International payments in logistics can directly affect how quickly cargo is released, collected or handed over for onward transport. Even a properly planned shipment can be delayed if a bank requires additional documents, the payment parties do not match the parties to the transaction, or the payment is selected for additional compliance checks.
“Cargo owners mainly focus on ensuring that their cargo reaches its destination smoothly. However, one factor that is often overlooked is bank payments, which can significantly delay the arrival or collection of cargo.”Žilvinas Urbonas, Managing Director of TLC
Why can a bank payment be delayed?
Banks may review international payments for anti-money-laundering purposes, sanctions compliance, payment purpose, transaction parties or other compliance requirements. If a transaction requires additional review, the bank may ask for a contract, invoice, order, transport documents or information about the ultimate beneficial owner.
Payment matters are therefore best assessed before the cargo is dispatched rather than when it is already waiting at a port or terminal.
Which documents should be prepared in advance?
The clearer the transaction and payment can be substantiated, the easier it is to answer any questions from the bank.
- the contract or order confirmation;
- the invoice and payment information;
- transport and cargo documents;
- information about the shipper, consignee and payer;
- other documents relevant to the specific transaction.
Check who is actually making the payment
Before making an international payment, it is important to ensure that the payer, beneficiary and other parties to the transaction match the information stated in the contracts and commercial documents.
If payment is made by a third party or the funds pass through a company other than the one stated in the main transaction documents, the bank may have additional questions. Such situations are best clarified before the transfer is initiated.
Sanctions screening – before entering into the transaction
When working with higher sanctions-risk markets or partners, it is particularly important to check not only the direct counterparty but also the other parties to the transaction, ultimate beneficial owners and the payment chain.
The European Commission recommends carrying out risk-based checks on partners, transactions and goods. Current information and practical guidance can be found in the European Commission’s sanctions due-diligence guidance.
How can you reduce the risk of payment-related delays?
International payments in logistics should be planned as part of the entire supply chain. Before cargo is dispatched, it is worth aligning the payment parties, preparing supporting documents and assessing the risk of sanctions or additional bank checks.
This does not guarantee that every transfer will be processed without further questions, but it reduces the likelihood that document collection will begin only when the cargo is already waiting to be released.
Taking these steps in advance can save time, reduce the risk of additional logistics costs and help avoid unnecessary cargo delays.
