Many importers lose more money paying suppliers than they ever lose in duty. Exchange rates move, banks charge fees, and fraudsters impersonate suppliers or invent them. A payment sent to the wrong account is almost impossible to recover. Safe payment is a skill that protects your capital and also gives you the records that customs and KRA ask for.

Payment options

  1. Bank transfer (telegraphic transfer or SWIFT). The most common route for business. The bank sends funds to the supplier's bank, using the account details on the pro forma invoice. Fees include the bank's charge, correspondent bank charges and the exchange margin.
  2. Letter of credit (LC). The bank guarantees payment to the supplier once they present specified documents, such as the bill of lading and inspection certificate. It is more expensive and slower, but protects both sides on large orders.
  3. Documentary collection. The supplier's bank sends the shipping documents to your bank, which releases them against payment or acceptance. Less protection than an LC.
  4. Payment platforms and cards. Useful for small orders or samples. Fees can be high, and limits may apply.
  5. Escrow or trade assurance services offered by some marketplaces, which hold your money until you confirm delivery.

Avoid paying large sums in cash, through personal accounts of individuals, or through unlicensed money transfer agents.

Know the real cost

Total cost = amount to supplier × exchange rate + bank charges + the foreign bank's fees. Banks apply a margin to the exchange rate, so compare quotes from two or three banks, and ask for the all-in cost in shillings before you send. If the supplier insists on a currency that is not the invoice currency, ask who bears the conversion. Include these costs in your landed cost with the landed cost calculator and the import duty and landed cost workbook.

Manage exchange rate risk

The shilling can move between the order date and the payment date. Options include paying in stages when the rate suits you, agreeing a fixed price in shillings with the supplier (rare), buying foreign currency forward through your bank or holding a foreign currency account. For small importers the simplest control is to price your stock with a safety margin and to pay promptly. Reflect the margin in your pricing: how to price your products and services.

Fraud checks

  • Verify the supplier. Check their business registration, address, website age, references and other buyers. See importing from China: risks and checks.
  • Confirm bank details by phone using a number you found independently, never one from an email that asks you to change the account. Email fraud where criminals send "updated bank details" is common.
  • Beware of prices far below market, pressure to pay quickly or requests for full payment upfront.
  • Pay to an account in the company's name, in the supplier's country.
  • Start small. Place a trial order before a large one.
  • Use a third-party inspection before final payment on big orders.

A split such as 30 percent deposit and 70 percent against shipping documents balances risk.

Records customs and KRA expect

Customs may ask for proof that the declared price was paid. Keep the pro forma and commercial invoices, the bank transfer confirmation (SWIFT message) and the exchange rate used. For tax, the payment supports your deduction for cost of goods sold, and the customs entry supports input VAT: import VAT: how to claim it back and importing goods for resale: VAT and records. Keep them for five years: how to keep business records for KRA.

Foreign exchange and withholding tax

Payments to non-residents for services, royalties and some fees can attract withholding tax, which the payer must deduct and pay to KRA: withholding tax in Kenya explained. Payments for goods do not, but payments for freight, commissions or consultancy may. Check before you pay.

Track every payment

Use the supplier payment run planner and the purchase order and goods received tracker to link each payment to an order, invoice and shipment. Add the payment fees to your bank reconciliation so the books match the statement.

Checklist before you send money

  1. Supplier verified and bank details confirmed independently
  2. Invoice price and Incoterm agreed in writing
  3. All-in cost in shillings known
  4. Payment split matched to the delivery stages
  5. Records saved
  6. Tax on the payment considered

Frequently asked questions

Can I pay a supplier through M-Pesa? Local mobile money is not designed for international supplier payments, though some providers offer cross-border services. Bank transfers remain standard for commercial orders.

What if I paid a scammer? Contact your bank immediately to request a recall, and report to the police and the Directorate of Criminal Investigations. Recovery is not guaranteed.

Who pays the intermediary bank fees? It depends on the instruction, shared or full. Agree this with the supplier so the right amount arrives.

Do I need a foreign currency account? It helps regular importers control timing and costs, but you must manage the balance and the risk of rates moving.