AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A US seller can be paid by a Nigerian buyer through cash in advance (safest for the seller), a letter of credit (a bank commits to pay against compliant documents), a documentary collection (banks pass documents but do not guarantee payment) or open account (riskiest for the seller). For larger orders, the buyer will also need a Form M through a Nigerian bank before paying in foreign currency, so agree the payment term and the Form M timing together.
The four main payment terms
The US International Trade Administration's Trade Finance Guide (2022 edition) ranks the main payment methods by risk. For a seller, risk falls as you move from open account to cash in advance; for the buyer, it is the reverse. Choosing a term is a trade-off between protecting your cash and making the deal attractive to the buyer.
| Term | How it works | Risk to US seller |
|---|---|---|
| Cash in advance | Buyer pays before goods ship | Lowest; least attractive to buyer |
| Letter of credit | Buyer's bank commits to pay when compliant documents are presented | Low if documents are right; lower still if confirmed |
| Documentary collection | Banks exchange shipping documents for payment or a signed draft | Moderate; banks do not guarantee payment |
| Open account | Goods ship first, buyer pays later | Highest |
Cash in advance
For first orders from a new Nigerian buyer, cash in advance is common and sensible. You avoid credit risk entirely. The cost is that the buyer carries all the risk, so expect to be asked for references, product photos or a partial deposit instead. A common compromise is a deposit before production or dispatch and the balance before the bill of lading is released.
Worked example (illustration only)
Example: a $20,000 order of salon equipment with 30% in advance and 70% before release of documents. The buyer pays $6,000 to start, and $14,000 when you send a scan of the bill of lading. You hold the original bill of lading until the $14,000 arrives. Your exposure, before the balance is paid, is the goods themselves, which you still control.
Letters of credit
The Trade Finance Guide describes a letter of credit as "a commitment by a bank on behalf of the importer that payment will be made to the exporter", conditioned "solely" on the exporter presenting documents that comply with the credit's terms. Letters of credit are irrevocable unless stated otherwise. The weak point for the seller is discrepancies: a misspelled name or a late shipment date can stop payment. The guide also calls LCs "relatively expensive" in transaction costs.
A confirmed letter of credit adds a second bank's commitment, usually a US bank, which pays you before it is reimbursed by the Nigerian issuing bank. Our guide to letters of credit from Nigerian banks explains when that is worth paying for.
Documentary collections
In a documentary collection, your bank sends the shipping documents to the buyer's bank, which releases them either when the buyer pays at sight (documents against payment) or when the buyer signs a draft promising to pay on a date (documents against acceptance). The guide stresses that banks here act as "facilitators", offering "no verification process and limited recourse" if the buyer does not pay. Under documents against acceptance, you lose control of the goods once the draft is signed.
Collections are cheaper than LCs but riskier, and the guide suggests them for established relationships and ocean shipments where documents control delivery.
Open account and credit insurance
Open account, where the buyer pays 30, 60 or 90 days after shipment, is the most attractive to buyers and the riskiest for you. If you move a trusted buyer to open account, export credit insurance can cover commercial and political non-payment; the Trade Finance Guide says short-term policies provide 90 to 95% coverage and that cost is "generally much less" than LC fees. It does not cover physical damage or currency losses.
The Nigerian side: Form M and how the buyer pays
Sterling Bank's Form M FAQ says Form M is mandatory for anyone importing physical goods into Nigeria "irrespective of the value", whether or not payment is involved, and that a Form M is marked either valid or not valid for foreign exchange. A buyer paying from their own domiciliary funds uses a "not valid for FX" Form M. Ask the buyer which applies and when their bank will process the payment, because that determines how quickly you are paid. The documents themselves are explained in the import documents Nigerian banks ask for.
What to agree before you ship
- The payment term and what triggers each payment.
- Currency: dollars, or naira at an agreed rate source.
- Which documents you will present and when.
- The buyer's Form M number and bank, before you load.
- Who pays bank charges on each side.
Watch for payment fraud
Be cautious with buyers who send overpayments and ask for a refund of the difference, who pay from accounts in names that do not match the buyer, or who change shipping addresses after payment. Confirm any change of bank details or delivery instructions by phone on a number you already hold, not one given in the same email.
Where Pryme fits
Some Nigerian buyers will want to pay in naira. A Pryme Business Account opened from the US holds USD and NGN with local account details for each, so a buyer can pay into naira details and you can convert with Swap, seeing the rate and fee before you approve. Invoicing and verifiable receipts give both sides a clear record.
Questions people ask
What is the safest way to get paid by a Nigerian buyer?
Cash in advance carries the least risk for the seller. A confirmed letter of credit is the next safest, provided your documents comply exactly.
What is the difference between D/P and D/A?
Under documents against payment, the buyer gets the documents only after paying. Under documents against acceptance, the buyer gets them after signing a draft to pay later, so you lose control of the goods.
Does a Nigerian buyer need Form M to pay me?
Sterling Bank says Form M is required for physical imports whatever the value. It is marked valid or not valid for FX depending on how the buyer is paying.
Is export credit insurance worth it for Nigerian sales?
It can be for open-account sales. The ITA says short-term cover is typically 90 to 95% and generally costs much less than LC fees.
Sources
- US International Trade Administration: Trade Finance Guide (2022 edition) · accessed Oct 2026
- Sterling Bank: Form M frequently asked questions (modified 13 Mar 2022) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.