Although Mexico is the United States' third largest trading partner, the lack of financial options for small- and medium-sized enterprises is often cited as the primary obstacle for U.S. companies selling to Mexico.

U.S. exporters should be aware that Mexican lending rates are higher than in the U.S., and range from 9 to 14% per year (as of June 2005). U.S. exporters can lose or lessen sales to Mexican buyers by demanding payment either by Confirmed Letter of Credit or Cash In Advance. While it is prudent for U.S. exporters to insist on secure payment terms, it pays for them to consider the broad variety of payment terms available to them in order to become as competitive as possible.

This guide identifies the main financing and payment mechanisms available to support U.S. exporters selling to Mexico. It is an introduction and the reader is encouraged to use it as a starting point in order to become more familiar with the subject. In many instances, the use of expert help is recommended. To that end, the following mechanisms will be examined in this report:

1. Cash In Advance;
2. Confirmed Letter of Credit;
3. Open Account Terms;
4. Open Account Terms with Export Credit Insurance;
5. Documents Against Payment (D/P) & Documents Against Acceptance (D/A);
6. Export Finance by US Commercial Bank (US$ denominated);
7. Import Finance by Mexican Bank (P$ denominated);
8. Lines of Credit Available from Mexican Development Banks.

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