Discusses the most common methods of payment, such as open account, letter of credit, cash in advance, documentary collections, factoring, etc. Includes credit-rating and collection agencies in this country. Includes primary credit or charge cards used in this country.

Traditionally, private sector imports into Ecuador have been managed with confirmed letters of credit (documentary letter of credit or stand-by letter of credit) issued by an Ecuadorian commercial bank or an international bank operating in Ecuador. Those letters of credit are confirmed by correspondent banks abroad. Payments are made upon presentation of documents as per letter of credit terms and conditions.

The process of obtaining letters of credit can be a bit difficult and burdensome at first, but typically as a company establishes a good relationship with a bank and a good credit history, issuance of letters of credit is simplified.

Financing is a key ingredient in selling to both the government and the private sector. Local banks offer financing. However, corporate and commercial credit interest rates are usually higher than those in the U.S. In January 2016, the average annual corporate/commercial interest rate in Ecuador was 9.32 percent (the Ecuadorian Central Bank sets a cap, currently at 9.33 percent). As a result, U.S. exporters with the capacity to provide direct credit facilities will have a significant competitive advantage. However, U.S. companies would be well advised to exercise judgment before extending credit. Usually U.S. suppliers willing to offer an open account generally do so only after developing a long-standing relationship with the buyer.

U.S. companies should consider including mediation/arbitration clauses when negotiating contracts with Ecuadorian companies.

When negotiating an agent or distributor agreement with an Ecuadorian party, the U.S. Embassy recommends that both parties agree beforehand on quantities, delivery timing, price, shared marketing expenses or training, the selection of financial intermediaries, and credit.

The U.S. Embassy encourages U.S. companies interested in government contracts, or in business activities requiring government licensing or approvals, to consult with us early in the process for advice.

Due to a financial crisis in the 1990s, many trade credits were not honored, resulting either in non-payment or delayed payment at deep discounts. Ex-Im is only open for short and medium-term financing (up to 1 year and from 1 to 7 years) for the public sector.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.