lead to losing the order. Here’s how to negotiate:
1. First, acknowledge their difficulties but emphasize that your company’s financial system requires "immediate payment."
2. Propose a compromise: accept a 90-day deferred L/C but require a 15-20% prepayment (TT method). This locks in the client’s commitment while mitigating your funding risk.
3. If they refuse, escalate to a "discountable deferred L/C"—the buyer bears the discount interest, and you’ll receive full payment via bank discounting after delivery.
4. Frame your argument this way: "We value our long-term partnership, but deferred payments put too much pressure on our cash flow. If you can pay a 20% prepayment, we’re willing to accept a 90-day L/C. This supports your working capital while enabling us to proceed with the order smoothly."
5. Subtly hint that there are other Algerian buyers interested, creating a sense of urgency. Remember: Algerian businesspeople prioritize relationships. Emphasizing "brotherhood" and "long-term cooperation" during negotiations is more effective than focusing solely on contract terms.